Generics Drive Down Drug Prices In India, TPP Trying To Stop That

from the really-sick dept

Back in March, we wrote about an important development in India, where a compulsory license for Bayer's Nexavar anti-cancer drug was granted. Bayer, of course, is fighting back:

in its 37-page appeal to the Intellectual Property Appellate Board, Bayer has "demanded the withdrawal of the country’s first compulsory license given to Natco Pharma, arguing that a three-fourths reduction in the price of the anti-cancer drug by another Indian firm has made the permit redundant and its patent itself is vulnerable to being revoked," the Economic Times, India’s leading business newspaper, reported on 19 May. Bayer says CIPLA’s new price "will render Natco’s price unreasonable and defeat the purpose of compulsory licensing," according to the newspaper.

As that shows, there's been an interesting twist in this story. Cipla, another Indian manufacturer of generics, has announced that it too is coming out with a version of Nexavar, pricing it at $125 for 120 tablets. That's even cheaper than Natco's price of $163, to say nothing of Bayer's $5,128 for the same course. A key difference is that India's Patent Controller has granted a compulsory licence to Natco, but not to Cipla. In fact, Bayer has said that it is taking Cipla to court over its production of a cheap version of Nexavar.

Bayer is employing some very strange logic here. On the one hand, it is saying that Cipla's cheaper version of Nexavar means that Natco's licence is no longer needed, and should be revoked. On the other, Bayer is suing Cipla because it has produced Nexavar without the compulsory license that Natco has. Clearly, Bayer hopes to get the best of both worlds -- the revocation of Natco's compulsory licence, and a court ruling against Cipla, which would leave Bayer once more as the only supplier of Nexavar.

Bayer seems to be trying to make that outcome more palatable by emphasizing that it has already reduced the price of Nexavar for some people:

Bayer stresses that to facilitate access for patients to innovative treatments, it has had a Patient Access Programme in place since the launch of Nexavar in India in 2008. Bayer says that this programme, last expanded in April 2012, reduces the price for the monthly treatment with Nexavar for qualified persons to about a tenth of the regular pharmacy price (Rs 280,000 or $5,128) for the complete duration of treatment.

But it's not clear how many patients have actually benefited from this program. And in any case, the reduced price of $512 per 120 tablets is still three times higher than Natco's pricing, which would put it out of the reach of many poorer patients. Compulsory licensing, by contrast, has driven down the price to $163, and maybe even to $125 if Cipla is allowed to offer it too. In other words, the availability of indigenous alternatives has caused the price to drop from completely unaffordable levels to ones that are more realistic for the India market -- exactly as generics are supposed to do:

Health advocates and cancer patients are happy that the fight between the big brand-name pharmaceutical producers and local generic drug makers is making cancer drugs cheaper. The vast majority of Indians don’t have any form of health insurance and out of pocket payments continue to be among the highest in the world. Cancer has also become one of the ten leading causes of death in India today. It is estimated that there are nearly 2 – 2.5 million cancer cases at any given point in time in the country.

Against that background, provisions in TPP that will make it much harder for local manufacturers to produce low-cost generics legally are troubling. They represent a clear attempt by the US to prevent the kind of access to vital patented drugs that India's compulsory licensing has permitted. Western pharmaceutical companies and their shareholders may rejoice if that happens, but many of those in emerging economies who are unable to afford life-saving medicines will die as a result.

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Filed Under: access to medicine, drugs, generics, india, tpp
Companies: bayer, cipla, natco

Putting Lives Before Patents: India Says Pricey Patented Cancer Drug Can Be Copied

from the hello-compulsory-licenses dept

India has an interesting relationship with pharmaceutical patents. In 1970, India did away with drug patents entirely, believing it would help create a domestic drug industry. And it worked. As we discussed in the past:

2,237 licensed drug manufacturers in 1969-1970 grew to 16,000 by 1991-1993, production of drugs grew at an average rate of 14.4% per year from 1980 to 1993, India became a net exporter of pharmaceutical products, and the market share of foreign multinational corporations (MNCs) dropped from 80-90% to 40% (Fink 2005). In 1995, six of the top ten pharmaceutical firms in India were domestic, and employment in the sector had reached half a million people

Now, remember how people say that without intellectual property, industries protected by those monopolies collapse? Yeah, the opposite happened in India. And yes, many were producing generic versions, but not all of them were. Either way, despite all of this success, the international community, pressured by the big pharmaceutical firms, cracked down on such practices, and demanded that if anyone wanted to join the WTO -- an important organization for large countries to be a part of -- they had to recognize pharmaceutical patents as per the TRIPS agreement. India finally did so in 2005.

However, one key point in TRIPS that developing countries such as India and Brazil have paid close attention to is the fact that they can force a compulsory license on a drug patent holder in the interest of public health.

For the first time since re-instating patents on pharmaceuticals, India has granted just such a compulsory license, covering a kidney and liver cancer drug marketed under the name Nexavar. Indian generic drug company Natco requested a license, noting that Nexavar was in short supply in India and exceptionally expensive. A typical dosage costs around $70,000 per year in India -- something Bayer says is necessary to recoup the drug's R&D costs. However, reports show that it cost less than $300 million to develop this drug (not to mention that the US government subsidized the process) and Bayer has already made billions selling the drug around the world. In a detailed ruling (pdf and embedded below), India's Controller of Patents (nice title) granted Natco the right to make the same drug, requiring it to sell it at a significantly lower price than Bayer sells Nexavar for, and then pay back to Bayer a 6% royalty rate (which is actually at the high end of what the UN recommends). Natco has to make the drug itself and can't name it Nexavar, make it look the same or even state that it's the same as Nexavar -- but it can make its own version of the drug and sell it, and the license lasts the life of the patent. Bayer can and almost certainly will appeal, but this is going to be interesting to watch for a few reasons.

The real question here is how the US will react to this. The Obama administration has been trying to exempt drugs that treat non-communicable diseases (such as cancer medication!) from such compulsory license rights. In the meantime, the big (non-Indian) drug companies have been working hard to lock up the Indian drug market with patents. Not surprisingly, the Obama administration and the big drug companies have a cozy relationship when it comes to dealing with patents in India.

It's likely that you'll start to hear some rumblings from the US government about how this kind of ruling is a "problem" and how India isn't "respecting" international patent law. Expect to see diplomatic pressure placed on India to put limits on its compulsory licensing program, and potentially even noises about how India has to change its patent laws to "update" them and "harmonize" them with the world. Also don't be surprised if stuff like this leads India to jump up the charts on next year's Special 301 reports from the USTR, which list "naughty" countries. It's probably too late to make it into this year's list for this particular move. Is it really any wonder that India is so worried about ACTA? It knows that ACTA is entirely about ratcheting up enforcement, without any exceptions for things like this where something as important as saving lives comes into play.

Filed Under: cancer, compulsory license, health, india, nexavar, patents, pharmaceuticals, trips, wto
Companies: bayer, natco