TRIPS agreement enforces the member countries to grant patents to
Pharmaceutical companies on their product and provides certain flexibility to
safeguard the public health. India faced a lot of issues after the
implementation of the patent on medicines as it was expensive for the people
suffering from diseases like Cancer, HIV and the medicine was not reaching to
the patients to the extent as it should have been. But our Indian patent laws
provide a remedy to this issue in the form of licenses to the generic
There are two types of licenses. They are Voluntary licenses and Compulsory
licenses. Voluntary licensing is the arrangement between the parties where the
patent holder and the third party from any of the country come to an agreement
of making affordable medicines in their respective countries and sometimes with
discounts. A patent holder may give license to the third party either with an
exclusive or non-exclusive right, the right to manufacture, import and
distribute a pharmaceutical product.
Compulsory licensing is when a government allows someone else to produce the
patented product or process without the consent of the patent owner, this is
usually associated with pharmaceuticals, but it could also apply to patents in
any field. The agreement allows compulsory licensing as part of the agreements
overall attempt to strike a balance between promoting access to existing drugs
and promoting research and development into new drugs.
But the term compulsory licensing does not appear in the TRIPS Agreement,
instead, the phrase other use without authorization of the right holder appears
in the title of Article 31. Compulsory licensing is only part of this since
other use includes use by governments for their own purposes.
Compulsory licensing and government use, of a patent without the authorization
of its owner can only be done under a number of conditions aimed at protecting
the legitimate interests of the patent holder. The person or company applying
for a licence must have first attempted, unsuccessfully, to obtain a voluntary
licence from the right holder on reasonable commercial terms (article 31b).
If a compulsory licence is issued, adequate remuneration must still be paid to
the patent holder (article 31h). However, for national emergencies, other
circumstances of extreme urgency or public non-commercial use (or government
use) or anticompetitive practices, there is no need to try for a voluntary
licence (article 31b).
Compulsory licensing must meet certain additional requirements in particular, it
cannot be given exclusively to licensees (e.g. the patent-holder can continue to
produce), and usually it must be granted mainly to supply the domestic market
and it cannot be arbitrary.
Article 31 - Other Use Without Authorization of the Right Holder
Where the law of a Member allows for other use (7) of the subject matter of a
patent without the authorization of the right holder, including use by the
government or third parties authorized by the government, the following
provisions shall be respected:
authorization of such use shall be considered on its individual merits;
Such use may only be permitted if, prior to such use, the proposed user has made
efforts to obtain authorization from the right holder on reasonable commercial
terms and conditions and that such efforts have not been successful within a
reasonable period of time. This requirement may be waived by a Member in the
case of a national emergency or other circumstances of extreme urgency or in
cases of public non-commercial use.
In situations of national emergency or other circumstances of extreme urgency,
the right holder shall, nevertheless, be notified as soon as reasonably
practicable. In the case of public non-commercial use, where the government or
contractor, without making a patent search, knows or has demonstrable grounds to
know that a valid patent is or will be used by or for the government, the right
holder shall be informed promptly;
The scope and duration of such use shall be limited to the purpose for which it
was authorized, and in the case of semi-conductor technology shall only be for
public non-commercial use or to remedy a practice determined after judicial or
administrative process to be anti-competitive;
Such use shall be non-exclusive;
Such use shall be non-assignable, except with that part of the enterprise or
goodwill which enjoys such use;
Any such use shall be authorized predominantly for the supply of the domestic
market of the Member authorizing such use;
Authorization for such use shall be liable, subject to adequate protection of
the legitimate interests of the persons so authorized, to be terminated if and
when the circumstances which led to it cease to exist and are unlikely to recur.
The competent authority shall have the authority to review, upon motivated
request, the continued existence of these circumstances;
The right holder shall be paid adequate remuneration in the circumstances of
each case, taking into account the economic value of the authorization;
The legal validity of any decision relating to the authorization of such use
shall be subject to judicial review or other independent review by a distinct
higher authority in that Member;
Any decision relating to the remuneration provided in respect of such use shall
be subject to judicial review or other independent review by a distinct higher
authority in that Member;
Members are not obliged to apply the conditions set forth in subparagraphs (b)
and (f) where such use is permitted to remedy a practice determined after
judicial or administrative process to be anti-competitive. The need to correct
anti-competitive practices may be taken into account in determining the amount
of remuneration in such cases. Competent authorities shall have the authority to
refuse termination of authorization if and when the conditions which led to such
authorization are likely to recur;
Where such use is authorized to permit the exploitation of a patent ("the second
patent") which cannot be exploited without infringing another patent ("the first
patent"), the following additional conditions shall apply:
The invention claimed in the second patent shall involve an important technical
advance of considerable economic significance in relation to the invention
claimed in the first patent;
The owner of the first patent shall be entitled to a cross-licence on reasonable
terms to use the invention claimed in the second patent; and
The use authorized in respect of the first patent shall be non-assignable except
with the assignment of the second patent.
