It was before the French Revolution that when the peasants went to their queen, Marie Antoinette to spill their grievances that she said “if the people didn’t have bread let them eat cake”. This analogy has been used whenever any authority has waived the grievances of the poor stating that they had other options to survive. In the present scenario it was the Controller of patents not granting a compulsory license to Lee Pharma for the drug Saxagliptin, that drew parallels to Antoinette for certain people. It is interesting to note that this decision came a few days after the DNA reported that the RSS had urged the Indian government to grant automatic compulsory licensing to drugs to help reduce the cost and benefit the poor. At first glance you might feel that the Controller acted a bit like the French Queen, but on reading the detailed and well laid out judgement, you see the reason for taking this decision. For a better understanding of the concept of compulsory licensing and the case concerned you can read my colleague’s blog.

India entered the watch list of international pharmaceutical companies when it granted a ‘compulsory license’ to produce a generic version of the patented medicine Nexavar (an anti-cancer drug used in the treatment of Liver and Kidney Cancer) of the German Pharmaceutical Bayer’s AG. Company in 2012, which allowed the drug to be produced by Natco Pharma Ltd., and sold in India at a much lower cost. A compulsory License, when granted, allowed the Indian company to make the drug and sell it and pay the patent owner a royalty fixed by the Controller. The process is not that simple and the request for a CL can only be granted after a voluntary license has been denied by the licensor. After which the applicant had to prove the said three grounds for the grant of a Compulsory License, as stated in Section 84, of the Indian Patent Act.

Though India risked facing the ire of many international pharma Moghuls, it stood its ground and upheld the old ideology of the welfare state in the Nexavar matter. India is a signatory of the TRIPS Agreement (Trade Related), which under Article 31, which talks about ‘other use without the authorization of the right holder’. Section 84 of the Indian Patent Act is an incorporation of the Article 31.

In the second case India did not grant the compulsory license for the anti-cancer drug that was Patented by Bristol Myer Squibb. The Controller in his order stated that the applicant B.D.R Pharmaceuticals International Pvt. Ltd had failed to show that it had used a credible amount of effort to acquire a voluntary license.

In the present case the Controller refused to grant CL to the Hyderabad based Lee Pharma for the production of the drug Saxagliptin. The patent was owned by AstraZeneca. The drug sold in the market under the name Onglyza. This drug was used in the treatment of Type II Diabetes.

The Controller gave well-articulated reasons for the refusal under each of the grounds under Section 84 (1) as specified below:

  1. Reasonable requirement of the public with respect to the patentable information has not been satisfied
  2. that the patented invention is not available to the public at a reasonably affordable price.
  3. that the patented invention is not worked on in the territory of India.

The 1st ground seemed to be the deciding factor in the present case. The order stated that Lee Pharma had failed to prove that a reasonable requirement of the public for the subject drug, against the other drugs of the similar composition. They could also not prove that the price of the said drug was much higher than that of the competitors. They also failed to convince the Controller that, by granting CL the cost of the drugs would reduce considerably, allowing people from the marginalized society to buy it. They also failed to show that the subject could not be substituted by the similar drugs.

Is there more than what meets the eye?

What follows is only my assumption on reading the case, and letting the Order brew, along with a stirring of research.

With India fighting tooth and nail to be in the good books of America and most of the other developed nations, to invite FDI; it is but necessary to show that India respects the Intellectual Property Rights of other nations and has a strong body enforcing it. Granting Compulsory Licenses would make the investors wary of stepping foot in India. It is pertinent to note that Compulsory Licenses are not limited to drugs. As stated earlier when India granted the first compulsory license ever, it became a place where international pharmaceutical companies feared to tread.

Another deduction being that, by granting a compulsory license, what India is doing is allowing the Indian pharmaceutical companies to try and use another company’s patents for their benefit and still pay the other company a fixed sum of compensation. There is no inventiveness on the part of the Indian company. India was ranked, just 3 places from the bottom in a list of 56 nations in a recent metrics on impact on global innovation, by the US think tank Information Technology and Innovation Foundation. This list comprised of the nations that were responsible for 90 percent of the world economy. Being in the bottom three is not a proud spot to be, especially given India’s wealth of knowledge.

With millions spent on R & D in pharma it is a valid requirement that India should come up with a cheaper alternative to expensive drugs that have to be imported. As stated by Lee Pharma these drugs were being imported into India, which increased the cost considerably. What Lee Pharma could do was to put some time into research and make a drug that was cheaper than the competitor’s, patent it and sell it in India. Think of how many people it would benefit, not just the patients with Type II Diabetes, but also provide employment to people, both skilled and unskilled.

India has had its share of being fed ready made products and it is time that the researcher the inventor and the entrepreneur, wake up and make India a self-sufficient economy. Also I duly conclude saying that the Controller’s reasoning for the Order bears no kinship to that of the French Queen, and his reason for not granting the CL maybe blessing in disguise for the poor. We can only wait in hope that Indian companies try to invent rather than to rely on the inventiveness of others.

This article has been authored by Shwetha, an IP Law practitioner.