India looks like it is headed for a cancer war—one that is different from fighting the disease. Last week, pharmaceutical firm Cipla Ltd announced that it was substantially reducing the prices of three anti-cancer medicines. On Tuesday, a Reuters report, quoting Cipla chairman Y.K. Hamied, said the company is mulling cutting prices across its entire range of anti-cancer drugs. And last week, the German drug maker Bayer AG appealed to the Intellectual Property Appellate Board against a compulsory licence issued to a domestic rival to produce a generic version of its patented anti-cancer drug Nexavar.
Cipla’s price cuts (up to 76%) will provide relief to a large number of cancer patients in India, only a fraction of whom can afford chemotherapy without the treatment blowing a hole in their finances. Seen from that perspective, compulsory licensing—now believed to be a moving force behind drug makers taking a hard look at the high prices of these medicines—appears to be serving a useful public purpose.
There is, however, a trade-off here: firms whose products are subjected to compulsory licensing, and others as well, may not innovate to create new drugs or, if they are located abroad, may not even want to introduce new medicines in the Indian market. There is a good chance that drug makers may not be able to recover their research and development (R&D) costs in case such an action occurs early in the life cycle of a new drug. This is a problem that involves not only anti-cancer medicines but cuts across a spectrum of drugs used to treat various diseases. In the short run, compulsory licensing will provide relief to many, especially the poor. But in the medium and long run, the danger is that the pipeline of new molecules to treat different—many currently incurable—diseases will dry up.
As a result, compulsory licensing is a contentious issue. There are other problems: foreign firms and even governments view it as a forcible weakening of intellectual property (IP) rights even if it is permitted by law. This is fast turning into a major bilateral issue between the US and India. If these frictions are not handled carefully, there is a danger that they can evolve into a major trade dispute. This is because drug makers based in the US and other parts of the West spend substantial sums on R&D. Countries such as India, by licensing these drugs, threaten profits. The government needs to carefully consider the trade-offs between making vital medicines available at a reasonable cost and important IP issues that can create problems in the medium run.
Is compulsory licensing a necessary evil? Tell us email@example.com