CONDITIONS WHERE PRIOR NEGOTIATION WITH THE PATENT HOLDER NEED NOT BE PURSUED.
These are the cases of:
- National emergency
- Other circumstances of extreme urgency or
- Public non-commercial use - "Public non-commercial use" is a flexible concept, leaving governments with considerable flexibility in granting compulsory licences without requiring commercial negotiations in advance. However, that the waiver of prior negotiations does not extinguish the requirement that adequate compensation in the circumstances be paid to the patent holder.
THE GROUNDS FOR USING COMPULSORY LICENSING
The TRIPS Agreement does not specifically list the reasons that might be used to
justify compulsory licensing. In Article 31, it does mention national
emergencies, other circumstances of extreme urgency and anti-competitive
practices but only as grounds when some of the normal requirements for
compulsory licensing do not apply, such as the need to try for a voluntary
Some governments were unsure of how these conditions or flexibilities would be
interpreted, and how far their right to use them would be respected. At the Doha
Ministerial Conference in November 2001, WTO members struck a deal which
clarified the accords and provided governments in the developing world with
greater clarity and certainty that protection of patents does not and should not
prevent members from taking measures to protect public health. But one more
element was needed - how to guarantee that countries lacking the capacity to
produce generic drugs could still procure them affordably.
Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health
recognized that "WTO members with insufficient or no manufacturing capacities in
the pharmaceutical sector could face difficulties in making effective use of
compulsory licensing under the TRIPS Agreement", and instructed the Council for
TRIPS to find an expeditious solution to this problem.
In August 2003, WTO members decided to remove an important obstacle to
affordable drug imports by waiving the limitation in the TRIPS Agreement to
predominantly supply the local market (article 31(f)). As Countries with
insufficient or no manufacturing capacities are naturally reliant on imports
from foreign suppliers. When medicines are produced under a compulsory licence
in another country, the TRIPS Agreement in effect limited the proportion that
could be exported. TRIPS therefore posed a potential barrier if a country lacked
its own production capacity and wished to import medicines from another country
where a patent was in force and where a compulsory licence was needed for
The decision was made by stating reason- that if the importing country could not
secure access to needed medicines at affordable prices, these medicines could be
produced under compulsory licence by drug makers in third countries, and be
imported to poorer countries unable to manufacture the medicines themselves.
In 2005 - WTO members decided to permanently incorporate the 2003 waiver
decision into the TRIPS Agreement subject to the acceptance of two-thirds of WTO
members. Thereby amending TRIPS to include Article 31bis.
The amendment of the TRIPS Agreement aims at removing this difficulty by
creating an additional form of compulsory licence that had not existed before: a
compulsory licence especially tailored for the export of medicines to countries
in need � in effect, a 'trade related' compulsory licence. This mechanism was
sometimes termed the 'paragraph 6 system', from its origins in the Doha
Now the flexibility to protect public health becomes an integral part of the
TRIPS Agreement. The amendment took effect on 23 January 2017 and replaced the
2003 waiver for members who have accepted the amendment. Members who are yet to
accept the amendment currently have until 31 December 2021 to do so.
The new Article 31bis of the TRIPS Agreement gives full legal effect to this
system and allows low cost generic medicines to be produced and exported under a
compulsory licence exclusively for the purpose of serving the needs of countries
that cannot manufacture those products themselves.
This empowers importing, developing and least-developed countries facing public
health problems and lacking the capacity to produce drugs generically to seek
such medicines from third country producers under "compulsory licensing"
Normal procedure of providing medicines produced under compulsory licences to
domestic market only had been replaced allowing exporting countries to grant
compulsory licences to generic suppliers exclusively for the purpose of
manufacturing and exporting needed medicines to countries lacking production
The amendment further provides a secure and sustained legal basis for both
potential exporters and importers to adopt legislation and establish the means
needed to allow countries with limited or no production capacity to import
affordable generics from countries where pharmaceuticals are patented.
