Compulsory licensing allows government to license parties other than the patent holder to manufacture and sell patented products without the patent holders’ consent. Despite being WTO compatible, compulsory licenses are yet to be issued under the amended Patents Act, although the concept has been successfully applied in developed countries including the US, UK, Canada and Italy and also to countries such as Brazil, Thailand, Malaysia, South Africa, Kenya and Ecuador, following the Doha Declaration.
In this context, DIPP has come up with a discussion paper, with an objective to facilitate development of a predictable environment for the use of compulsory licensing in the pharmaceutical sector, thereby balancing the rights of the patent holder and the governmental obligation to ensure availability of products, especially life saving drugs at reasonable prices. The paper includes a series of recommendations, including the opening of a loophole for third-party manufacturers to produce patented drugs and the threat of dragging price-inflating companies to the Competition Commission of India (CCI).
In the paper, different stakeholders’ views have been sought on the scope of compulsory licensing provisions to gauge the need for new guidelines. The issue has also been examined regarding the feasibility of issuing a compulsory license to a qualified company to produce a critical drug, whenever the demand for such drug remains unfulfilled.
The different options explored by the paper includes:
(1)Invoking the Competition Act, 2002 to scrutinise whether the price/availability of a drug is a consequence of an anti-competitive agreement or has adverse effect on competition or abuse by a company.
(2)Reviewing the policy on foreign investment for pharmaceutical companies, viz. modifying investments in the pharmaceutical sector that are entirely on the automatic route at present to the Government route, thereby enabling FIPB scrutiny of M&A proposals and monitoring of technology introduced by foreign company during acquisition of Indian company.
(3)Expanding the ambit of the National Pharmaceutical Pricing Authority, allowing it to act as regulatory authority over a larger number of drugs.
The fear has been voiced in the paper that unless these recommendations are paid heed to, “[w]hile the bulk of essential drugs are still under the process patent regime, new formulations will steadily be issued product patents, resulting in monopoly power among the patent holders.” Referring to the high price of cancer medicines and consequent low demand, the paper has also floated the question as to whether it is a case suitable for issue of compulsory license. The possibility has also been mooted of issuing such licenses under the competition law if the manufacturing/selling company’s dominant position adversely impacts the availability of medicines. Among other efforts, an attempt has also been made to define a “working patent”. In some nations, it signifies the patent protection given to medicines manufactured within the country, while others consider a patent as “working” if the medicine is made available in the country, whether through import or otherwise.
DIPP has also asked for opinions regarding whether publicly-funded Indian research organisations should stipulate (while selling/ transferring patents to Indian private sector companies) that the ownership of patents will revert to these organisations in case the ownership of those companies passes on to foreign hands. The deadline for sending comments to the paper is September 30, 2010. The Indian Pharmaceutical Alliance, the representative body for leading domestic drug firms, is yet to come up with a definite response to the paper, although Mr. D.G. Shah, Secretary General of the Indian Pharmaceutical Association, has said that it “is a welcome move as it will ensure that consumers in India are assured of affordable drugs. Indian drug companies will also benefit as they will be able to produce drugs ahead of the patent expiry which will give them a headstart in other markets.”