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Acute Shortage of Remdesivir: Section 92 And 107 A(b) of Patent Act is the Answer

Amid the surge in COVID-19 cases, shortages of antiviral drug Remdesivir are being reported across the country. The antiviral drug used for the treatment of COVID treatment is now being sold in black market. According to medical practitioners, the anti-viral injection that costs between Rs1000 and Rs5,500,depending on the brand, is being sold for Rs30,000 to Rs 40,000 in the black market. Families of people undergoing treatment for the viral disease were forced to pay double the price for the injections. Due to increase in number of critical patients, the demand and supply of this medicine has imbalanced grossly. As per Govt sources, the daily production of injection Remdesvir is about 1.5 lakh vials.

India is called pharmacy of the world. She is known for the production of low- cost medicines around the world and the pharma sector of India contribute a major portion of India’s total export. Even in the trying time of second wave of Corona infection within boundaries, India exported the vaccine to more than 80 countries under Vaccine Matri programme.

Now question arises that even after such a robust infrastructure in pharmacy, why India failed to provide the adequate amount of remdesivir injection to her critical ill patients. Although, there are several reasons for the inadequacy of this medicine in market reasons being non-availability of raw materials, black marketing, limited resources at production facilities, number of workers etc among others. But a major factor having legal implications around is Law of Patent. The patent laws govern the production of medicine around the world. The World Trade Organisation, TRIP Agreements and respective municipal patent laws regulate the production of medicine.

Compulsory Licence:

Patent laws ensure that the benefits of production of a particular thing should be enjoyed by that person first who invented the thing. Same is applicable on medicines. Injection remdesivir is patented by an American company Gilead Sciences. To expand the supply of remdesivir across the globe, Gilead Sciences has signed non-exclusive voluntary licensing agreements with four Indian generic pharma manufacturers, namely; Cipla, Hetero Labs, Jubilant Life sciences and Mylan. Non-Exclusive licence is a licence that can be granted to more than one entity. For example, a patent holder can grant non-exclusive licences to multiple generic drug manufacturers.

A voluntary licence is a voluntary agreement reached between the patent holder (licensor) and the licensee. Terms and conditions of such a licence are agreed between the patent holder and licensee, and can specify in which countries a medicine can be sold and what the royalty will be. The MPP is a mechanism that manages voluntary licences between multiple licensors and licensees.

The above stated India’s pharma company can sale this drug in 127 countries, that are mostly low- and middle-income group nations. Although the government has restricted the export of this drug in light of acute shortage in India, but still the state failed to take alternative steps to grant compulsory licences to other pharma companies based in India. Some of the largest pharma companies like Sun Pharma has huge capacity and resources to make such drug with short notice.

Although such companies are at liberty to sigh contract with Gilead sciences to do similar non- exclusive agreement, but companies have their own decisions keeping the commercial values in mind. In such circumstances, the only solution left is section 92 of Patent Act 1970, that Indian state has not exhausted till date.

What is Section 92 of Patent Act 1970:

Sec 92 of said Act talks about

compulsory licencing to certain companies at time of public needs or emergencies without the consent of patent holder. The relevant portion of section 92 is reproduced here for easy reference:
92. Special provision for compulsory licences on notifications by Central Government:
  1. 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:
    1. 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;
       
    2. in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour 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.

Under article 92 as mentioned above, central government may take steps to grant the compulsory license to other manufacturer in case of national emergency. Covid 19 in India has become a severe national health emergency and all the necessary steps to any extent may be taken to contain this deadly virus. Indian generic drug manufacturers have the ability and the will to manufacture the generic Remdesivir version at a very low and affordable price.

The Indian companies after negotiations for manufacturing Remdesivir under Gilead’s license have fixed that Remdesivir will be sold at a “concessional” price of USD 400 or Rs 30,000-35,000 for the same five-day course. The cost of manufacturing Remdesivir for a full course as worked out by experts is less than USD 10 or Rs 750 in the US, and about Rs 100 in India. Gilead, by virtue of its patent monopoly, is holding the world to ransom by asking a price that is hundreds of times its cost.

Moreover, under Clause 92A of the Patents Act, compulsory license can even be issued for export to countries that may require the drug and not have the capability to manufacture it. Given Gilead’s extortionate price for Remdesivir, the government should immediately issue compulsory license to a number of Indian manufacturers. It is pertinent to note that the restriction of licence is not applicable on some countries (generally low-income group nations) like Bangladesh and hence Bangladesh does not fall under the restrictions of TRIP agreement. She can manufacture the remdesivir even without the licence from Gileads Science company.

Now second important task which government of India can do is to import remdesivir from Bangladesh as the latter has started to produce it in generic form. A few experts says that under TRIP agreement, the import by Bangladesh to India shall be in contravention of international patent law, but this is not true. Let’s see what are the right vested in Gilead sciences and state of Bangladesh in respect of import of remdesivir injection.

Gilead’s Extent of right to prevent import of Remdesivir:

Under section 48 of India’s Patents Act, 1970, Gilead, being the patent holder for Remdesivir, has an exclusive right to prevent third parties from importing it to India without its consent.

However, this right is not absolute. Under section 107A(b) of the Act, any person can import the drug (without the patentee’s consent) “from a person who is duly authorised under the law to produce and sell or distribute the product”. Therefore, import of Remdesivir by any person in accordance with this provision will not be considered as an infringement of Gilead’s patent rights and Gilead has no right to prevent such import.

Is the import of Remdesivir from Bangladesh covered under Section 107A(b) of Patent Act 1970?

Bangladesh, being a least developed country (LDC), is not obligated to protect product patents under TRIPS until 2033. Therefore, any person in Bangladesh can manufacture, use, sell or distribute a drug which is patented in other countries without seeking a license from the patentee. Pursuant to this, many pharmaceutical companies in Bangladesh (Beximco Pharma, Eskayef Pharma etc.) have been manufacturing generic version of Remdesivir without obtaining a license from Gilead. Now, whether an import from these companies is permitted under Section 107A(b) depends on whether these companies qualify as “a person who is duly authorised under the law to produce and sell or distribute the product”.

Before the 2005 amendment to the Patents Act, one could import only from a person who was “duly authorised by the patentee” to manufacture and sell the product. This meant that even if the product was not patented in the exporting country or the patented product had already been sold once by the patentee, it could not be imported in India unless the particular exporter was “authorised by the patentee” to manufacture and sell the product in that country.

So, since Gilead has not authorised any person to manufacture and sell Remdesivir in Bangladesh, under the pre 2005 provision, a person in India could not have imported the drug without Gilead’s consent.

However, after the amendment, the requirement of ‘authorisation from the patentee’ was done away with. One can now import a product from any person who is ‘duly authorised under the law’, whether ‘authorised by the patentee’ or not. Unfortunately, however, it is still not clear what is meant by “duly authorised under the law” and it has not been interpreted by any court yet in my knowledge. Going by a plain meaning reading of the provision, as long as a person has obtained marketing approval for Remdesivir from the drug regulation authority in Bangladesh, they would be considered to be ‘duly authorised under the law’ to manufacture and sell or distribute the product. So, a person in India can legally import Remdesivir from them under Section 107A(b) without obtaining permission from Gilead.

From the above legal discussion, it can be safely inferred that India in such a national health emergency can invoke section 92 and 92A for compulsory licencing to other Indian pharmaceuticals company to meet the demand of this important medicine. Besides, India can import generic and low cost remdesivir from Bangladesh also using provisions of 107 A(b) of Patent Act 1970.

Written By: Lakshita Rajpurohit - Practicing Lawyer at District Courts in Jodhpur

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