scbd byr vs natc

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Bayer vs. Natco

First Case of Compulsory Licensingin India

5/8/2013Indian Institute of Management Raipur 1

Presented by:

Anand Sivakumar J (12PGP007)

Gagandeep Singh (12PGP015)

Manu Dhunna (12PGP027)

Pousali Chakrabarti (12PGP032)

Shweta Mallick (12PGP041)


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*The Intellectual Property Rights across theworld abide by a common agreement named

Trade Related Aspects of Intellectual Propertyor TRIP which is a part of the WTO agreement

*TRIP covers Compulsory License in detail.

Compulsory License or CL is referred to as non-voluntary license, which is pertinent to variousintricacies of IPR.



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*Theconcept of CL originated in the UK in 1623with the purpose of making the localapplication possible for a patented invention.

*Later, in 19th century France, a law was passedto forfeit a patent in case it is not used for astipulated time frame. In 1883, the UK lawincluded three important provisions regarding

when to grant a CL under Patent Act:

1. If the patent was not being utilized in the UK2. If the basic necessities of the public were

hindered3. If a person was prevented from using orworking on an invention.



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*TRIP requires that CL be used primarily for thebenefit of local markets, a requirement that

puts restriction on Governments for importingdrugs manufactured overseas.



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*Chapter XVI (Section 82-98) of the amended Indian PatentAct, 1970 is devoted to Compulsory Licensing. Section 84 of

Indian Patent Act provides for grant of CL. The grounds onwhich a compulsory licence can be granted under the Actcan be subdivided into the following categories:

*(i) Abuse of patent rights (dealt with broadly under Section84);

*(ii) Public Interest (dealt with broadly under Section 92).



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*Following is the brief mention of the provisions ofsection 84 and 92 of the Act.

*Section 84 of Compulsory licenses:*At any time after the expiration of three yearsfrom

the date of the [grant] of a patent, any personinterested may make an application to the Controller

for grant of compulsory license on patent on any ofthe following grounds, namely:

*(a) That the reasonable requirements of the publicwith respect to the patented invention have not beensatisfied, or

*(b) That the patented invention is not available tothe public at a reasonably affordable price, or

*(c) That the patented invention is not workedin theterritory of India.



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*Under Section 84(1) a person has to make an application tothe Controller of Patents for grant of CL. This applicationfor CL can be made only after 3 years of grant of patents.Thus, even in case of CL a rightful patent holder has clearthree years period to exploit the invention. Section 84(1)(a) further provides three grounds on which CL can beissued the patented invention has failed to satisfy

reasonable requirements of public. This means that:*If patented invention is unable to meet the needs of public

for which it is invented then the Controller of patents maygrant CL for the patented invention

*The Second ground for grant of CL is that the patentedinvention is not available to public at a reasonablyaffordable price



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*This sub-section Section 84 (1) (b) is at the crux ofgrant of patent for Nexavar in Bayer v/s Natco case.

*Section 84(2) provides that a person even if he alreadyhaving license from the rightful patent holder stills/he/it can make an application under Section 84 (1) tothe controller for grant of CL if the three exigenciesmentioned in Section 84 (1) arises.

*Further Section 84 (2) provides that while opposing CLthe patent holder has right to plea that the threementioned exigencies and that the patent is notworking in India.



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*Section 84(4) gives huge discretionary powers to theController to grant CL if he is satisfied that any of the threeexigencies mention in Section 84(1) are met i.e. interests of

public is not satisfied vis--vis patented invention or thatthe patented invention is not working in India and it is notavailable at affordable price.

*Section 84(7) provides various circumstances under which it

shall be deemed that the reasonable requirements of thepublic are not met. It provides that if the rightful patentholder has refused to grant license and such refusal isdetrimental to trading or manufacturing in India then thereasonable requirements of the public are not met. Hence

it opens up case for CL



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*Sections 92 (1) and 92 (3)Circumstances of nationalemergency or extreme urgency

*Section 92 AForexports of pharmaceutical products toforeign countries with public health problems


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*Natco v/s Bayerwas the first case of compulsorylicensing being obtained in India in pharmaceutical

field of discipline

*International drug manufacturing firm BayerCorporation and Indian pharmaceutical companyNatco Pharma Limited

*Bayer obtained a patent on Nexavar

*A pack of 120 cost Rs. 2.8 lakh INR

5/8/2013Indian Institute of Management Raipur11


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*The players of this case are:

Bayer Corp The Patentee

NATCO - The Applicant

NEXAVAR



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*Ms Bayer Corp is an innovative drugmultinational giant based at Germany.

*Invented a drug named SORAFENIB' - CarboxylSubstituted Diphenyl Urea

*Life extending drug to be used in liver andkidney cancer treatment

*Brand name 'NEXAVAR'



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*Indian generic pharmaceutical company

*Natco filed an application with the Bayer Corporationfor the Voluntary license of the drug Nexavar(Sorafenib) with reasonable commercial terms andconditions.

