CIPLA files for a compulsory license against Merck’s Isentress

SpicyIP brings to its readers another spicy post from Suchita Saigal, this time on Complusory Licensing.  Suchita provides a possible solution to one of the compulsory licensing issues arising from a recent case involving Merck and Cipla.  

A recent article published by Moneycontrol states that Mumbai based pharma giant Cipla has applied for a compulsory licence to manufacture Merck’s anti-HIV drug Isentress on the basis that the drug is exorbitantly priced and is inaccessible to needy patients in India.

Legislative background

Section 84 of the Indian Patents Act 1970 states that, “at any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:

….(b) the patented invention is not available to the public at a reasonably affordable price…”

Reasonably affordable price           

The construction of ‘reasonably affordable price’ forms the crux of the argument in this case. Is Isentress available at a reasonably affordable price for the Indian market?

I have not come across any academic writing on the concept of ‘reasonably affordable price’ specific to Section 84 of the Patents Act 1970. Any analysis has been case specific. For instance, Shamnad in his article ‘India’s new patent regime: aiding access or abetting “genercide”?‘examines whether patented drugs used to cure bird flu were reasonably affordable vis-à-vis similar drugs manufactured by the generic drug manufacturers. In the article he states that, “Section 84(1)(b) permits a compulsory licence when “the patented invention is not available to the public at a reasonably affordable price”. Hetero, Roche’s licensee in India, is currently selling to the government at Rs 75 ($USD1.68) per tablet. Since the only available generic equivalent in India, Antiflu made by CIPLA, sells for Rs 65 ($USD1.46) per tablet, it may be difficult to argue that the Hetero’s pill is unaffordable.”

The concept of ‘affordable price’ has been analysed by Prashant Iyengar in an article relating to the library exception under the Indian Copyright Act 1957.  In the article he suggests a per-capita GDP based comparison to determine affordability. Applying this criteria in the context of his article he states that, “[for the purposes of Section 52(1)(o) of the Copyright Act 1957,] a “book” would be deemed “available for sale in India” only if the ratio of its price to the per-capita GDP remains constant across all the countries in which it is sold – in other words, it must be equally affordable in India as the country where the same “book” is most affordably sold.” To take [an] example from his article, “the book Harry Potter and the Deathly Hollows retailed in 2007 in India at a price of Rs. 1080 (or approx $USD24). This represented about 2.4% of India’s per capita GDP ($USD975) at the time. At the same time, the same book retailed at $USD35 in the US representing 0.0008% of its per capita GDP ($USD43,444). Had the book been sold in the US at 2.4% of US per capita GDP, its price would have been $USD1042. If it had been sold in India at 0.0008% of India’s per capita GDP, its price ought to have been a mere 0.78 $USD or Rs. 35. At a price of Rs. 1080, the book was approximately 30 times less affordable in India than in the US.”

The measure put forth by Prashant is interesting in light of the fact that the Moneycontrol article states that Merck has launched Isentress in India at a fourth of its US prices – that is $USD7 for a day’s treatment as against $USD28 in the US. If one uses the numbers used by Prashant, then $USD7 represents about 0.717% of India’s per capita GDP while $USD28 represents about 0.06% of US’s per capita GDP. Hence, applying Prashant’s criteria of affordability, Isentress as currently priced in India is clearly not reasonably affordable and the price differential is not sufficient to support any argument of reasonable pricing. 

Other points
On a related note, in the past, countries like Brazil have effectively negotiated with pharmaceutical giants such as Merck to bring down prices of drugs to support national health programmes. For instance, in 2003, post Brazil’s initiative to allow generic manufacturers to import or produce ARV drugs without the consent of the patent holder, several drug manufacturers (including Merck) and Brazil reached an agreement whereby a wide package of ARV drugs were available in Brazil at discounts ranging from 25% to 75% of the original market price.  It would be interesting to see how far Cipla pursues this application and any policy guidance which comes out of the same.

(image from here)

Rajiv Kr. Choudhry

Rajiv Kr. Choudhry

Rajiv did his engineering from Nagpur University in 2000 in electronics design technology. He has completed his LL.B. from Delhi University, Law Center II in 2006, while working as an engineer at ST Microelectronics in NOIDA. After his LL.B., he went on to The George Washington Univeristy, Washington DC to do his LL.M. in 2007. After his LL.M., he has worked in the US at a prestigious IP law firm based out of Philadelphia. Till 2014, he was Of-Counsel to a Noida based IP law firm where he specialized in advising clients on wireless, telecommunication, and high technology. Rajiv is the founder of Tech Law Associates, a New Delhi based law firm specializing in IP law, with a focus on high - technology, and patent law. His core IP interest areas are the intersection of technology and IP, Indian IP policy, innovation, and telecommunications patents. He is also an inventor with pending applications in machine-to-machine communications domain (WO2015029061).


  1. AvatarCountry ruined by fools

    irony…many pregnant females died in jodhpur because of sub-standard drugs manufactured and sold by cheap generic companies…the generic companies say cheap drugs are for public interest. It only happens in India where everything is corrupt and life is cheaper than drug. I just pray it should not happen to anyone near and dear to anyone of us.

  2. AvatarCountries ruined by fools

    My condolence to all those families who lost their dear ones because of sub-standard drugs manufactured by generic companies who in the name of affordability continue to sell poison to own people to increase their bottom line.

  3. AvatarCountry ruined by fools

    In the name of development and for the sake of votes, poors are allowed to make shanties

    In the name of affordability, companies are alllowed to ripe profit and compromise quality and life

    There is not a single inquiry over the years about the quality of drugs produced by the drug manufactures in India…thanks to strong nexus between generics and politicians. Both good in fooling people and judiciary good is safeguarding their interests.

  4. AvatarAnonymous

    SpicyIP team:

    I read the MoneyControl article to say that its a VOLUNTARY license.

    While your article makes it a COMPULSORY license.

    In reality, I believe that its a voluntary license Agreement that Merck is granting to multiple players from India.


  5. AvatarSuchita Saigal

    Thanks for your comments.

    The issue of quality of generic drugs is an important but separate issue from the one considered in this post. I agree that manufacturers of sub-standard drugs should be prosecuted.

    In re the compulsory licensing regime, section 88 of the Patents Act allows the controller (while considering a compulsory license application)to assess the ability of an applicant to work the invention and whether the applicant can do so for public advantage. Arguably, this would allow the controller to refuse an application if the applicant has been guilty of producing sub-standard drugs in the past.

    Kind regards,

  6. AvatarCountry ruined by fools

    If life-saving drugs too fall within the reach of all generic manufacturers then there is a possibility that market will be flooded with cheap yet sub-quality life-saving versions that will put thousands of life at risk.

    Affordability issue should be dealt cautiously and diligently by bringing public-private dialog. We should remember that despite generic dominance in Indian market, medical infrastruture and issue of spurious drug remainss major concern for public health.

  7. Avatartruth matters not identity

    dear CRBF
    you seem to be very passionate about misdeeds of for articles by unnikrishnan on crocin 1000 for a start.

    i dont belong to medical industry in the first place


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