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A welcome first -TK Rajalakshmi

Industry reacts with caution to the grant of a compulsory licence to Natco, but cancer patients welcome it and hope for many more.

THE first compulsory licence (CL) issued by the Indian patent office, to the local drug manufacturer Natco Pharma Ltd to sell the generic version of Bayer AG's anti-cancer drug Nexavar, has led to varied reactions. The landmark decision has also raised concerns about the outcome of cases of a similar nature pending in court. The decision also assumes importance in the context of the government's plan to deliver universal health care as recommended by the high-level expert group appointed by the Planning Commission. Incidentally, the generic form of the drug is still expensive for many, at Rs.8,800 for a month.

While the pharmaceutical industry has reacted to the decision with overarching caution and disappointment, cancer patients have welcomed it and are hopeful of many more similar decisions. The Organisation of Pharmaceutical Producers of India (OPPI), a platform largely of foreign companies, expressed disappointment with the judgment. In a statement, Ranjit Shahani, OPPI president and head of Novartis India, held that compulsory licences should be used only in exceptional circumstances, such as in times of a national health crisis. If used arbitrarily, compulsory licences will serve to undermine the innovative pharmaceutical industry and will be to the long-term detriment of the patient, he said. His argument is that for better access, improved health-care infrastructure and distribution are needed. Pharmaceutical companies have argued that they can have a system of differential pricing for different countries.

According to S. Srinivasan of the Vadodara-based organisation LOCOST (Low Cost Standard Therapeutics), differential pricing has never worked. “It depends on the market which is the beneficiary and whether there won't be reverse leakages in the market. It also has a bit of elimination of manipulation of the market without market forces coming into play fully, and [it] can also be an argument against compulsory licences and local development of technology and backward integration. It is a bit like voluntary licensing – of, say, Tenofovir – without even benefits of any semblance of local manufacturing, such as it is with a voluntary licence. Generally, it is a device to hold a market captive and dependent on one manufacturer, usually the innovator. More importantly, it inhibits any questioning of pricing and costing per se of the product, investing the manufacturer with an undeserved halo,” he told Frontline.

“The basic issue is that these drugs are priced completely out of reach for the poor person,” said a cancer patient who is on Glivec, which he accesses free at a leading government hospital in Delhi. He toldFrontline on condition of anonymity that the outpatient ward of the hospital was crowded with blood cancer patients. The medicine was being given free under the Access Programme of the company. In that particular hospital, there were three OPD sessions in a week, with each session being attended by nearly 125 patients, he said. The bulk of the patients came from the rural hinterland and there were very few patients from the middle classes, he added.

“This is what happens just in one hospital. One can only imagine the number of needy patients,” he said. He said that if he bought it from the open market, it would cost him Rs.1.5-2 lakh a month. “The only reason I am able to use the drug is that even as exclusive marketing rights were given to the company, the condition was that it would provide the drug to needy people. In the case of this drug, the court held that under the Indian patent law generic production was permissible and rejected the patent on the drug.” The company has challenged this in the Supreme Court.

He said that even for the “needy persons”, proof of income was demanded by the company. “I am an income-tax payer and I legitimately file my tax returns. I passed the criteria to get the medicines free,” he said. The government, he added, had taken a proactive line after the Left parties pressured the government to make several changes to the Indian Patents Act in 2005. “The Left parties proposed as many as 13 amendments to the draft Patent (Third) Amendment Bill, 11 of which were passed by Parliament,” he said.

As one who has been on the drug for nearly six years, he said he had to buy it from the market for the first four months. He said: “I used to pay Rs.14,500 then, which was roughly equivalent to my monthly salary. Then I applied for the scheme and my application was sent back to the parent company. I have learnt now that the company has circulated a letter to all its patients stating that from 2012 onwards all new patients will have to pay Rs.10,000 a year and that they will not be able to provide the medicine free any longer…. I cannot say I am out of the woods, but without this drug I wouldn't be talking to you today.”

The Indian Drug Manufacturers' Association (IDMA), too, has welcomed the compulsory licence awarded to Natco. Gajanan Wakankar, executive director of the IDMA, said it was a very good step for cancer patients and for the government, which appeared committed to providing access to medicines. “Between profit and profiteering, there is a very thin line. In this particular case, involving Bayer, it was not a case of reasonable profits,” he said.

Compulsory licensing, he said, was a provision accepted under TRIPS [Trade-Related Aspects of Intellectual Property Rights] and was applicable all over the world, including the United States. The prime reason was to prevent the abuse of monopolies. Multinational firms should recover their costs incurred in research and development, but when the costs exceeded by a wide margin it was tantamount to profiteering, he said. The decision of the patent office seemed to have had a positive effect, he added.

On the issue of differential pricing by pharma companies, Gajanan Wakankar said there were ways to do it under the voluntary licensing system, but most companies were not doing it. He gave the example of the anthrax scare in the U.S., where the government threatened to issue a compulsory licence for the cure, and thereby ensured a reduction in the price.

He said Natco, which happens to be one of the IDMA's oldest members, had wanted a voluntary licence from Bayer for the drug but the latter refused. He explained that drug production even under compulsory licensing was difficult for ordinary companies because they had to employ highly qualified scientists who had the expertise and know-how to produce the same. The IDMA was largely responsible for pushing and drafting the Patents (Amendment) Act, 2005. “There will be litigation but we hope that the law stands the test,” he said.

Loon Gangte, representative of the Delhi Network of Positive (HIV) People, also welcomed the patent office's order, terming it a “beautiful precedent”. He said all third-line and second-line HIV drugs were patented. While the government had started rolling out second-line drugs, it was a matter of time before resistance would develop and third-line treatment would be required, he said. He said that while the government was being proactive, it was also a fact that there was not a single HIV drug that was not patented.