Pharmaceuticals: Compulsory licensing & reasonable efforts

Globally harmonised patenting laws recognise the sovereignty of nations like India which retain the right to compulsory licensing. This is in case the patent holder does not manufacture sufficient quantity of drugs, as demanded by the market or doesn’t sell it at a reasonable price. A compulsory license can be granted by the government to a domestic pharmaceutical company with desired competence to manufacture patented drugs. But, there is a prerequisite. The domestic company  first has to make reasonable efforts to get a voluntary license from the patent holder. In the absence of evidence of making such reasonable efforts, the applicant’s right to seek a compulsory license is not triggered.

Last year, India granted the first compulsory license for Bayer’s Nexavar to Indian generic drug company Natco. Maybe, encouraged by this, another Indian company BDR Pharmaceuticals filed a compulsory license for anti-cancer drug Sprycel, brand name used by Bristol Myers Squibb for active pharmaceutical ingredient Dasatinib. It is patented in India with number IN203937. BDR sent a letter to Bristol asking for licensing the drug to which the latter responded by raising certain queries. BDR preferred not to reply and instead filed an application with the patent office for the grant of a compulsory license for the drug.

The question that needs to be answered is whether if BDR made reasonable efforts in negotiating for a voluntary licensing agreement with the patent holder. Calling such an agreement ‘voluntary licensing’ makes sense as the other one is the ‘compulsory licensing’ which the government forces upon the patent holder. However, an agreement by definition has to be voluntary. Now, in the present case, just by writing a letter requesting the patent holder to grant it a license does not suffice for reasonable and adequate efforts by the applicant. And the case of the applicant is further weakened when it fails to answer queries raised by the patent holder.

On the assumption that a simple letter requesting license would be adequate, it would be a nightmare for pharmaceutical companies doing business in India and holding patents. This is so, as there maybe a large number of applicants simply sending requests and not receiving a reply or receiving a request for further details deemed to be rejected. The government in such a scenario would be flooded with requests for compulsory licensing which surely had not been the intention of the legislature while enacting a law regarding pharmaceutical patents in India.

It is a good decision by the patents office in India and must be applauded for another reason. In the recent past sentiments of multinational pharmaceutical companies have been hurt. The first reason is the grant of a compulsory license last year and the second is the rejection of appeal by Novartis for recognition of incremental patent in April this year by the Supreme Court of India.

There is no doubt that India is a sovereign country, and it is the duty of the legislature, executive and judiciary to protect the interests of its people.  However, we need not forget that there are certain international commitments India has made, and one of them is the protection of intellectual property rights in the country according to the Trade Related Intellectual Property Rights (TRIPs) agreement of World Trade Organisation (WTO).

India should rightly bother about the realistic situation of the availability of drugs produced as a result of years of research which are needed for the large population. Moreover, if India wants the multinational companies to set-up production units in India, it is necessary that a favourable environment is created. Also decisions in line with reasonableness and common sense go a long way in such a process.