Compulsory licensing for anti-cancer drugs: concerns and future ahead

Rai S Mittal

India’s Health Ministry’s recent recommendation for compulsory licensing (CL) of three anti-cancer drugs belonging to Roche and Bristol-Myers Squibb — trastuzumab (used for breast cancer), ixabepilone (used for chemotherapy) and dasatinib (used to treat leukaemia) — is being hotly debated by the pharma industry, patient advocacy groups and intellectual property law experts alike. If the said recommendation is accepted, it would enable generic drug manufacturers to bypass patents in respect of these drugs and their cheap copies (a month’s dose of each of which currently costs more than Rs one lakh) could soon hit the Indian market. Incidentally, India issued its first CL in March last year when Natco Pharma won the rights to manufacture Bayer AG’s anti-cancer drug Nexavar. Since then, Natco Pharma has been marketing its version at a small fraction of the original product’s price.

Current legal scenario

Under the Indian Patents Act, a CL can usually be issued in cases where the medicine is deemed unaffordable or is not sufficiently available. The licensee can then manufacture and sell the patented drug on payment of a royalty to the patentee and subject to other terms and conditions imposed by the government. This CL process cannot be a random process but a decision taken judiciously.

WTO/ TRIPS requirements

During the earlier golden days of Indian generics, India did not recognise patents in areas considered vital to human life, being food and health, as long as the process used for manufacturing was different from that used by the inventor. This allowed Indian generics to compete in the world market by providing medicines at an affordable price in poor/underdeveloped countries. In 1994, India became a part of the World Trade Organization (WTO) and signed the agreement on Trade-Related aspects of Intellectual Property Rights (TRIPS) and as part of that, it was required to recognise internationally patentable inventions, including those for food and health.

Are the fears of the industry imaginary?

Based on some studies, doubts have been raised as to any substantial impact of CL on the profits made by giant pharma companies. It is hence an arguable point whether by licensing to generic producing companies, the pharma companies can increase the reach of their drug by tapping into a market that is not catered to by these giants, i.e., middle and low income group, and make sufficient profits through royalties. Some studies also seek to suggest that grant of CL does not hurt innovation and in any case the hurt is only a small fraction of what is feared.

To the contrary, the common perception of pharma giants is that these are just studies, most of which are based on imaginary data, and there should be little doubt that inability of the patent holder to deal with the drug in an unrestricted manner does have substantial effect on their profits and their willingness and ability to invest time, efforts and money in other research activities. The view, that CL can possibly be justified in the given facts and circumstances only on humanitarian grounds, thus has large acceptability. A section of researchers also argue that years of research results in trade secrets and undisclosed information that the patent does not cover but which is necessary to produce the effective product, though this argument may have little application to drugs.

Is Governemnt’s move right?

Certainly, reasonably priced healthcare is important for patients in any humanitarian society, however, CL is not the only way to deliver it. The GoI should have looked and can still look at other commercial measures to bring down the prices for these drugs, rather than CL which arguably is the option of last resort, for example, in national emergencies. The other ways of ensuring drug price affordability include, for instance, discounted bulk procurement by the government and price control. In many countries, treatment for cancer is also managed effectively by government agencies through suitable reimbursement mechanisms thereby making expensive therapies very much affordable. The GoI could also look at a suitable public-private partnership model.

Similarly, the drug-makers, on their part, could look at slashing prices for Indian market on certain products, by signing deals with India’s drug makers or otherwise, so as to avoid any government action by way of CL. These products may be sold under new brand names to protect pricing in the developed world. It is learnt that some companies are already working on this model.

The right approach

There cannot be any doubt that there needs to be a right balance between commercialising intellectual property and delivery of healthcare at an affordable cost, especially in an emerging market like India. This would ensure that the country breeds a culture of investing time, efforts and money in research and development and at the same time ensure that innovation benefits all those who need it. The industry and the various chambers of commerce and industry need to work closely with the government to strike this perfect balance. There should be little doubt that in case steps are not taken judiciously and CL is allowed in a large number of cases, without adequate justification or on biased terms, India may be perceived to be taking major swipes at big pharma companies. In addition, while imposing conditions on which CL is to be granted, the authorities should also consider the large costs incurred in developing the patented product. It should also be uderstood that CL is a provision provided under TRIPS, though it is hardly implemented in western countries especially for pharma products.

What lies ahead?

The concerns are already expressed that the intellectual property protections India adopted to invite foreign investment and to honour international commitments are not real with the GoI moving into protective mode. Clearly, we do not see a sooner end to the wrangling over patent protections and drug prices by Indian government and major drug makers. The disputes over aspects such as revocation of patents and whether a generic version steps on the patent would also continue to engage IP lawyers and Indian courts. The debate whether CLs are the only effective and practical way in the present Indian society to get lifesaving treatments to the Indian masses and what could be a better alternative in the given facts and circumstances would also continue.

Other costly therapies such as HIV drugs may be next to get the CL treatment. But even worse for big pharma companies is the prospect of other developing nations following India’s path. China recently amended its patent laws, permitting CL to local firms in cases of state emergencies, unusual circumstances and in the interests of public and is already considering CL in specific cases as a way to keep drugs affordable for its people. We could also see that the availability of CL is sufficient to encourage patentees to grant voluntary licenses on mutually agreed terms.

The author can be reached at [email protected]