COMPULSORY LICENSING IN INDIA
Compulsory licensing for patents in India, were introduced into the Patents Act
pursuant to the recommendation made by the Ayangar Committee, considering the
fact of the abuse of patent rights which had become the matter of concern. The
provisions are contained in Chapter XVI of the Patents Act, 1970 (S.82 to S.94)
was introduced by the Patents (Amendment) Act of 2002, slightly amended by the
Patents (Amendment) Act of 2005, and was designed to be TRIPS-compliant.
TYPES OF COMPULSORY LICENSING
- Third party initiated Compulsory Licensing � Section 84 of Patents Acts 1970
- Special Compulsory Licensing � Section 92 of Patents Acts 1970
- Compulsory Licensing of related patents � Section 91 of Patents Acts 1970
- Compulsory Licensing for export pharmaceuticals � Section 92 A of Patents Act 1970
Section 84: Compulsory licences:
Section 90 Terms and conditions of compulsory licences:
- At any time after the expiration of three years from the date of the 170 [grant] of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:
- that the reasonable requirements of the public with respect to the patented invention have not been satisfied,
- that the patented invention is not available to the public at a reasonably affordable price,
- that the patented invention is not worked in the territory of India.
- An application under this section may be made by any person notwithstanding that he is already the holder of a licence under the patent, and no person shall be estopped from alleging that the reasonable requirements of the public with respect to the patented invention are not satisfied or that the patented invention is not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price by reason of any admission made by him, whether in such a licence or otherwise or by reason of his having accepted such a licence.
- Every application under sub-section (1) shall contain a statement setting out the nature of the applicant's interest together with such particulars as may be prescribed and the facts upon which the application is based.
- The Controller, if satisfied that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price, may grant a licence upon such terms as he may deem fit.
- Where the Controller directs the patentee to grant a licence he may, as incidental thereto, exercise the powers set out in section 88.
- In considering the application filed under this section, the Controller shall take into account:
Provided that this clause shall not be applicable in case of national emergency
or other circumstances of extreme urgency or in case of public non-commercial
use or on establishment of a ground of anti-competitive practices adopted by the
patentee, but shall not be required to take into account matters subsequent to
the making of the application.
- the nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patentee or any licensee to make full use of the invention;
- the ability of the applicant to work the invention to the public advantage;
- the capacity of the applicant to undertake the risk in providing capital and working the invention if the application were granted;
- as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions, and such efforts have not been successful within a reasonable period as the Controller may deem fit.
[ Explanation; For the purposes of clause (iv), "reasonable period" shall be
construed as a period not ordinarily exceeding a period of six months.]
- For the purposes of this Chapter, the reasonable requirements of the
public shall be deemed not to have been satisfied:
Provided that this clause shall not be applicable in case of national emergency
or other circumstances of extreme urgency or in case of public non-commercial
use or on establishment of a ground of anticompetitive practices adopted by the
patentee, but shall not be required to take into account matters subsequent to
the making of the application
- if, by reason of the refusal of the patentee to grant a licence or
licences on reasonable terms:
- an existing trade or industry or the development thereof or the
establishment of any new trade or industry in India or the trade or industry
in India or the trade or industry of any person or class of persons trading
or manufacturing in India is prejudiced; or
- the demand for the patented article has not been met to an adequate
extent or on reasonable terms; or
- a market for export of the patented article manufactured in India is not
being supplied or developed; or
- the establishment or development of commercial activities in India is
- if, by reason of conditions imposed by the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented
article or process, the manufacture, use or sale of materials not protected by
the patent, or the establishment or development of any trade or industry in
India, is prejudiced; or
- if the patentee imposes a condition upon the grant of licences under the
patent to provide exclusive grant back, prevention to challenges to the validity
of patent or coercive package licensing; or
- if the patented invention is not being worked in the territory of India
on a commercial scale to an adequate extent or is not being so worked to the
fullest extent that is reasonably practicable; or
- if the working of the patented invention in the territory of India on a
commercial scale is being prevented or hindered by the importation from
abroad of the patented article by:
- the patentee or persons claiming under him; or
- other persons against whom the patentee is not taking or has not taken
proceedings for infringement.]
- persons directly or indirectly purchasing from him; or
Section 85 and Section 86 deals with the power of controller in revocating
patent and adjourning applications of patent. Section 87 deals with the
procedure to be followed while dealing with applications under section 84 and
85. Section 88-Powers of Controller in granting compulsory licences. Section
89-General purposes for granting compulsory licences.
