India’s First Doha Case: Has Nepal Issued a Notitication?

Pursuant to our posts on the Natco’s application for a Doha Style Compulsory license to export two anti-cancer drugs patented by Roche/Pfizer, there have been some articles on this theme in the mainstream media. We bring you two of them in this post. For our earlier posts, see here (in particular see the exchange with Tahir Amin in the “comments” section of the blog post), and here.

Tatum Anderson wrote a piece in IP Watch and Jonathan Allen reports on this in Reuters.

The Reuters piece has an interesting quote from a Roche spokesperson:

“Natco has offered 5 percent royalties on sales it makes to Roche and Pfizer, in keeping with TRIPS guidelines.

Asked to comment on Natco’s offer, a Roche spokesman said: “Tarceva is already available in India through Roche and therefore patients in Nepal have access to Tarceva.”

I’ve been trying to make sense of this statement. If Roche has made Tarceva available in India, how is it necessarily available to patients in Nepal?? The last I checked, these were two separate countries.

On a more serious note, this brings us to an important issue. Is Tarceva available to patients in Nepal, and if so, how is it priced? Unless we know this, it is very difficult to comment on whether Nepal has a “public health” problem. After all, section 92A cannot be invoked unless there is a public health problem.

Aren’t there any Nepalese reporters covering this issue who can give us more facts? Many missing links here, including: does Natco have drug regulatory approval to sell in Nepal; do Roche/Pfizer have regulatory approval and are they selling in Nepal etc etc.

Secondly, it appears that the Nepal notification is a mere authorisation from Nepal’s drug controller to a Nepalese distributor permitting imports of Natco’s generic drug–this authorisation does not speak of a public health problem in Nepal.

As far as Nepal is concerned, they can permit anyone to import these drugs, as there are no patents. But Natco cannot export, without complying with the terms of the Doha regime and section 92A–as otherwise, it would amount to patent infringement in India (since it manufactures in India).

Section 92A uses the term “notification” without stressing what the notification should contain. Can Natco argue that a mere import authorisation as above mentioned would therefore suffice? And that there need be no notification spelling out a clear “public health” problem in Nepal. Under a strict reading of section 92A, they might be able to do this–but the Doha regime clearly requires Nepal to notify the public health problem on the WTO website, spelling out the quantities of drugs it needs etc.

Also, importantly, section 92A uses the term “public health problem”. It would seem therefore that the notification would have to stipulate that there is a public health problem –or perhaps the section could be interpreted to mean that the existence of a “public health” problem could be established through other means–for eg. demonstrating that Tarceva is not available at all to patients in Nepal.

It is also important to note, that, till date, Nepal still hasn’t made any notification on the WTO website–and I am guessing that both parties must be lobbying the Nepalese government pretty hard now. The interesting legal issue here would be: can the Controller of Patents stay this compulsory licensing application till such time as such WTO notification in accordance with the 2003 Implementation Decision is made by Nepal? (section 92A itself does not specifically refer to Doha or any of it’s conditions).

Thankfully we’ll have some answers in the next couple of days: the hearing for the Tarceva case (Natco vs Roche) is tomorrow and the hearing for the Sutent case (Natco vs Pfizer) is the day after.

I was quoted in the IPWatch and Reuters articles referred above–and for the benefit of readers, I’m listing below some of the responses that I offered to the authors of the pieces above:

Q 1. What are the kind of opportunities presented by the Doha style licenses for India?

Ans: It’s interesting to note that when I interviewed some of the generic companies in the year 2005, none of them were really interested in using section 92 A, as they didn’t think it made economic sense to export to countries with low paying consumers. They didn’t think the margins would have been great. And most of them wished to focus on the regulated markets of the developed countries.

Of course, now it presents a huge business opportunity for them, as they must have recalculated potential business gains from these markets. More NGO’s operate in these markets and engage with drug procurement here, which means the chances of selling in larger quantities and making money is far better. A noteable example is the Clinton Foundation, which guarantees large orders to Indian generic companies that wish to supply to Africa etc—this helps with economies of scale and production costs etc.

Even apart from the economics of it all, this presents an excellent opportunity for them to work with newer drugs and hone up their technical skills. But for this window, they would have had to wait for the 3 year compulsory licensing window in India to elapse. Even assuming they waited 3 years, there is still no guarantee that a compulsory license would have issued, as they would had to satisfy one of the grounds under the Act (excessive pricing, lack of “working” in India etc).

However, Natco has only just applied for a license and one is not certain on the kind of administrative roadblocks that they would face. As you can appreciate, if this turns out to be a legally and administratively costly affair, it may deter more companies from applying. However, if the process is fairly easy and a good revenue model is established via this CL mechanism, then big pharma has much to fear….

Q.2 How are MNC’s likely to react?

Ans. Earlier on, big pharma must have sat easy, as they saw that despite 3-4 years going by since the 2003 Doha implementation decision, not a single license had been applied for or operationalised. This could have been due to several reasons, one of which no doubt was the potential administrative bottlenecks in operating this mechanism.

However, if a precedent is established in India by Natco and the adminsitrative process proves easy, then a number of Indian companies will follow suit. Big pharma will really have to rethink its model of pricing worldwide and may have to drop down prices to reasonable level in the LDC’s where they operate. More importantly, they will also be forced to introduce drugs in the LDC markets quickly–for if these drugs are not sold in these markets (which is sometimes the case), then the case for a Doha Style CL is really strong.

Some of them are already taking some laudable steps in this direction, but they have to do much more. If they manage to drop down the prices, then they not only make it more difficult to invoke Doha style licensing (as the drugs are affordable), they also make it economically difficult for the generics to sell in that market. Of course, the threat of parallel imports and the fear of their home consumers wanting lower prices may disincentivise them from doing so on a large scale—and one will have to wait and see what strategies they adopt. Perhaps they might voluntarily license generics to manufacture and sell at low prices in these markets.

This way, they control the markets and also the threat of parallel imports etc more effectively, than if they had a “compulsorily licensed” player operating in that market. As more Indian companies engage with R&D and discovery of new molecules, we are seeing a greater R&D collaboration between Indian generics and MNC’s. Will these relationships begin affecting the incentives to apply for such licenses? Only time will tell.

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

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