[e-drug] India Considers Compulsory Licenses For Exportation Of Drugs

["Sarah Rimmington" <srimmington@essentialinformation.org>]

E-DRUG: India Considers Compulsory Licenses For Exportation Of Drugs
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http://www.ip-watch.org/weblog/index.php?p=933
Intellectual Property Watch

20 February 2008
India Considers Compulsory Licenses For Exportation Of Drugs
By Tatum Anderson for Intellectual Property Watch

The Indian government will consider whether it should grant permission 
for patented drugs to be manufactured and exported without the consent 
of the patent owners at a hearing scheduled for the last week of February.

If the government agrees to the application, it would be the first time 
such permission has been given in India and only the second time in the 
world. The decision also would be controversial as it likely would bring 
a reaction from patent holders in industry.

The hearing has been scheduled in response to an application to India's 
Patent Controller by Hyderabad-based generic pharmaceutical company 
Natco to produce two drugs for export to Nepal in September last year.

It is unclear whether the government will make its final decision at a 
hearing. A spokesman for Natco said: "It is the pure discretion of the 
[Patent] Controller whether to grant the same [licence] or not. There is 
no specific time limit fixed for the government to take the decision."

One drug, called Erlotinib, was patented in India last year by Swiss 
manufacturer Roche under the brand name Tarceva. This lung cancer drug 
is approved for use in 87 countries worldwide.

The other also is a cancer drug, called Sunitinib, and is sold by US 
manufacturer Pfizer under the brand name Sutent.

Specifically, Natco has asked for a so-called compulsory licence, a 
recognised legal instrument contained within the World Trade 
Organization Agreement on Trade-Related Aspects of Intellectual Property 
Rights (TRIPS).

TRIPS does not stipulate exactly when countries might need to use such a 
provision; it is a flexibility built into the agreement that leaves it 
up to governments.

If compulsory licences are issued for purposes of a national emergency 
or extreme urgency then there is no requirement to try to negotiate a 
voluntary licence with the patent owner.

What is special about the Natco case is that it invokes new compulsory 
licence rules that were introduced to the TRIPS agreement relatively 
recently.

Before 2003, compulsory licences could only be issued for production 
predominantly for domestic use, thereby allowing a country to permit 
domestic manufacturers to produce copies of patented drugs for its own 
citizens. However, while many countries could, in theory, access drugs 
quickly as a result of the compulsory licence mechanism, some of the 
poorest countries in the world could not. Many of the countries lack 
domestic drug manufacturers that could produce medicines.

In 2001, the WTO's Doha Ministerial Conference decided to change TRIPS 
so that countries unable to manufacture the pharmaceuticals could obtain 
cheaper copies elsewhere if necessary. By August 2003, WTO's General 
Council had issued an addendum to TRIPS, which legalised the process by 
which generic drugs, made under compulsory licences, can be exported to 
countries that lack production capacity. WTO members approved a 
permanent amendment to TRIPS in December 2005, and two-thirds of the 
membership must ratify it by 2009 for it to enter into effect.

India has transposed this provision into its amended patent law, which 
entered the statute books in 2005. Under Section 92A of that law, 
companies can apply for a licence to export copies of patented drugs to 
a country that requests it. Both the importing and exporting country 
must also fulfil a range of other criteria set out by the WTO before 
export can take place (the importing country must issue a compulsory 
licence too, for instance).

Natco's application is significant because, if successful, it will be 
the first time that Section 92A has been invoked. It would only be the 
second time since 2003 that this particular TRIPS provision has been 
used throughout the world - partly because the criteria under which such 
exports can take place are seen by many to be cumbersome.

Nevertheless, the first compulsory licences for export were issued last 
year by Canada and Rwanda. The licences enable Canada's manufacturer 
Apotex to manufacture and export copies of the anti-AIDS drug TriAvir, 
patented by GlaxoSmithKline, to Rwanda.

Although there is no indication of what course the Indian government 
might take, the decision to issue a licence could open the door for a 
slew of other compulsory licence applications.

Several other Indian manufacturers are understood to be watching the 
case closely and considering whether to apply for such compulsory 
licences, say observers such as Shamnad Basheer, a research associate at 
the Oxford Intellectual Property Research Centre (OIPRC) within Oxford 
University.

"As you can appreciate, if this turns out to be a legally and 
administratively costly affair, it may deter more companies from 
applying," Basheer said. "However, if the process is fairly easy and a 
good revenue model is established via this CL mechanism, then big pharma 
has much to fear."

Good revenue models from least developed countries may not be the only 
focus of generic companies.

The Indian Patent Act prevents compulsory licences that allow 
manufacturing for the Indian market from being issued for the first 
three years of a patent.

However, when those three years are up, the law permits compulsory 
licences under some of the broadest conditions in the world, said 
Basheer. For instance, a compulsory licence can, in theory, be issued if 
the drug is not available in adequate quantities, not reasonably priced, 
not manufactured in India or the drug was manufactured by a generic 
company before the law came into effect.

Indeed, experts believe generic manufacturers might begin to apply for 
compulsory licences for export, in order to build up manufacturing 
capacity until they can manufacture for the potentially huge domestic 
market. Of course there is no guarantee the Indian government will grant 
licences easily.

However, the size of that market is unclear because the law only came 
into force in 2005 and many of the patents issued under it are less than 
three years old.

By definition, generic companies will be able to sell drugs at a 
fraction of the cost of patented drugs.

Although Roche has refused to comment on the price of Erlotinib, Indian 
public health activists say the drug is beyond the reach of most 
Indians. In contrast, generic companies might be able to manufacture the 
same drug for a fraction of the cost - although by just how much appears 
to be unclear.

But if generics over-ride patents and undercut the price of drugs, 
originator companies say they will not be able to recoup the investments 
in research and development that created the drugs in the first place 
and invest in new innovations. Indeed, they consider compulsory licences 
to be a form of theft of patented intellectual property.

When it became clear that two countries, Thailand and Brazil, might 
issue such licences last year, albeit for domestic use, the originator 
pharmaceutical industry cried foul.

Billy Tauzin, president and CEO of the Pharmaceutical Research and 
Manufacturers of America (PhRMA), which represents some of the world's 
largest pharmaceutical research and biotechnology companies, said in a 
statement: "PhRMA is deeply troubled by the recent trend toward the 
issuance of compulsory licences for pharmaceutical products. This 
misguided focus on short-term 'budget fixes' could come at a far greater 
long-term cost, potentially limiting important incentives for research 
and development that are necessary to positively impact the lives of 
millions of patients worldwide."

It is unclear what the industry's reaction will be if India issues a 
compulsory licence. Roche, for instance, has refused to comment on what 
the next step might be. Meanwhile, it is busy fighting a case against 
another Indian generic manufacturer, Cipla, which had begun 
manufacturing Erlotinib for the Indian domestic market and has not 
applied for a compulsory licence. That case is ongoing.

Tatum Anderson may be reached at info@ip-watch.ch.


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-- 
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/