genglob magazine

India’s patent appeals body Monday rejected Bayer AG’s plea to stop a local company from manufacturing and selling a generic version of its cancer drug Nexavar, a ruling that has wider implications for multinational drug makers operating in the South Asian nation.

The German company last year approached the Intellectual Property Appellate Board after the local patent authority granted a “compulsory license” to Natco Pharma Ltd.to manufacture a generic version of the drug.

The Indian Controller General of Patents, Designs and Trademarks allowed Natco to make copies of the liver- and kidney-cancer drug on the grounds that Nexavar was too expensive for most people in India. The license allowed Natco to sell a generic version at less than one-30th of Bayer’s price.

India’s patent law allows authorities to order holders of drug patents to license their products for local manufacturing if they are priced beyond the reach of patients. The patent authority’s March 2012 order on Nexavar represented the first instance of a compulsory license being granted in the country.

India says there is a need to balance intellectual property rights with the rights of people to get access to new and expensive medicines. Foreign producers argue India is discouraging innovation by weakening patents, reducing the incentive for big companies to invest time and money to discover drugs.

The appellate board, which is based in the southern city of Chennai, said the patent authority was right in allowing a compulsory license for Nexavar as Bayer hadn’t priced the drug at “reasonably affordable” rates.

Bayer said it “strongly disagrees” with the conclusions of the appellate board and will pursue the case at the high court in Mumbai.

The order “weakens the international patent system and endangers pharmaceutical research,” the company said in a statement.

Natco welcomed the order.

“This is a reasoned and detailed order that can be sustained in any court of law,” said M. Adinarayana, Natco’s company secretary.

The appeals body’s ruling Monday could set a precedent for similar cases.

“It will pave the way for future [compulsory] licenses, given that many of these [patented] drugs are exorbitantly priced” and aren’t affordable for most people in India, said Shamnad Basheer, professor of IP Law at the National University of Juridical Sciences in the eastern city of Kolkata.

Bayer got India patent for Nexavar in 2008.

Last year, the patent authority noted that Bayer’s branded drug Nexavar sells for $5,181, or 284,428 rupees, for a month’s supply. Natco Pharma, the generics competitor which brought the case to the patent authority, sought to sell a month’s supply of the generic version at $160.

The patent body allowed Natco to legally make and sell the low-cost version of Bayer’s drug on the condition that it pay a royalty of about 6% of the net sales from the drug to the German company.

The appellate board Monday ordered Natco to pay 7% of its net sales from the drug to Bayer.

Medecins Sans Frontieres said it was “relieved” with the decision by the board to uphold India’s first compulsory license.

“Most importantly, the decision means that the way has been paved for compulsory licenses to be issued on other drugs, now patented in India and priced out of affordable reach, to be produced by generic companies and sold at a fraction of the price,” said Leena Menghaney, India manager of its advocacy program which pushes for greater access to lifesaving medicines.

“We hope that, in the near future, compulsory licenses will be issued for the newest drugs to treat HIV and affordable generic versions will be available not only in India, but in the rest of the developing world,” Ms. Menghaney added.

To get patent protection under India’s laws, companies need to prove that new versions of their products are therapeutically more beneficial than earlier versions on which patents have expired.

Under this rule, India had refused to patent Swiss Novartis SA’s cancer drug Glivec. Novartis has taken the patent battle to India’s Supreme Court, which is expected to give its final order on the case shortly.

An Indian government panel late last month published a set of proposals to control the prices of patented drugs. If implemented, these guidelines could lead to multinational drug companies being forced to sell some medicines at a third of their current prices.