Section 91 Licensing of related patents;
In settling the terms and conditions of a licence under section 84, the Controller shall endeavor to secure;
- that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors;
- that the patented invention is worked to the fullest extent by the person to whom the licence is granted and with reasonable profit to him;
- that the patented articles are made available to the public at reasonably affordable prices;
- that the licence granted is a non-exclusive licence;
- that the right of the licensee is non-assignable;
- that the licence is for the balance term of the patent unless a shorter term is consistent with public interest;
- that the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product, if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84;
- that in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use;
- that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.
No licence granted by the Controller shall authorize the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation would, but for such authorization, constitute an infringement of the rights of the patentee.
Notwithstanding anything contained in sub-section (2), the Central Government may, if in its opinion it is necessary so to do, in the public interest, direct the Controller at any time to authorize any licensee in respect of a patent to import the patented article or an article or substance made by a patented process from abroad (subject to such conditions as it considers necessary to impose relating among other matters to the royalty and other remuneration, if any, payable to the patentee, the quantum of import, the sale price of the imported article and the period of importation), and thereupon the Controller shall give effect to the directions.
Section 92 Special provision for compulsory licences on notifications by Central
- Notwithstanding anything contained in the other provisions of this Chapter, at any time after the sealing of a patent, any person who has the right to work any other patented invention either as patentee or as licensee thereof, exclusive or otherwise, may apply to the Controller for the grant of a licence of the first mentioned patent on the ground that he is prevented or hindered without such licence from working the other invention efficiently or to the best advantage possible.
- No order under sub-section (1) shall be made unless the Controller is satisfied;
- that the applicant is able and willing to grant, or procure the grant to the patentee and his licensees if they so desire, of a licence in respect of the other invention on reasonable terms; and
- that the other invention has made a substantial contribution to the establishment or development of commercial or industrial activities in the territory of India.
- When the Controller is satisfied that the conditions mentioned in sub- section (1) have been established by the applicant, he may make an order on such terms as he thinks fit granting a licence under the first mentioned patent and a similar order under the other patent if so requested by the proprietor of the first mentioned patent or his licensee: Provided that the licence granted by the Controller shall be non-assignable except with the assignment of the respective patents.
- The provisions of sections 87, 88, 89 and 90 shall apply to licences granted under this section as they apply to licences granted under section 84.
If the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use, that it is necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette, and thereupon the following provisions shall have effect, that is to say-
- the Controller shall on application made at any time after the notification by any person interested grant to the applicant a licence under the patent on such terms and conditions as he thinks fit;
- in settling the terms and conditions of a licence granted under this section, the Controller shall endeavor to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights.
The provisions of sections 83, 87, 88, 89 and 90 shall apply in relation to the grant of licenses under this section as they apply in relation to the grant of licenses under section 84.
Notwithstanding anything contained in sub-section (2), where the Controller is satisfied on consideration of the application referred to in clause (i) of sub-section (1) that it is necessary in:
- a circumstance of national emergency; or
- a circumstance of extreme urgency; or
- a case of public non-commercial use,
Which may arise or is required, as the case may be, including public health
crises, relating to Acquired Immuno Deficiency Syndrome, Human Immuno Deficiency
Virus, tuberculosis, malaria or other epidemics, he shall not apply any
procedure specified in section 87 in relation to that application for grant of
licence under this section: Provided that the Controller shall, as soon as may
be practicable, inform, the patentee of the patent relating to the application
for such non-application of section 87.
Section 92A Compulsory licence for export of patented pharmaceutical products in
certain exceptional circumstances;
- Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.
- The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him.
- The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory license can be exported under any other provision of this Act. Explanation. -For the purposes of this section, 'pharmaceutical products' means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address public health problems and shall be inclusive of ingredients necessary for their manufacture and diagnostic kits required for their use.
COMPULSORY LICENSES FOR ANTIRETROVIRAL TREATMENTS
In the 2000s, Brazil, Ecuador, Ghana, Indonesia, Malaysia, Mozambique, Thailand,
Rwanda, Zambia, and Zimbabwe each issued compulsory licenses for one or more
antiretroviral drugs to respond to the plight of their HIV-infected citizens who
could not afford antiretroviral therapy. While most countries issued licenses
for a specific patented drug, Ghana and Zimbabwe issued categorical compulsory
licenses on all antiretroviral drugs.
