Why aren’t there any takers for compulsory licenses?

Last September, SpicyIP queried the Controller General of Patents relating to application filed with them seeking compulsory licenses (CL) under the Patents Act, 1970. Our primary motivation was to test the CL provisions amended in the post TRIPS era. The exact wording of the queries as below: 

a. Please provide true copies of Form 17 applications filed by applicants for seeking compulsory license per Patents Act, 1970 Sections 84(1), 91, 92(1) read with Rule 96. 

b. Please provide true copies of any correspondence received from persons expressing intention to file application for compulsory license. 

As on October 15, 2012, the Patent Office received only one application seeking grant of compulsory license. No surprises, it is Natco Pharma’s CL application against Bayer’s anti-cancer drug, Nexavar. A scanned copy of the application is available here. Although I have no reason to doubt the veracity of the Patent Office, we request our readers to enlighten us if there have been more instances of CL applications filed. 

Where is the generic industry? 

Between 2007-08 and 2009-10 alone, the Patent Office granted 1058 patents on pharmaceutical compounds and formulations. I am quite puzzled at the fact that no CL applications have been filed, given that we have a highly competitive generic industry and some of them have even advocated a ‘licenses of rights’ regime, under which all pharma applications would be subject to compulsory licenses. It is definitely not the case where the generic industry has given up its fight on important drugs and in fact the oppositions to grant of patents, at both pre and post grant stages to these drugs, tells us the opposite. Cipla for one continues to manufacture generic equivalents of Sorafenib despite a valid patent held by Bayer. Having said that, this is a risky proposition premised on the fact that patent covering these drugs are weak. 

Secondly, many of the important drugs are biologics which the generic manufacturers are presently not in a position to copy them easily. This is, however, not completely convincing especially considering that the Health Ministry recently issued directions for granting CLs to anti-cancer drugs. Why would it do so if there is no one capable of manufacturing them? In fact, one would suspect the generic industry to have forced the government to issue compulsory licenses under Section 92. Prof. Basheer in an interview to Third World Network recently opined that the government is trying off-set the burden on generic manufactures by processing CLs under Section 92 by assuming the legal risk. This appears to be the most plausible explanation considering that generics have be bear huge costs in seeking and defending the license. 

Interestingly, DIPP’s Discussion Paper on ‘Compulsory Licensing’ released in August, 2010 postulates this exact situation where there are no takers for CLs. Paragraph 26 of the Report notes six instances of Indian companies bought over by foreign multinationals. Of which, three such manufactures feature in top 10 manufacturers in India. The report also mentions strategic alliances between Indian and western counterparts. Although, there is nothing that I came across which suggested any anti-competitive behavior, there is certainly room for oligopolistic tendencies in an industry with limited market players and EU has witnessed this before. Again, readers could enlighten us on this. 

Access conundrum 

Readers would recollect that in a joint RTI investigation conducted by SpicyIP and P-PIL in 2011 on seven patented drugs revealed that patentees have ignored to file Form 27 (Working of Patent) applications each year and the ones filed were nowhere close to satisfying the local working requirement. If CL provisions are access related public interest exceptions to patent monopoly, how come there aren’t any takers? What about other industries? Unfortunately, there is no ready data available on working of patents. For those interested in exploring this conundrum, I have prepared a draft RTI application available here.

One comment.

  1. AvatarKS

    This is a good post on a very important topic. It is why analysis of patent law needs to be complemented by political economy analyses that take into account industrial structure and the incentives facing different actors.


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