Patent is granted for protection of invention that is novel, involves inventive step and has commercial use. Patent owner has exclusive right to make, use and sell its invention for 20 years and hence enjoying monopoly over the product for a certain time period. It can lead to rise in prices of the product that may be essential like drugs and medicine and thus making it unaffordable for the developing and under developed countries. This is the reason that the concept of compulsory licensing was introduced.
It is the authorization given by government to the applicant for making, using and selling the patented product without the prior permission of patent owner. It is a non exclusive license. It is provided to prevent the abuse or misuse of patent rights.
TRIPS agreement under Article 31 recognizes the granting of compulsory licenses under certain conditions. In Doha Declaration, 2001 the granting of a compulsory license for the export of the patented pharmaceutical products to countries lacking in manufacturing capacities was permitted. India became a member state of the TRIPS agreement in 2005 and thus recognizing the product patent in India. Part XVI of the Indian Patents Act, 1970 provides provisions for compulsory licensing under section 82 to 94.
In 2012, Indian Government issued compulsory license for the first time for the drug Nexavar, an anti-cancer drug.
Conditions for granting compulsory license:
Section 84 of The Patents Act provides that, after the expiry of the three years of the patent, any person interested can apply for a grant of a compulsory license to the Controller General of Patents, Designs and Trademarks on following grounds:
- If reasonable requirements of the general public have not been satisfied in relation to patented invention; or
- If patented invention is not available to public at reasonable price; or
- If the patented invention is not worked in the territory of India.
It can be done when the proposed user has made an effort to obtain authorization from the patent owner on reasonable commercial terms and conditions and such effort has not been successful within reasonable period.
Section 92 of The Patents Act empowers the controller of patent to grant compulsory license suo moto on the grounds of:
- National emergency; or
- Extreme urgency; or
- Public non-commercial use.
Here there is no need to wait for the lapse of three years for granting compulsory license. On receiving application from central government for granting compulsory license, the controller has discretion to follow or not to follow the procedure provided under section 87.
For granting compulsory license, reasonable royalty is to be given to the patent owner. It is to be decided by having in regard the nature of the invention and the expenditure incurred in developing, obtaining and maintaining the patent (Section 90).
Compulsory license can be terminated by the controller when the circumstances under which it was issued, ceases to exist (Section 94).
Remdesivir: Whether a need to grant compulsory license
Gilead Science Inc. (U.S. based) holds the patent of Remdesivir. It is the only drug which has shown improvement in COVID-19 cases. Gilead has signed non-exclusive voluntary licensing agreements with generic pharmaceutical manufacturers based in Egypt, India and Pakistan to further expand supply of Remdesivir. The agreements allow the companies – Cipla Ltd.; Dr. Reddy’s Laboratories Ltd.; Eva Pharma; Ferozsons Laboratories; Hetero Labs Ltd.; Jubilant Lifesciences; Mylan; Syngene, a Biocon company; and Zydus Cadila Healthcare Ltd. – to manufacture remdesivir for distribution in 127 countries (mostly low-income and lower-middle income countries).
Under the licensing agreements, the companies have the right to receive a technology transfer of the Gilead manufacturing process for Remdesivir. This will help in increasing the supply of the drug. The companies can set their own prices for the generic product they produce. The licenses are royalty-free until the World Health Organization declares the end of the Public Health Emergency of International Concern regarding COVID-19, or until a pharmaceutical product other than Remdesivir or a vaccine is approved to treat or prevent COVID-19, whichever is earlier.
Hetero Labs Ltd. received approval for manufacturing and marketing Remdesivir from Drug Controller General of India (DCGI). It will be marketed under the name ‘Covifor’ at a price between Rs. 5,000 to 6,000 per dose. At this price, a five-day full course, would cost Rs.35,000-42,000.
Mylan has got approval from the DCGI and has fixed the price for 100mg/vial of the antiviral at Rs. 4,800 each. The approval is for restricted emergency use on COVID-19 patients. It will be made available under the brand name Desrem.
The prices can be increased or decreased by National Pharmaceutical Pricing Authority (NPPA) under paragraph 19 of Drug Price Control Order or 2013 in public interest or extraordinary circumstances.
So, as the royalty free licenses have been issued by the Gilead to 6 Indian Firms and therefore leaving the determination of price on NPPA. The drug is allowed to be manufactured for exporting to the countries which do not have access to the drug or which do not have manufacturing capacities.
The number of COVID cases is increasing day by day in India and this will directly lead to increase in demand for the drug in the country. These 6 firms are also to export the drug to under-developed and developing countries. Therefore, it will create a lot of burden on these 6 entities. Also the drug cannot be afforded by lower class or lower middle class (situation worsened by lock-down causing unemployment) at such high rates of Rs. 35,000 to 40,000. The price rates need to be lowered so that this vaccine is available to everyone.
So, either more firms should be given this non-exclusive license by Gilead and NPPA should fix a reasonable price or the controller suo moto should declare the grant of compulsory license for manufacturing the drug.
This article is written by Rawal Shweta and edited by Rupreet Kaur Dhariwal.