Compulsory Licensing of

Pharmaceuticals : Socio-Legal ImpactBY-

HARSHAL MORWALELL.B. 8TH SEM (5 YRS COURSE)

SNG LAW COLLEGE, AKOLA

Compulsory Licensing – A Need

We hear of two kinds of drugs- generic and brand name drugs:

Generic drugs are those whose patent has expired or does not exist and which

can be produced by any registered manufacturer without need of taking

permission from any authority and also without any payment of royalty.

Brand name drugs are those which are patented and cannot be produced

without the consent of the patent holder. A royalty is to be paid for production of

these drugs.

But what happens if a company holds patent of an essential drug and there is an

emergency in which the drug needs to be provided at low cost for vast populace?

In this case, Compulsory Licensing comes to the rescue.

What is compulsory licensing?

Compulsory licensing is when a government authorises a

party other than the patent owner to produce the patented

product or process, without the patent owner's consent.

Under Indian Patent Act, 1970, the provision with regard to

compulsory licensing is specifically given under Chapter XVI.

TRIPS contains rules on Compulsory licenses.

What is TRIPS ?

Contains rules on patents, copyrights and trademarks.

Contains rules on Compulsory licenses - Article 31 of TRIPS.

India is a party to above international agreements for the protection of

intellectual property that have provisions regulating compulsory licensing.

The Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS) is an international agreement administered by the World Trade

Organization (WTO) that sets down minimum standards for many forms of

intellectual property (IP) regulation as applied to nationals of other WTO

Members.

Why compulsory licensing of

pharmaceuticals is important in India?

To save lives of the populace by ensuring accessibility of

drugs at affordable prices

To break up monopolies and cartels, which are some of the

abuses of patent rights

To ensure social justice in accordance with constitutional

mandate

Arguments in favor of Compulsory Licensing

Fosters innovation in pharmaceutical industry

To establish the primacy of national health over any

trans-national intellectual property rights

Need of Indian researchers to innovate according to

India’s needs with some modifications to these

patents

Arguments against Compulsory Licensing

Compulsory license is interference in the exclusive rights of the patentee

of the invention.

The decision of a government to grant compulsory licenses may lead to

the loss of foreign direct investment.

Uncertainty about patent protection may halt search for new drugs much

needed by third world countries.

Use of compulsory license may cause trade friction with the countries

which produce patented drugs.

CL will lead to stop the growth of research and development.

Case Law- NATCO Vs. BAYER

The Controller General of India passed an order of compulsory license against

Bayer’s patent on drug Nexavar on March 09, 2012, which is India’s first

compulsory license post TRIPS era.

NEXAVAR- anti-cancer drug, chemically known as Sorafenib tosylate (Patent-

holder Bayer Corporation)

Hyderabad-based Natco had filed an application for issue of compulsory license

to manufacture the low-cost version of Nexavar.

The compulsory license enables Natco to sell the drug at a price Rs 8,880 for a

pack of 120 tablets as against Rs 2,84,428 being the cost of Nexavar sold by

Bayer.

Natco will have to pay 6% royalty on sales to Bayer for the drug on a quarterly

basis.

Importance of Case Law

The interest of public at large would be given more importance by the

government to make life saving medicines affordable.

With a huge population, lack of proper preventive measure, increasing

incidents of non communicable diseases coupled with lack of universal

health coverage, such measures are essential for larger public interest.

It also breaks monopolies and gives boost to generic medical industry.

Suggestions

Grounds for grant of C.L. on pharmaceuticals need to be made morecomprehensive and wider in scope.

Central Government should be able to issue a license whenever it feels that thecost of a particulars product is very high and not in proportion to the cost of R & Dand cost of production.

The directions of the Competition Commission should be another ground for issueof a C.L.

National Pharmaceutical Pricing Authority should be able to issue compulsorylicense on its own.

A reasonable solatium of 10% should be granted help restore the confidence ofthe innovator of drugs.

Final Word

Compulsory licensing is one of the most comprehensively debatedconcept at international level.

Representatives of the developing countries and NGOs expressconcern that stringent patent law will inhibit access to essential drugs.

On the contrary, there are those who argue that not protecting IPRswill inhibit access to health care.

Conclusion

To sum up, compulsory licensing falls mid-way; neither full

patent protection is granted, nor is it denied altogether

The government must step in and take proactive measures to

ensure accessible healthcare for all by compulsory licensing

and generic medicine.

Thank you