Compulsory licences on pharmaceutical patents in India: A short article

Abstract

Over the last few years, multiple media reports have commented on compulsory licensing of pharmaceutical patents in India. A majority of these reports painted a doomsday scenario and were devoid of facts. The grant of India’s sole compulsory licence in March 2012 (to Natco for Bayer’s patented drug – Sorafenib) spawned a series of media reports theorising that the grant of this compulsory license was ‘… a major blow to global pharmaceutical firms’ and speculating a beginning of compulsory licensing era for pharmaceuticals patents. However, this simply has happened and India till date has rejected all subsequent compulsory licence applications filed after the Natco/Sorafenib compulsory license application. The purpose of the present article is to collate the present information around the various compulsory licences in India and provide some historical background at a time when even developed countries are beginning to issue compulsory licences for pharmaceutical products.

Keywords

India patents pharmaceuticals drug generics compulsory licence

Background on compulsory licence (CL) applications

India has a long history of patent law, going back to the 1850s.¹ The present patents regime is enshrined within the Patents Act, 1970² (the 1970 Act) that was enacted after repealing the Indian Patents and Designs Act 1911 (the 1911 Act).

Pursuant to an earlier version of the Patents Act, 1970, India allowed only process patents within the drug/pharmaceuticals and food domain until 2005. Changes were made in stages to the Patents Act, 1970 in 1999,³ 2002⁴ and 2005 as a part of India’s Trade Related Aspects of Intellectual Property Agreement (TRIPs Agreement) commitments. India restarted issuing product patents for pharmaceuticals from 2005.⁵

The Indian Patents and Designs Act of 1911 was amended in 1952 (vide Act LXX of 1952) to provide CLs for both product and process patents in the food, medicine, insecticide, germicide or fungicide domain or inventions capable of being used as surgical or curative devices⁶ as well as provide a mechanism called ‘Licence of Rights’.⁷ This effectively meant that an interested person could get a license for such patents as a matter of right – hence the term ‘Licence of Rights’ mechanism.⁸

The 1970 Act was a big game changer; for instance, it removed product patents in the food, drugs and related areas (i.e. it disallowed product claims in these areas). The 1970 Act carried forward the ‘Licence of Rights’ mechanism. Patents pertaining to food and drug were deemed endorsed with a ‘Licence of Right’ after the expiry of three years from the grant of patent.⁹ The ‘Licence of Rights’ feature was almost directly and wholly borrowed from the corresponding legislation in the United Kingdom (for instance, section 35 of the UK Patents Act of 1949). Certain forms of this ‘Licences of Right’ provisions are still present in patent legislations of various Commonwealth jurisdictions, including the United Kingdom (section 46).

The 1970 India legislation also provided for grant of Compulsory Licences (hereinafter, referred as CL) only under specific grounds. The 1970 Act was amended in 2002 and the chapter titled ‘Licences of Right’ was removed. Additionally, the provisions relating to CLs in sections 82 through 94 were revised. The Act states that a CL can be sought from the Controller of Patents by a license seeker if it can show any of the below three grounds:¹⁰

that reasonable requirements of the Indian public with respect to the patented invention have not been satisfied, or

that the patented invention is not available to the public at a reasonably affordable price, or

that the patented invention is not worked in the territory of India.

Additionally, a compulsory license to manufacture and export patented pharmaceutical product to a country having insufficient or no manufacturing capacity in the pharmaceutical sector for the patented product to address public health problems is also provided.¹¹ It is to be noted that such a CL can be issued by the Controller only if the destination country has granted a CL on the corresponding patent or has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.

Over the last few years, a number of media reports/speakers/stakeholders have commented on the CL situation in India and there is a lot of fiction mixed in a very small amount of facts. The grant of a CL in March 2012 (granted to Natco for Bayer’s patented drug – Sorafenib) spawned a series of media reports globally that tried to argue that the grant of this compulsory license was ‘… a major blow to global pharmaceutical firms’¹² and that this grant would lead to the opening of floodgates to issuance of further compulsory licenses. However, nothing of that sort happened and the reality is that till date, India has rejected all subsequent licence applications apart from the sole Natco/Sorafenib CL.

