We had blogged on this application earlier here, setting out the text of section 92A and the various legal issues involved with this compulsory licensing application.
“The government is to consider whether or not it should allow its drugs companies to manufacture patented medicines for export to poor countries at a hearing scheduled in the Delhi Patent Office late next week.
Hyderabad-based Natco Pharma has requested compulsory licences overriding patents owned by the Swiss company Roche on erlotinib and the U.S. company Pfizer on sunitinib — both are anti-cancer drugs. If the government agrees, it will be the second time an export licence has been granted for public health reasons since WTO members agreed on the trade provision in August 2003. The first was issued by Canada for the production of an HIV/AIDS drug for export to Rwanda.
“The Nepal government issued us an import licence and based on that we applied,” M. Adinarayana told The Hindu on Saturday. Natco, which intends to produce 30,000 tablets of erlotinib and 15,000 of sunitinib, has offered the patent holders a 5 per cent royalty, in line with the WTO requirement to provide remuneration.”
In order to appreciate the various legal niceties involved in this dispute, we reproduce the text of section 92A:
“(1) Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.”
Since Nepal is an LDC with time till 2106 to implement product patents in pharmaceuticals, Natco need not worry about procuring a compulsory license from the Nepal government. Indeed, in the light of the fact that there is no patent covering either Erlotinib or Sunitinib in Nepal, one may wonder why Natco needs a license at all. Can it not freely export these drugs to Nepal?
Not so, since the Indian patents act provides a patentee with many exclusive rights, including the right to manfuacture, sell, import etc. In order for Natco to export to Nepal, it has to first manufacture the product–an act that violates one of the exclusive rights of a patentee. Hence, Natco has to make their case fall within the exceptional circumstances carved out by section 92A.
Under section 92A, although Natco does not need a compulsory license issued in Nepal, it still requires issue a notification permitting the importation of patented products from India. From the Hindu article above, it appears that the Nepal government has done so. But one is not certain of the terms of this “import” license. Is this clearance sufficient to comply with the requirements of the 2003 Decision (para 2 (a)), which provides that:
“the eligible importing Member has made a notification to the Council for TRIPS specifying “the names and expected quantities of the product(s) needed”.
We’ve checked the TRIPS website again and there is no notification from Nepal to this effect. The only notification till date is that of Rwanda, which states:
“Based on Rwanda’s present evaluation of its public health needs, we expect to import during the next two years 260,000 packs of TriAvir, a fixed-dose combination product of Zidovudine, Lamivudine and Nevirapine (hereinafter referred to as the “Product”) manufactured in Canada by Apotex, Inc. However, because it is not possible to predict with certainty the extent of the country’s public health needs, we reserve the right to modify the foregoing estimate as necessary or appropriate.”
Natco should take steps to ensure that the Nepalese government puts up such a notificaiton soon.
The Hindu article states that the patent office will hear the patentee before taking a decision on whether to grant a license, a step which the article notes is “unusual”! It cites Adi Narayana, a representative of Natco in this regard:
“The Patent office has done something unusual, Adi Narayana explains. For compulsory licenses, the government is empowered to take decisions based on the strength of the application alone.
“I intend to ask the patent office why it is allowing representation from the patent holder,” he said.
Contrary to what Mr Narayana suggests, most compulsory licenses are decided after hearing the patentee-so really, there is nothing “unusual” about this. However, from a strict reading of the patents act, the government is not obliged to offer the patentee a hearing. For regular compulsory licenses under the patents act, section 87 mandates such a hearing of both the parties. However, there is no similar section offering such a possibility in the case of a section 92A “Doha style” application. From this, one might argue that the patentee ought not to be heard under section 92A.
However, this omission appears more an oversight than a deliberate intent to exclude the views of a patentee in deciding a section 92A application. Readers will recollect our earlier comment in relation to whether or not the patentee ought to be remunerated under section 92A. We reproduce this portion from our previous post below:
“Interestingly, the above section does not speak of royalties, but leaves it upto the Controller to fix “terms and conditions”. Can the Controller issue such a license without any royalties to Roche? Clearly not, since Clause 3 of the 2003 Decision states that “adequate” remuneration (pursuant to Art 31 [h] of TRIPS) has to be paid to the patentee.”
It seems reasonable that a patentee should be offered a hearing, before the government determines what royalty is reasonable under the circumstances.
Readers will recollect that SpicyIP decried the grant of a patent without hearing the parties in the Valcyte case. The same sort of considerations ought to prevail here too i.e. in the interests of transparency and having a government authority make the right decision, we have to ensure that both parties are heard–particularly since this is the first case under section 92A.