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Is the pharmaceutical industry on the verge of as big a change as we have seen? Posted 29/06/2012

‘The old order changeth, yielding place to new’ [1]

For many years the Trade Related Intellectual Property Rights (TRIPS) negotiations have been criticised as being overly protective of the rights of large pharmaceutical companies. ‘It is unacceptable to threaten developing countries aiming to provide medicines to their populations, and disregarding international commitments to ensure access to medicines,’ ran a Médecins sans Frontières statement in 2010. ‘The US is using its trade laws to bully developing countries into applying arbitrary pharmaceutical industry requests at the expense of millions of people who depend on generic medicines in developing countries.’

But now someone has read the small print and decided that poor people are entitled to access to medicines, even if they are protected by patents. ‘Compulsory licensing’ allows governments to grant a non-patent holder permission to make a drug on condition that the originator has not been able to make it accessible to those who need it at an affordable price. It is legal, even for countries that are part of the World Trade Organisation.

Clause 3d of the agreement was intended to open up access to lifesaving drugs in the event of a national health emergency. But following the lead of Thailand, India, Brazil and now China, more countries with large poor populations and limited government funds for public health are expected to interpret it as allowing local firms to make patented medicines at local prices. It is even possible they will push further to allow export of such medicines to other low-income countries.

The effect so far
Bayer has been compelled to license its cancer drug Nexavar (sorafenib) to Natco Pharma, which promised to sell its copycat version for Euros 142 per month, compared with Bayer’s Euros 4,500 monthly price [2]. The Indian generics firm had been petitioning for the compulsory licence for years, and soon after it launched its version; Cipla, another domestic drugmaker, said it would sell its own copy even more cheaply.

Use of the provision depends on the laws and market circumstances that prevail in the respective countries. The new Chinese laws allow a third-party drugmaker to apply for a compulsory licence after three to four years of a patent grant [3]. Public interest, affordability and accessibility are among the preconditions. ‘All of this is reflective of a new intellectual property world order, where developing countries appear to be taking the lead,’ enthused Shamnad Basheer, a professor in Intellectual Property Law at National University of Juridical Sciences, Kolkata, India.

Can Big Pharma adapt?
Swiss-based pharmaceutical company F. Hoffmann-La Roche Ltd is among those seeking ways of adapting. ‘We are conducting various pilot projects in different countries. These can include a range of arrangements, including local manufacturing and commercial pricing arrangements, such as volume discounts, rebates, price capping, differential pricing, cost and risk-sharing arrangements’ the company said in a statement.

Bayer was unsurprisingly more grumpy. ‘The order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research.’ A UK company commented that research-oriented companies ‘will have to restructure their business plans in emerging markets,’ to compete. Strategies will include making their drugs cheaper themselves in the countries where the threat of compulsory licensing exists and making sure they are available to more poor patients to cut off the incentive to invoke the manoeuvre.

Related articles

TRIPS and access to essential medicines

WHO prequalification programme for medicines


1.  Alfred Lord Tennyson. Idylls of the King. 1856–1885.

2.  GaBI Online - Generics and Biosimilars Initiative. Bayer opposes sorafenib compulsory licence in India [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2012 June 29]. Available from: www.gabionline.net/Biosimilars/News/Bayer-opposes-sorafenib-compulsory-licence-in-India

3.  GaBI Online - Generics and Biosimilars Initiative. China follows the Indian and Thai route to affordable drugs [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2012 June 29]. Available from: www.gabionline.net/Generics/General/China-follows-the-Indian-and-Thai-route-to-affordable-drugs

Source: Livemint, Médecins sans Frontières

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