Earlier licence applications

Official data pertaining to CLs in India, prior to the Sorafenib licence, either under the 1911 Act or the 1970 Act is sketchy at best. The Ayyangar Committee Report¹³ has data for the 1911 Act and gives the following data on compulsory license activity in India for the period 1950–59:

No compulsory license was granted in pharmaceutical/chemical domain during the above period. A 1984 Thesis by Sudip Chaudhuri states the following:¹⁴

Till 1972, i.e. when a new Act came into force, there were only five applications for compulsory licence made by Hindusthan Antibiotics Ltd (in 1959), Alembic Chemical Works (1963), Dey’s Medical Stores (Manufacturing) (1960), Raptakos Brett & Co (1957) and Neo Pharma Industries (1961). The applications were ultimately withdrawn in the first two cases. Compulsory licence was refused by the Controller of Patents in the third case. The Controller granted compulsory licences in the last two cases. ’ (Emphasis mine, refer page 131–2 at chapter 3 of the thesis)

Thus, while Chaudhuri’s thesis does not have further details on the granted CLs, it mentions that both Raptakos Brett and Neo Pharma CL applications were granted. A 2005 paper¹⁵ by Shamnad Basheer and Mrinalini Kochupillai summarises the following list of CL requests in the pharmaceutical/chemical domain, initiated in India under the 1911 Act as well as the 1970 Act:¹⁶

On a related note, in a 2007¹⁹ paper, Janice Mueller mentions that ‘fewer than half a dozen compulsory licences have been granted in the history of India’s patent system’. It is unclear as to whether Mueller is referring to licences under the 1911 Act or the 1970 Act. That said, in the present author’s checks, the sole granted drug/ pharmaceutical CL under the 1970 Act is the Natco/Sorafenib CL.

Present position

The purpose of the present article is to only focus on the information around the various drug/pharmaceutical CL requests made under the 1970 Act. The next section gives a short description on the individual cases.

A lot has been written on the Natco/Sorafenib CL. Natco sought for and ultimately got India’s first pharmaceutical CL (after the TRIPs Agreement era) for Bayer’s anti-cancer drug (Sorafenib, branded as Nexavar). The March 2012 detailed decision²⁰ granting the CL is worth reading to understand why the Patent Office went ahead and granted the CL. A key reason for the Controller in issuing the CL was the extremely low volume of product being imported by Bayer prior to the CL issuance. Price of Bayer’s product was another major factor. The CL grant was challenged by Bayer in Court but the challenge was dismissed and the CL continues to be in force.²¹

The Sunitinib²² and Erlotinib CL²³ requests from Natco were identical in nature. Natco wanted CLs for these patents to manufacture and export these patented anti-cancer products to least developed countries. Both these applications did not result in issuance of any compulsory applications.²⁴ This could possibly be on account of Natco not being able to fulfil all the checks required for such export-oriented CLs.²⁵

While it is not clear if Natco also applied for an export-related CL for a third product, a Department of Industrial Policy and Promotion (hereinafter, DIPP) paper states:²⁶

In September 2007, three applications under section 92A of the Patents Act, 1970 were received for grant of compulsory licence for the manufacture and export of patented drugs to countries which reportedly did not have manufacturing capacity nor had insufficient capacity. The process envisaged under the Act was initiated. However, the applicant subsequently withdrew his applications.

The DIPP paper does not specify the patented products for which the three CLs in question were sought nor does it mention the licence seeker.

Natco’s 2010 request for a CL²⁷ to manufacture and sale in India Maraviroc (Pfizer’ HIV medicine branded – Selzentry) does not have much data in public domain except the fact that Natco requested Pfizer for a voluntary licence in November 2010. No CL was granted on Maraviroc.

