India cancer ruling opens door for cheaper drugs

Editor's note: the original version of this article misidentified the ruling — it described the Supreme Court's Novartis/Gleevec decision, which actually came in April 2013. This version covers the real March 2012 event.

The short version: In March 2012, India's Controller General of Patents granted the country's first-ever compulsory license for a pharmaceutical product: Natco Pharma was allowed to manufacture and sell a generic version of Bayer's liver-and-kidney cancer drug Nexavar (sorafenib), at roughly 3 percent of Bayer's price.

What happened

Bayer sold a month's course of Nexavar in India for about Rs 2.8 lakh — putting it out of reach for nearly everyone who needed it. Natco, an Indian generics maker, applied for a compulsory license under Section 84 of the Patents Act, arguing that the drug was not available to the public at a reasonably affordable price and that Bayer's manufacturing in India was inadequate.

The patent office agreed. Natco would pay Bayer a 6 percent royalty on net sales and sell its version at Rs 8,800 a month — a price cut of roughly 97 percent.

Why it was a landmark

Compulsory licensing is permitted under the WTO's TRIPS agreement for exactly this situation: a patented medicine priced beyond the reach of the population that needs it. Thailand had used the tool in 2006–2008 for HIV drugs, but India — the "pharmacy of the developing world" — had never done it before. The decision signaled that India's generic-drug industry would no longer treat patented-cancer-drug prices as untouchable.

Bayer appealed, arguing the ruling undermined innovation incentives. The compulsory license was upheld — the royalty was later raised to 7 percent on appeal — and the ruling stood as one of the decade's most important access-to-medicines decisions.

The related case

Separately, the Supreme Court was hearing Novartis's challenge over its leukemia drug Glivec (imatinib) — the Section 3(d) "evergreening" case. That decision would come in April 2013, when the court rejected Novartis's patent application too. March 2012's Natco ruling was the first blow; Glivec was the second.

The honest bottom line

The tension between innovation incentives and access to medicine has no clean resolution. But in March 2012, India chose access — and a kidney-cancer patient's monthly drug bill fell from Rs 2.8 lakh to Rs 8,800.

From the archive: this piece was originally published March 13, 2012, and has been corrected and rewritten for accuracy.