If the government grants Hyderabad’s Lee Pharma a licence overriding AstraZeneca’s patent, more than 60 million diabetes patients will benefit.

A little known pharmaceutical company of Hyderabad has again lit the fuse to the volatile issue of access to medicines and patent rights in India. Lee Pharma has applied for a compulsory licence to produce a cheaper version of a patented medicine to treat diabetes, a move that is likely to set off a furious global debate on the contested aspects of India’s patent law.

A patent gives a company that has developed a new drug the sole right to manufacture and sell it. The monopoly normally lasts for 20 years. An international agreement called TRIPS is administered by the World Trade Organisation to ensure patents are enforced across member-countries. But there are flexibilities that allow governments to override patents to meet public health requirements, primarily through a compulsory licence. This licence is issued without the patent owner’s consent to allow another company to manufacture a less-expensive generic version. However, a royalty rate is paid to the innovator company.

Very few compulsory licences have been issued globally, yet, pharma companies view them as a violation of their intellectual property rights. India has issued just one compulsory licence, for a cancer drug, after it amended its patent law in 2005 to comply with World Trade Organisation’s requirements. A second application for a compulsory licence, also for a cancer drug, was rejected for failing to follow procedures. Lee Pharma’s application is the third to be filed in India.

Diabetes drug
On June 25, Lee Pharma applied for a compulsory licence to manufacture saxagliptin, a drug to treat type-2 diabetes. The drug was originally patented in 2007 by Bristol-Myers Squibb, an American company, and later transferred to the British-Swedish company, AstraZeneca.

India has 66.84 million diabetics, of whom 90% suffer from type-2 diabetes mellitus which has no cure but can be managed through medication. Another 77 million are pre-diabetic or borderline cases. The country is in the midst of a diabetes epidemic with even the poor suffering from this lifestyle disease.

Lee Pharma states in its application that type-2 diabetes is now shifting to a younger population in the 25-35 years age group and imposes a heavy economic burden on their families. It quotes studies that estimate low-income families would be setting aside a quarter of their income for diabetes care.

The company appears to have plumped for saxagliptin – it is sold under the brand name of Onglyza in stand-alone form and as Kombiglyze XR in combination with another active ingredient – because it provides effective treatment for type-2 diabetes patients without any weight gain.

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Marshalling its arguments for the issue of a compulsory licence, Lee Pharma says it has met all the three criteria listed under section 84 (1) of the Patents Act, 1970, although just one ground is enough. Compulsory licences are issued if the reasonable requirements of the public have not been satisfied, either because the drug is not widely available, or it is not sold at a reasonably affordable price, or if the patented invention is not being produced in India.

“Even after eight years [from grant of patent], saxagliptin is not manufactured in India and all forms of the compound are imported,” states Lee Pharma in its application. The company calculates that these imports meet just a dismal 0.23% of the total annual demand. Moreover, the drug is not “available at a reasonably affordable price”. The company claims that the cost of the imported standalone formulation is just 80 paise per tablet but is sold at Rs 41-Rs 45, whereas the combination drug is priced at Rs 49 per tablet against the imported cost of 92 paise. Lee Pharma intends to sell its generic product at Rs 30 per tablet.

Renewed expectation
Health experts and activists think that Lee Pharma’s move marks the beginning of a new spring on compulsory licences after a long barren winter. Why is there a renewed sense of expectation despite the country’s poor track record on compulsory licences?

For one, Lee is also a manufacturer of APIs or the active pharmaceutical ingredients which are the central component of a drug. For another, API process technology is a key driver lowering prices of generic drugs. This has led pharma companies to seek patents on APIs as well. Warned Leena Menghaney, a lawyer working on public health law and policy: “Patents on APIs are slowly creeping in and will have a chilling impact on generic manufacture.”

According to Menghaney, compulsory licence applications by API manufacturers must be reviewed carefully because the courts, the Delhi High Court in particular, have been issuing injunctions on licence applications which bar the companies from pursuing their case. This has a serious impact on competition and access to affordable medicines. “It is time the Patent Office worked independently of political pressure to take up compulsory licence applications,” she said.

