bayer
4 March 2013Patents

India rejects Bayer plea over compulsory licence

India’s patent authorities have dealt a blow to German pharma company Bayer by refusing to overturn an order forcing the company to license one of its patented drugs.

The Intellectual Property Appellate Board (IPAB) on Monday dismissed Bayer’s appeal against a compulsory licence (CL), which allows Indian generic company Natco to sell cancer drug Nexavar at 8,800 rupees ($175) for a month’s dosage, rather than Bayer’s 280,000 rupees ($5,500).

In March 2012, the Indian Controller of Patents issued the country’s first compulsory licence under section 92 of the Indian Patents Act, saying Bayer had not made Nexavar publically available at a reasonably affordable price or manufactured the drug sufficiently in India.

The controller granted Natco a non-exclusive licence allowing it to sell generic versions of Nexavar, an anti-liver and kidney cancer drug, until 2020, when Nexavar’s patent expires. Natco was ordered to charge no more than $175 per-patient per-month and pay Bayer a royalty of 6 percent.

Bayer appealed in September 2012 and, following hearings in January this year, the IPAB on Monday rejected the German company’s efforts but increased the 6 percent royalty rate by 1 percent.

While today’s decision has not been published and won’t be available until later in the week, it is understood that the IPAB ruled convincingly in Natco’s favour.

Bayer press spokesman Christian Hartel said in a statement that the company strongly disagreed with the ruling, confirming that it will appeal to the High Court in Mumbai by filing a writ petition.

He added: “The challenges faced by the Indian healthcare system have little or nothing to do with patents on pharmaceutical products, as all products on India’s essential drug list are not patented. The order of the IPAB weakens the international patent system and endangers pharmaceutical research. The limited period of marketing exclusivity made possible by patents ensures that the costs associated with the research and development of innovative medicines can be recovered.”

In a statement on its website, non-governmental organisation Knowledge Ecology International (KEI), which filed a statement to IPAB in this case, welcomed today’s decision:

“The decision by the IPAB is an important reaffirmation of the pro-patient provisions in the India patent law, and creates more momentum to address the vast inequality of access to cancer drugs around the world. KEI calls upon other governments to make similar rulings when facing high prices for cancer drugs.”

Dr Mohan Dewan, principal at law firm R.K Dewan & Co in Mumbai, said he wasn’t aware of Natco selling Nexavar in large quantities since the ruling was issued, as its conditions – such as manufacturing the drug from only one factory – were quite onerous and the company would have wanted to wait until the decision’s implications became clearer.

He added: “This is not a good decision for IP, but any responsible government would have done the same. Bayer’s supplies [of Nexavar] were very small – it did not make the product available. Bayer adopted a bad strategy and should have built a more India-centric strategy.”

But he said pharma companies would not necessarily be too fazed by the ruling, as India is a “huge market with a huge consumer base, where companies are making money”.

The cost of medicines in emerging markets such as India is a hot topic for European and US drug companies, said Jason Rutt, head of patents at law firm Rouse. “This importance is magnified given the tough times the pharma industry has faced [over] the last five years. That value falls away if they can’t pitch prices at a level that recoups cost."

He added: “India has a strong and skilled pharma industry, but one largely focussed on generics. The protectionist aspect of the initial ruling that ‘working’ the invention means local manufacture, not just sales, helps Indian companies and provides additional costs to global pharma companies looking to consolidate manufacturing at one site for cost and good manufacturing practice.”

Bayer’s market for Nexavar in India is estimated to be worth $50 to $60 million. The company reported revenues of €39.8 billion ($51.7 billion) in 2012.

Natco did not respond to a request for comment.

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