*Received a license from the Drug Controller General ofIndia for manufacturing the drug in bulk and marketingin form of tablets in April 2011.



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*The drug Nexavar (Sorafenib) is the

patented product of M/s BayerCorporation

*R&D cost incurred was exorbitant and

hence there should be no CompulsoryLicensing.



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*Bayer did not disclose the cost of R&D involved in theinvention of this drug.

*Bayer has time and again tried to conceal the R&DExpenditure for development of Nexavar, the relevantdata has been mined from Annual reports of OnyxPharmaceuticals.

*As per Onyx SEC fillings from 1994-1999 Bayerprovided Onyx with $26.1 million



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*October 8, 2004- Bayer received an orphan drugdesignation for Nexavar which makes the drug eligible

for a 50 % orphan drug tax credit thus, lowering thenet cost of the investments to both Bayer and Onyx.

*SEC filings reported a combined Bayer/Onyx outlay of$275 million.

*Total R&D for development of Nexavar was

$ 275 million.

*Deduction of Orphan Tax credit from the same further

lowers the R&D cost.



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*2006- $165 million.

*2007- $371.7 million.*2008- $678 million.

*Total- $1.2 billion within three years ofapproval as an orphan drug.



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*When the world sales were $934 millionin 2010 the Indian Sales was almostnegligible. It is important to rememberthat India is one of the most populouscountries.



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Preface:

*Huge patient base for drugs and pharmacompanies

*Indias per capita income-considerably lower

compared to other developed and emergingmarket economies

*Indias spending on healthcare (as % of GDP)-considerably low



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*Nexavar cost - The cost of cancer drug Sorafenibin 200mg tablet varies vastly in branded andgeneric category.

*Branded Category- Rs 280,428 per patient permonth.

*The generic drug:

1) Sorafenib was available from Cipla for Rs 27,9602) Natco is providing the same at Rs 8,880/-. After

the judgment for grant of compulsory licenseCipla has slashed its price further and now it isavailable for Rs 6,600/- per patient per month.



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*Per Capita Income of India (PCY) in 2011 -

$1575/-*Cost of Bayers Nexavar PP/Year in 2011 -$69,000/-

*Cost of Natcos Sorafenib PP/Year in 2011 -$2,120/-

*Bayer was charging almost 45 times the PerCapita Income of India of India.



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*Natco, a generic drug manufacturing companyrequested Bayer for giving it a voluntary license.

*The request was denied and so Natco filed anapplication in the Controller of Patents Court for grantof a compulsory license.

*In accordance with the provision of Indian Laws

Section 84 of the Patent Act, the Indian Controller ofPatents started with competing claims of both thepatentee (Bayer) and the compulsory licenseapplicant (Natco).



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*Requirement of about 23,000 bottles per month.

*No bottles of Nexavar were imported in India in theyear 2008 and 200 bottles were imported in 2009. Inthe year 2010 there were no imports of Nexavar.

*The importance of the time period lies in the fact thatthe Government of India granted Bayer a patent on thedrug Nexavar in the year 2008 after assessing that

Bayer would fulfil the Reasonable requirements ofthe Public during that period. Also, Bayer did notmanufacture the drug in India as it focused on importsof its bottles.



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*The Controller cited that the drug was Exorbitantly pricedand thus was out of reach of majority of the population.

*The price of the drug was at the time of decision Rs.

2,80,248/- per month compared to the generic drugs price ofRs. 8,800/- per month from Natco.

*The Controller also added that the drug was not availablethroughout the country was only available in majormetropolitan cities like Chennai, Delhi, Kolkata and Mumbai.

*The Controller also cited that the supply of Nexavar was shorteven in the previously mentioned cities and this was highlysignificant to the case as the drug was a Life saving drugand not a Luxury Item.



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*Finally the Controller noted that in the year 2010, Bayerssales across the world had increase to 934 million dollars from165 million dollars in 2006. He wrote, These figures clearly

demonstrate the neglectful conduct of the Patentee (Bayer)as far as India in concerned.

*The Controller illustrated that it would take a common manin India while 3.5 years of his/her wage to afford just onemonths supply of the drug the drug Nexavar extends life for

a kidney cancer patient by only about four to six years.*The Controller also cited from WHOs bulletin, a research

article titled Impoverishing effects related to theaffordability of medicines in the developing nations, alongwith an affidavit from James Packard Love, Director of

Knowledge Ecology International and co-chairman of theTrans-Atlantic Consumer Dialog Policy Committee onIntellectual Property Rights.



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*Bayer argued that the high cost of the drugNexavar was to support the further research and

development of Sorafenib, for curing othertypes of cancer, in public interest. And thus,granting Natco a compulsory license would harmthe public interest.

*Bayer also argued that the reduced cost as aresult of compulsory license should not be ofbenefit to the rich and the middle class who

could afford Bayers price of Nexavar.



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Thank You


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