Life Sciences Blog

Compulsory Licensing In India — Big Pharma TRIPS-Up?

With the second largest population in the world, a growing middle class, and the country set to be the epicentre for conditions such as diabetes and heart disease, India is evolving into a pharma hotspot attracting global drug industry players.

Big Pharma’s pace of market entry and expansion has particularly increased since the government’s adoption of Trade Related Intellectual Property Rights (TRIPS) in 2005, when product patents were put into place. More recently, the recession in the western world in 2008 has made India an important market for Big Pharma. With the increased pharma spending cuts and pharmacoeconomics in the U.S and Europe, markets such as India seem an attractive option. The country currently has little pricing regulation, with only 74 bulk drugs of the 348 essential drugs under price control as we speak.

While efforts have been made to increase price control since 2006, internal disagreement within the government and bureaucracy have seen such policies yet to be implemented (of course, I haven’t forgotten about the 4th April discussion on the National Pharma Pricing Policy 2011, by the Group of Ministers, but I cannot comment on this as the results are yet to be announced!).

Contradicting Policies Confuse Big Pharma
The government’s enthusiasm for global investments in the pharma industry is apparent in its allowance of 100% Foreign Direct Investment (FDI) in the pharma sector. However, the health ministry, drug price regulator National Pharma Pricing Authority (NPPA) and other stakeholders are keen to ensure that drug prices continue to remain affordable. So, in spite of having product patent laws, several key drugs, including Tarceva (erlotinib), remain unpatented in the country, either on account of “prior art”/known innovation or due to public health clauses.

First Compulsory Licenses Authorized
However, earlier this month, the India's Office of the Controller General of Patents, Designs and Trade Marks (CGPDTM) went a step further and authorized its first compulsory license to Natco Pharma (India) for Bayer’s (Germany) Nexavar (sorafenib). This was in spite of the fact that Cipla’s (India) “at risk” launch has been available in the country since 2010 for one-tenth of the price of the innovator. What is more worrying is the fact that this regulator has indicated that more compulsory licenses may follow based on demand and affordability.

What is Next for Big Pharma in India?
The development has alarmed Big Pharma, who are likely to tread with caution to prevent similar fates. While some may be in the process of re-thinking their India launch strategy, others might follow Roche (Switzerland) and drop the price of their drugs, in order to be more affordable. Either way, India’s attractiveness as a market to launch technologically advanced medicines has just decreased!


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