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Mumbai: India’s decision to invoke compulsory licensing laws to allow a generic drug maker to make a copy of a patented drug for the first time has evoked a mixed response.

The order was issued by patent office chief P.H. Kurian on the day he handed over charge to successor Chaitanya Prasad.

Natco Pharma Ltd, the compulsory licensing applicant, has said it will sell the drug at 8,880 for a month’s dosage against the 2.8 lakh that Bayer charges. Natco will pay 6% of net sales as royalty to Bayer.

Some companies saw the decision as undermining time and money invested in research, while others said the decision would make medicines more affordable.

“This decision marks a precedent that offers hope: it shows that new drugs under patent can also be produced by generic makers at a fraction of the price, while royalties are paid to the patent holder," Tido von Schoen-Angerer, director of global healthcare group Médecins Sans Frontières’ Access Campaign said. “This compensates patent holders while at the same time ensuring that competition can bring down prices."

Foreign drug makers were concerned that the decision would set a precedent for similar rulings.

“No compulsory licence should be granted to serve the commercial interest of anyone," said Ranga Iyer, former managing director of US drug maker Wyeth Ltd in India, and an India representative at the Pharmaceutical Research and Manufacturers of America (PhRMA). “Rather, the government should have initiated a dialogue with the patent holder to find other solutions to pricing and access issues."

Kurian had observed that there was no clear evidence to show that Bayer’s patent worked in the country. The law requires that a patent cannot be considered to be working if the patentee continues to import the drug, he said.

The decision interprets “working" as “local manufacturing within India", which could lead to global drug companies challenging the decision, said IP law experts.

“By this interpretation, more than 90% of drugs imported into India may be subject to compulsory licensing. If upheld, this could lead to a sharp drop in prices, apart from multinationals seeking more partnerships with Indian generic makers to locally manufacture patented drugs to help ward off compulsory licensing orders," said Shamnad Basheer, a patent expert and a professor at the National University of Juridical Sciences, Kolkata.

Michelle Childs, also of Médecins Sans Frontières, said the World Trade Organization’s trade-related aspects of intellectual property rights agreement recognizes compulsory licences as a legal means of overcoming barriers in accessing affordable medicines.

“The Indian decision in fact mirrors similar moves made in other countries, including the US," she said. “In February 2011, the US Patent Office decided not to prevent a ‘generic’ medical device used for skin grafts from being sold, but rather insisted that its manufacturer pay royalties to the patent holder."

Spicy IP, a blog run by patent experts, said the ruling may spur other generic makers to resort to this route.

“Many have been puzzled by the lack of initiative shown by generic companies in availing of the extremely wide compulsory licensing grounds articulated in India’s patent regime," the blog said.

The legal route that Natco chose was cumbersome and expensive, said Dilip G. Shah of the Indian Pharmaceutical Alliance.

“It should have been much easier had the government itself initiated this exercise, considering that the access to this critical drug is being blocked by a patent monopoly," he said. “I am sure that Natco cannot even in the long term recover the cost that it incurred on this lengthy procedure by selling this product at the stipulated price."

Bayer is likely to appeal against the order. At the same time, Cipla and Natco have challenged the validity of Bayer’s patent in a separate proceeding before the Delhi high court and the Intellectual Property Appellate Board.

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