BDR, Lee Pharma decide not to pursue CL appeals

(Posted on behalf of Balaji)

A  Reuters report from earlier today, carried by newspapers such as Mint and The Hindu, states that generics manufacturers Lee Pharma and BDR have decided not to pursue appeals against the rejection of their compulsory license applications for patents over AstraZeneca’s Saxagliptin and BMS’s Dasatinib respectively.

The report identifies recent news of the Indian government’s private assurance to US pharma lobbies that it would not issue compulsory licenses for commercial purposes as the reason behind the decision.

licensingIf true, the ramifications of this development for the industry and for patients cannot be understated. First, it must be understood that the Section 84 mechanism, a crucial policy lever that operationalises access to medicines in situations where the patentee is unable or unwilling to serve the patient population, is entirely dependent on the generics industry aggressively enforcing its right to compulsory licenses in all situations where the requirements under S. 84(1) are met. In essence, Section 84 is only as strong as the generics industry’s enthusiasm to apply for compulsory licenses, and decisions like these may go on to render the very existence of such hard-fought TRIPS flexibilities a nullity. If generics manufacturers are disillusioned with the neutrality of the Section 84 process, then the result is a lose-lose scenario where innovators are effectively freed from their duty to maintain adequate supplies of their products available to the public at a reasonable price.

Second, it must be borne in mind that generics manufacturers today are not operating in a vacuum in which compulsory licensing is their only alternative to willful infringement – voluntary licenses are becoming more and more prevalent in the pharma industry, with several leading generics manufacturers entering into agreements with innovators to supply low- and middle-income countries with life-saving drugs, most notably in the case of Gilead’s sofosbuvir therapy. While this may result in sub-optimal gains for generics manufacturers and the patient population (in the form of higher royalties leading to higher prices, and larger numbers of weak patents being left unchallenged), this still represents a valuable and viable alternative for generics manufacturers to take on. After all, these firms exist to turn a profit, not to serve as watchdogs for weak patents or unreasonable pricing or inadequate supply of drugs to the market.

Third, even with voluntary licensing gaining prevalence in the market, the role played by a neutral Section 84 process does not get side-stepped altogether. If nothing else, the threat of a robust CL process that enforces generics manufacturers’ right to compulsory licenses in circumstances that demand them is a valuable bargaining chip in the hands of generics, both in enhancing the level of technology transfer and in lowering royalties and procuring other short-term benefits that can be passed on to the consumer.

Of course, it’s entirely possible that the recent statement could be an exercise in corporate theatrics designed to scare a reassurance out of the Modi government, but the very possibility that large generics players could resort to such measures must certainly set off enough alarm bells in New Delhi for a strong statement in support of the neutrality of the Section 84 CL process.

Kiran George

Kiran Mary George is a Third Year student at ILS Law College, Pune. Her first stint in the world of Intellectual Property law was an internship with a registered copyright society that granted her an insight into the world of copyright in music. Since then, her interest in IPR has taken strong hold, and she enjoys keeping close tabs on developments in the field. She is still discovering her interests, but so far takes a special liking to open access, copyright and trademarks.

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