Cancer drugs
India faced a firestorm over its patent policy after it issued its sole compulsory licence to Natco Pharma of Hyderabad in March 2012 to manufacture a generic version of the cancer drug sorafenib tosylate (brand name Nexavar). The German company Bayer which held the patent over the drug contested the compulsory licence vigorously in the Patent Office and all the way to the Supreme Court for almost three years. In December, the Supreme Court appeared to put the lid on the controversy when it dismissed Bayer’s Special Leave Petition against the Bombay High Court’s decision upholding of the licence and allowed Natco Pharma to go ahead with the sorafenib’s production.

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The drug used to fight liver and kidney cancer was sold by Bayer at a cost of Rs 2.8 lakh for 120 tablets, required to be taken as one month’s treatment, while Natco was able to market its generic version at just Rs. 8,800 for the same number of tablets – an astounding 97% drop in prices.

The moot point is that if the compulsory licence provisions of India’s patent laws were not compliant with WTO regulation, member-countries would have dragged India to the disputes body. That has not happened so far because there are no grounds to challenge the 2005 patent amendments. Last month, in a review of India’s trade policies, the WTO panel gave the country a clean chit on intellectual property rights protection.

However, large pharma companies, US business lobbies and top trade officials have not relaxed their high-octane campaign against India’s policies which they claim do not provide due protection to intellectual property rights. This has made the Commerce Ministry’s Department of Industrial Policy and Promotion, the nodal agency handling patent issues, noticeably wary of granting compulsory licences, allege activists.

“My question is why just one compulsory licence for cancer treatment when there are so many other drugs in the same class as sorafenib?” demanded Menghaney. “Cancer patients are calling me day and night desperately pleading for drugs to be provided on humane grounds. Most Indians cannot afford the new cancer drugs which cost a bomb.”

This is a country where most people have no medical insurance, where there is no public health service to cater for such patients and where even those with private medical insurance find they are not covered for cancer, she says. The government should not buckle to the pressure of multinational companies and the US Trade Representative, according to the activist-lawyer.

Making drugs affordable
India has shown the world how prices of patented cancer medicines plummet dramatically, by over 90%, when unrestrained generic competition is allowed. The earliest example was that of the blood cancer drug imatinib mesylate made by Swiss drug giant Novartis. While its patent claim was being processed in 2005-’06, the drug was selling at Rs 1.2 lakhs for a month’s course with each tablet costing Rs. 4,628.

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A clutch of Indian manufacturers was selling generic versions for less than a tenth of that price, with the cheapest going for as little as Rs 9,000 for a month’s course. Fortunately for cancer patients, the Glivec drug failed India’s strict patenting norms. After a seven-year long legal battle, the company lost its case in the Supreme Court.

In a recent note sent to the Inter-ministerial Committee for Pricing on Patented Drugs, the Campaign for Affordable Trastuzumab, which was formed in 2012 to challenge Roche’s monopoly on the exorbitantly priced breast cancer medicine trastuzumab, pointed out the salutary effects of compulsory licences on expensive drugs. Even the looming threat of a compulsory licence was enough to force some drug giants to slash prices of life-saving medications.

For example, when trastuzumab was launched in India in 2011, it was priced at over Rs 100,000 a vial. In March 2012, soon after Natco got the compulsory licence for sorafenib, Roche cut the price of trastuzumab from Rs 1.08 lakhs per dose to Rs 92,000. A little later, when a committee of the Ministry of Health considered recommending the grant of a compulsory licence it trimmed the price further to Rs 72,000 – a 33% drop from the original price.

There was more to come. When the likelihood of a compulsory licence became stronger in July 2013, Roche relinquished its patent on trastuzumab in India, thus allowing the world’s first copy of the breast cancer drug to be launched in January 2014. With more companies expected to release competing versions, the price is expected to drop further from the current Rs 40,000.

Kalyani Menon-Sen, campaign coordinator of the campaign, says the price of new generation of cancer medicines “poses an important challenge for India”. While the multinational drug industry and its associations continue to oppose compulsory licences and push developing countries towards tiered pricing, she says, “Experience shows clearly that such measures as negotiated price reductions and tiered pricing do not result in any significant expansion of access, since prices continue to remain beyond the reach of most citizens”.

Will all this convince the Indian authorities or are they likely to choose the line of least resistance? We should know in a few weeks whether India has been intimidated by the drug multinationals or is willing to take them on. #KhabarLive