Two countries that had notable success
with decreasing the price of antiretroviral drugs in the mid-2000s were Thailand
and Brazil. Both countries provided free antiretroviral treatments to all
citizens living with HIV/AIDS and were thus keenly motivated to seek out
affordable antiretroviral supplies. Both provide efavirenz and lopinavir/ritonavir
to their patients. In initial price negotiations with Thailand, Merck offered
efavirenz at the price of US$500 per patient per year (PPPY), and Abbott offered
lopinavir/ritonavir at the price of US$2200 PPPY.
The Thai government rejected both of these offers due to the high prices and
issued compulsory licenses for both drugs in late 2006 and early 2007. These
licenses allowed the Thai government to import generic versions of the
antiretroviral drugs from India at a significantly lowered cost � generic
efavirenz at US$224 PPPY and generic lopinavir/ritonavir at US$676 PPPY. Brazil
issued a compulsory license for efavirenz in 2007.
Merck offered efavirenz to
Brazil at the price of US$760 PPPY. By issuing a compulsory license for
efavirenz, Brazil was able to generically import efavirenz at US$170 per
patient/y. However, Brazil did not issue a compulsory license for lopinavir/ritonavir.
In response to Brazil's persistent price negotiations and credible threat of
using a compulsory license, Abbott Laboratories eventually lowered the price of
lopinavir/ritonavir in Brazil from US$3241 PPPY to a price of US$1380 PPPY for
an older version and US$1518 for a heat-stable version.
The discounted price of Abbott's lopinavir/ritonavir in Brazil was still more
than twice the price of the generic lopinavir/ritonavir that Thailand acquired
through compulsory licensing and importing from India. To navigate the
complicated nature of imposing compulsory licenses, Thai officials diligently
educated themselves on the TRIPS Agreement and the Doha Declaration. Notably,
conferences with the WHO and non-governmental organizations such as Medecins
Sans Frontieres and Knowledge Ecology International helped to strengthen Thai
officials' capacity to deploy compulsory licenses and TRIPS flexibilities.
Natco Pharma Ltd V. Bayer Corporation Order No. 45/2013
Fact of the case:
- Patentee - Bayer Corporation
- Applicant - Natco Pharma Limited
- API - Sorafenib Tosylate
- Dosage Form - Oral
- Brand Name - Nexavar
- Strength - 200mg
- Category - Anticancer (liver and kidney cancer treatment)
Natco a generic drug manufacturing company requested bayer for giving it a
voluntary license. The request was denied and so natco filed an application in
the controller of patents court for grant of CL. In accordance with the
provisions of the Indian law's section 84 of the patent act, the controller of
patents started with competing claims of both the patentee and the applicant and
finally Natco received a license from the controller for manufacturing the drug
in bulk and marketing in form of tablets on the basis of the following grounds.
Reasonably affordable price:
- Nexaver cost - the cost of the cancer drug sorafenib in 200mg tablet varies vastly in branded and generic category.
- Branded category - Rs 280,428 per patient per month
- The generic drug
- Sorafenib was available from Cipla for Rs 27,960
- Natco is providing the same at Rs 8,880, after the judgment for the grant of CL Cipla has slashed its price further and now it is available for Rs 6,600 per patient per month.
- Requirement of about 23,000 bottles per month
- No bottles of Nexaver were imported in India in the year 2008, and only 200 bottles were imported in 2009. In 2010, there was no import.
- The importance of the time period lies in the fact that the government of India granted Bayer a patent on the drug Nexaver in 2008 after assessing that Bayer would fulfill the reasonable requirements of the public.
- Bayer did not manufacture the drug in India as it focused on imports of its bottles.
Patented invention is not worked in the territory:
The controller also cited that the invention was not worked in the territory in
India, natco argued that even though bayer had the manufacturing facilities in
India, it did not manufacture the drug in India. Bayer said it did not do so
because of economic reasons and argued that worked in the territory could not
mean manufactured in India. The controller of patent in his judgment awarded the
first CL in India under the new WTO rules, it was granted on the following
terms. The applicant Natco has very limited rights to manufacture and
commercially sell the drug. Natco cannot sublicense to another party, it is a
non-assignable and non-exclusive license with no right to import the drug
The CL drug can be sold only for the treatment of liver and renal cancer. Natco
cannot use this license for alternate or subsequent use of the drug.
