India Maintains Status Quo On Compulsory Licensing Provisions

Indian generics industry, multi-national company lobbies welcome moves to keep flexibility, but doubts linger regarding future investments.

MUMBAI - Lobby groups from both the Indian generics industry and multinational companies hailed a decision by the Indian government to maintain the status quo on legal provisions that determine the conditions needed to trigger a compulsory license for a drug. But both sides expressed apprehension on how the present set of norms will unfold, fearing that future investments or market opportunities may be at risk if wrong moves are made.

"As the existing legal framework is comprehensive, the government has decided that there is no need to issue additional guidelines for the issue of compulsory licenses," the government said in a press release April 11.

A white paper circulated in August 2010 by the Indian Commerce Ministry's Department of Industrial Policy and Promotion invited opinions to deliberate on a fool-proof compulsory licensing policy (Also see "Indian Firms Must Be In Indian Hands, Says Government Paper; Highlights Threats to Compulsory Licensing And Drug Pricing" - Scrip, 25 Aug, 2010.).

After receiving responses from 38 parties ranging from Indian and global pharmaceutical associations to legal experts, patient groups and academics, the government concluded the Indian Patents Act provided adequate guidance for compulsory licenses. "The circumstances of application of each of the relevant sections will depend upon the facts of each case," the government said. Responses to the DIPP's request came from as far off as Thailand, South Africa, the United States, U.K. and Japan (Also see "Stage Set For India To Frame Compulsory Licensing Provisions As Contrasting Groups Make Their Case" - Scrip, 4 Oct, 2010.)

IPA & OPPI: Happy But Divided Outlook

D. G. Shah, who represents 13 of the largest Indian companies as secretary general of the Indian Pharmaceutical Alliance, told PharmAsia News that it may not be feasible to frame guidelines, as each product may have its own characteristics. "In some cases, a HIV compound can cost 20,000 Indian rupees and in some cases it may be as little as 20 Indian rupees," he said, stressing that the situations may vary greatly, such as royalty payments to global companies from the Indian generic firms.

Shah said the laws should not follow rigid norms and praised the government for determining compulsory license provisions on a case-by-case basis.

But the Organization of Pharmaceutical Producers of India, a powerful lobby that represents global MNCs, said that the government should desist from sending mixed signals to the global industry on imposing restrictions on foreign direct investments in the pharmaceutical sector.

OPPI President Ranjit Shahani pointed to recent news reports that spoke of allowing foreign investments only to greenfield projects in India. "India needs a 'complete ecosystem ' which encourages investments in the innovative pharmaceutical industry," Shahani, who also holds the position of vice chairman of Novartis India, said.

Shahani, however, said he was pleased to see that the DIPP concluded that there is no need to issue additional guidelines for the issue of compulsory licenses. "It is also a reaffirmation of OPPI's views and the views of the research-oriented pharmaceutical industry," he said.

Government Cautious

Noting the sensitivity of the issue, the government advised the controller general of patents to ensure that the power to grant compulsory licenses is exercised with due care and caution, further cautioning not to delegate the power to a subordinate authority. The senior-most official in charge of patent issues has also been requested to ensure that all compulsory license applications are decided promptly (Also see "Cipla Targets Merck's Leading Anti-HIV Brand Isentress; Applies For Voluntary License In India" - Scrip, 1 Apr, 2011.).

DIPP directed the controller of patents to ensure prompt and effective compliance with all the reporting requirements of patentees as per the Indian Patents Act.

CL: A History Of Conflict

The issue of compulsory licensing has been one of the biggest points of conflict between Indian and multinational drug firms. Lobbies representing foreign firms, such as OPPI and PhRMA warned that proposals to allow government-owned or private companies to manufacture products or technologies patented by other companies can discourage overseas investments in India and go against the principles of protecting intellectual property.

"We do not believe that compulsory licensing of patented inventions is a sustainable or viable course of action to address India's healthcare challenges, as these products account for much less than 1% of [the] Indian drug market," OPPI said in its response to the government.

The Indian Patents Act outlined the compulsory license policy as having an overarching objective to enable access to medicines at affordable rates.

With Indian companies like Natco Pharma Ltd. and Cipla Ltd. getting aggressive on compulsory licenses for key drugs like Bayer's Nexavar (sorafenib), Pfizer's Selzentry (maraviroc) and Merck's Isentress (raltegravir), it will be important to see how the Patent Office makes its next moves, according to an executive at an Indian company.

The executive said that the Indian government is still serious about the spate of big buyouts by large MNCs while there could be more proposals from Indian companies seeking voluntary licenses from global pharmaceutical heavyweights.

- Vikas Dandekar ([email protected])

[Editor's note: This article appears courtesy of PharmAsiaNews.com, Elsevier Business Intelligence's source for Asian biotech and pharmaceutical news. Register for a 30-day risk free trial.]