Similarly, not much information is available on the Cipla/Raltegravir²⁸ license matter except for a news article that discusses Cipla having requested Merck for a voluntary licence in April 2011 (Merck brand – Isentress, HIV medicine). No CL was ever granted in India on Raltegravir. Interestingly, a German Court has recently issued a CL to Merck on a Shionogi patent that seems linked to Raltegravir²⁹ product on the grounds of public interest. The German decision is subject to appeal. What is surprising here is that this German CL has received negligible main stream media coverage in the international press, except for a few mentions in German media even though this patent battle is being fought between two international drug companies in multiple countries while the Indian Sorafenib CL became an international news item for months.

BDR pharma sought a CL on Dasatinib (BMS brand – Sprycel, anti-cancer medicine). This request was denied³⁰ by the Controller in October 2013. This decision is worth reading to understand what could be the potential pitfalls while preparing documents for a CL request.

Lee Pharma requested a CL for AstraZeneca’s patent on Saxagliptin relating to two anti-diabetes products – Saxagliptin (brand Onglyza) alone and Saxalgliptin + Metformin (brand – Kombiglyze XR). The Patent Office rejected³¹ this CL in Jan 2016 and Lee Pharma does not seem to have appealed this rejection.

Cipla had taken a different route against the patents covering Indacaterol³² (Novartis’ Onbrez COPD product). In October 2014, Cipla asked the DIPP to revoke five of Novartis’s patents related to Onbrez under S.66³³ (i.e. public interest) and not the classic CL grounds. Incidentally, these requests were filed after Cipla was sued for patent infringement by Novartis. In a June 2016 response,³⁴ the DIPP has advised that Cipla had withdrawn this request.

The Health Ministry angle

The Ministry of Health & Family Welfare had, in January 2013,³⁵ sent a letter to the DIPP (DIPP comes under the Ministry of Commerce & Industry) recommending that three drugs – Dasatinib, Trastuzumab and Ixabepilone – be placed under the CL regime. The Trastuzumab CL (Roche brand – Herceptin, an anti-cancer medicine) matter died a premature death since the Patentee (Roche) did not renew its patent. The Ixabepilone (BMS brand Ixempra) case also did not move forward since the Ministry of Health & Family Welfare later considered the drug to be unsafe. Finally, as regards Dasatinib, DIPP asked for more data but no information is available on what happened in that case. As noted above, BDR’s CL separate request for Dasatinib was rejected in October 2013.

The US IBC and Government of India's 2016 statements

A 2016 development is worth mentioning here. The US India Business Council (USIBC), in a letter³⁶ dated 05 Feb 2016 addressed to the Office of the United States Trade Representative stated that ‘The Government of India has privately reassured India it would not use Compulsory Licenses for commercial purposes’. This letter caused a lot of concern that access to affordable medicines could be impacted; for instance, the medical charity Medecins Sans Frontieres (MSF) expressed concerned and said,³⁷ ‘Such a commitment will encourage multinational drug companies to start charging unaffordable prices to Indian patients and governments across the developing world, further undermining access to critical, and life-saving products'.

Amidst this media uproar, India’s Commerce Ministry had to then issue a clarification³⁸ stating ‘(India) retains the sovereign right to utilize the flexibilities provided in the international IPR regime. It may be noted that to date, there has been only one case of compulsory license in India and that too after a well-thought out and laid down process, which was subsequently upheld right up to the highest Court of the land.’ Likewise, the USIBC also issued a clarification³⁹ stating ‘USIBC recognizes and supports the Government of India’s sovereign right to issue a compulsory license (CL).’

Conclusion

The CL measure has been used very sparingly by Indian Patent Office over the last 50 years and that too with extreme care and diligence. To continue to argue ad hominem that India could issue CLs for the asking to every person and in every situation is unwarranted and now proven as incorrect. The rejection of the overwhelmingly large number of CL applications undeniably proves that patentee rights are adequately protected and respected by the Patent Office.