Natco has to pay royalty for the drug at a rate of 6% of net sales to the patent
owner bayer this was in consonance with article 31(h) of TRIPS read with article
90(1) of the act. For one-month treatment the controller has set the price of
natco's drug at Rs 8800. Natco as committed before has to provide the drug free
of cost to at least 600 needy and deserving patients per year
Natco cannot or it has no right to represent privately or publicly that the
product manufactured by it is the same as Bayer's Nexaver. Bayer has no
liability for the drug to be manufactured by natco, which must be physically
distinct from nexaver dosage form following the grant of CL to natco, bayer has
filed a petition with the IPAB to order stay on the CL. But appellate board
dismissed the Bayer's request for the stay and thereby upholding the decision.
BDR Pharma V. Bristol Myers Squibb (BMS) C.L.A. No. 1 of 2013
Controller of Patents, Patents Office, Mumbai (Before Chaitanya Prasad,
Parties in the case:
M/s. BDR Pharmaceuticals International Pvt. Ltd Applicant Versus M/s. Bristol Myers Squibb Company Patentee
BDR Pharma filed for a Compulsory License in March 2013, for Bristol Myers
anti-cancer drug "Dastanib". The Controller rejected the compulsory license
application of BDR Pharma on 29th October, 2013 on the grounds that BDR Pharma
could not make out a prima facie case for the grant of a compulsory license,
because as the applicant, BDR Pharma had failed to make efforts to obtain a
voluntary license from the patentee on reasonable terms and conditions.
In the most recent case of compulsory licensing in India. Lee Pharma, a
Hyderabad based Indian pharma company, filed an application for compulsory
license (dated 29.06.2015) for the patent covering AstraZeneca's diabetes
management drug Saxagliptin.
In order to make a prima facie case, Lee Pharma strived to show that their
negotiations for a voluntary license with the patent owner were not rewarding as
they did not receive any response from the Patent owner within a reasonable
The grounds alleged by Lee Pharma were that:
- the patentee has failed to meet the reasonable requirements of the
- the patented invention is not available to the public at a reasonably
affordable price, and
- the patented invention is not worked in India.
However, all the three grounds of Lee Pharma were rejected by the Controller
General and the Compulsory license application was refused
The application was rejected on the basis that Lee Pharma failed to demonstrate
what the reasonable requirement of the public was with respect to Saxagliptin
and further failed to demonstrate the comparative requirement of the drug
Saxagliptin vis-a-vis other drugs which are also DPP-4 inhibitors.
Further, Controller General held that all the DPP-4 inhibitors were in the same
price bracket and the allegation that Saxagliptin alone was being sold at an
unaffordable price was unjustified.
The Controller General also stated that Lee Pharma failed to show the exact
number of patients being prescribed the patented drug and how many of them were
unable to obtain it due to its non-availability and consequently it was
difficult to hold whether manufacturing in India was necessary or not.
Considering the last two compulsory license cases in India, it is clear that the
provisions of compulsory license cannot be misemployed to diminish the rights of
the patent holders and that the basic jurisprudence governing the subject of
compulsory license lies in balancing the conflicting interest of the patentee's
exclusive rights and making the invention available at an affordable price to
third parties in case of need.
Lee Pharma v. AstraZeneca AB (C. L. A. No. 1 of 2015)
This case the license sought for Saxagliptin which is used in the treatment of
Type-II Diabetes Mellitus. On June 29, 2015, Lee Pharma filed an application for
compulsory license for patent covering Astra Zeneca's diabetes management drug
Saxagliptin. The application was rejected stating that no prima facie case had
been made out on any of the three grounds under section 84 (1) of the Indian
Reasonable requirements of the public had not been satisfied:
Lee Pharma failed to demonstrate reasonable requirements of the public with
respect to Saxagliptin and further failed to demonstrate the comparative
requirements of the drug Saxagliptin & other drugs.
The patented invention was not available to the public at a reasonably
affordable price. It was held that all related drugs were in the same price
range and that Saxagliptin being sold at unaffordable price was not justified.
The patented invention had not been worked in the territory of India.
Lee Pharma also failed to show the exact quantitative requirements of
Saxagliptin in India. Therefore, it could not be concluded whether manufacturing
of the drug in India was necessary or not.
Compulsory licensing is important for underdeveloped or developing countries.
As, the resources which are not available in the particular country can be a
necessity for that country. Medicine is a necessity for the society and if a
patented drug is available in a country but is very expensive that a normal
person cannot afford that drug then the government of that country has to do
something for the people who cannot afford it. Compulsory licenses will make the
similar product available to the people who cannot afford that drug.