Compulsory Licensing is a scenario when a Government allows someone else to produce the patented product or process without the consent of the patent owner. The Government has appointed a panel to look into issues related to Compulsory Licensing of drugs and availability of cheaper versions of cancer medicines Trastuzumab, Ixabepilone and Dasatinib. Each of the three drugs cost approximately Rs. 1 Lac for a month’s dose. Issuance of compulsory licenses by Department of Pharmaceuticals for these three commonly used anti-cancer drugs, has bring to the fore the debate about grant of compulsory license. The steps have been taken keeping in view the public welfare and the cause of novelty.

Health Ministry had sent its proposal regarding compulsory licensing for the three drugs to the Department of Industrial Policy and Promotion (DIPP) and the process for granting compulsory licences has now taken an instant take off.

Compulsory licensing is a provision under the World Trade Organization. It is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property- the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement. This provision of the World Trade Organization allows the government to permit a company to manufacture a patented drug without the consent of the innovator company. The Doha Declaration on TRIPS and Public Health confirms that countries are free to determine the grounds for granting compulsory licenses.

Resort to Compulsory Licenses has been provided for, under sections 84, 92 and 91A of the Patents Act , 1970 (‘Act’).

Attaining a license under Section 84 might be a little cumbersome as it is required that the applicant should establish that the patentee is not making available the invention at a reasonable cost. The Intellectual Property Appellate Board’s (IPAB) order in matter of Bayer Corporation Vs. Union of India , has set off tremors of interest all around the pharmaceutical world and IP world. The enforcement of issuance of compulsory licenses can be traced to this case. The patented invention which was in issue is a product called Sorafenib Tosylate sold as Nexavar. It is a palliative medicine for hepato-cellular carcinoma and renal cell carcinoma. The drug is administered only on the prescription and supervision of oncologists and the patients who are at stage IV of the disease and the drug admittedly improves the quality of life in the last months of the afflicted ones. After a long process of research and the necessary expenditure, the (Bayer Corporation) patentee arrived at this invention, and obtained patent in other countries, before getting a patent in India in 2008. The patentee manufactures the drug outside India, and the sale of Nexavar in India is only by import. The price at which the drug was sold by the patentee when the application for Compulsory Licensing was filed was, at Rs. 2,80,000/- per month. CIPLA, who is the respondent, is in the market, selling the same drug as Soranib, at Rs. 30,000/- a month at the time of this application, and now at Rs. 5400/- CIPLA sought for revocation of the patent. The 3rd respondent herein, NATCO had also been sued by the patentee, and in turn NATCO has also applied for revocation. CIPLA and NATCO are both generic drug manufacturers in India with a large market presence.

The patentee took the defense that the technicalities of the drug were carefully “invented” by them and there was a reason why the drug was being sold at the price of Rs. 2,80,000, whereas the respondents, had violated their patent in furtherance of which they, sold the drug at Rs. 30,000 only. Therefore the appellants wanted an injunction against the defendants.

It was observed by IPAB while rejecting the application for interim stay, “If stay is granted, it will definitely jeopardize the interest of the public who need the drug at the later stage of the disease, since it is admitted that this drug improves the quality of life. Therefore, the right of access to affordable medicine is as much a matter of right to dignity of the patients and to grant stay at this juncture would really affect them and further, it would in effect amount to deciding the main petition itself. The license is granted subject to certain conditions which the licensee is bound to comply with and the order does not deserve to be stayed.” It was also held that the appellant has not been successful in proving that as per section 84 of the Act, that he (the patentee) by his own supply has satisfied the reasonable requirement of the public and by its supply, the drug is made available at a reasonably affordable price. Therefore, the supply being made by the defendant was absolutely justified and had no reason of being ordered to stop its supply.

While the concern of social welfare and public interest have clearly been given precedence over the derivation of benefits by exploitation of patented product/process by the patentee, it remains to be seen whether this exception in form of compulsory license based on the public welfare shall hold its ground or not when the matter is heard and decided on its ssmerits by Delhi High Court.