#	CL seeker	Patentee	Drug/product	Decision/details
	Data excerpted for the pharmaceutical domain only and relates to the period 1950–59, i.e. under the 1911 Act.
1.	Indian Applicant	N.A.	N.A. (pharmaceutical)	CL application made under section 22 in 1951, later withdrawn in view of voluntary arrangement.
2.	Indian Applicant	British	Iron preparation (pharmaceutical)	CL application under section 23CC made in 1957, pending as of 1959. This probably refers to the Raptakos Brett Application (see below).

#	CL seeker	Patentee	Drug/product	Decision
	This 2005 paper covered data until 2005; below are excerpts for the pharmaceutical/chemical domain only. Items 3/4 (below) were under the 1911 Act.
3.	Benger Laboratories	Raptakos, Brett & Co (P) Ltd	Saccharated iron oxide (iron deficiency anaemia drug)	CL allowed (This CL application – noted earlier – was granted after the publication of the Ayyangar Committee Report)
4.	Neo Pharma Industries (P) Ltd	Parke Davis & Co	Chloramphenicol	CL allowed¹⁷
5.	Catalysts and Chemicals India (West Asia) Limited	Imperial Chemical Industries Ltd	Hydrocarbon-related chemical invention	CL allowed¹⁸

Raw data for Pharmaceutical/Drug CLs under the 1970 Act – period 1970 through December 2016

INN & Brand name	Requestor and scope	Final status and reference
Granted CL:
Sorafenib Tosylate (Nexavar)	Natco/domestic sale	Royalty bearing CL granted in March 2012
Rejected CLs:
Sunitinib (Sutent)	Natco/LDC export	Natco withdrew its application in September 2008
Erlotinib (Tarceva)	Natco/LDC export	Natco withdrew its application in September 2008
Maraviroc (Selzentry)	Natco/LDC export	Natco sought a VL from Pfizer in January 2011 but no later detail is available in public domain. No CL was ever granted on this product.
Raltegravir (Isentress)	Cipla/domestic sale	No CL was granted; only minimal information in public (April 2011)
Dasatinib (Sprycel)	Domestic sale/BDR Pharma (January 2013 recommendation by Ministry of Health & Family Welfare)	BDR’s application was rejected in October 2013
Trastuzumab (Herceptin)	(January 2013 recommendation by Ministry of Health & Family Welfare)	Patent was not renewed so no case of CL arose
Ixabepilone (Ixempra)	(January 2013 recommendation by Ministry of Health & Family Welfare)	No CL was issued
Saxagliptin (Onglyza) and Saxagliptin + Metformin (Kombiglyze)	Lee Pharma/domestic sale	CL application rejected in January 2016
Indacaterol (Onbrez)	Cipla/domestic sale	Cipla withdrew its request to DIPP for revoking Novartis’ patents on this drug. DIPP’s reply in June 2016 mentions the withdrawal

Footnotes

Acknowledgments

The author is deeply indebted to the work done by Ms. Janice Mueller, Prof. Sudip Chaudhuri, Ms. Mrinalini Kochupillai and Prof. Shamnad Basheer. A sincere thank you is due to senior practitioners – Mr. Guru Nataraj and Mr. Feroz Ali for the discussions over the years and to Ms. Devika Agarwal and Ms. Sufiyah Sulaiman for their help in reviewing draft versions of this article.

Author's note

The discussion in this article is based on information in the public domain as of 31 December 2016. Errors, if any, are the sole responsibility of the author. The observations and submissions contained in this article are entirely personal and should not be attributed or construed to reflect the views of the author’s present or past employer(s). The author welcomes all comments/counter-views/inputs to his mail ID.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Author biography

Sandeep K. Rathod is an Indian attorney with extensive experience in the pharmaceuticals domain. He holds Masters’ degrees in Law from University of Mumbai (India) and University of Pittsburgh (USA) and has received scholarships from the World Intellectual Property Organisation, the Japan Patent Office and the University of Washington, School of Law. He lectures frequently on law and policy, particularly on issues concerning patents and the pharmaceutical industry. He is also involved with civil society groups for improving access to pharmaceuticals.