CNV2-I2-6-Intellectual Property Rights
“The business of business should not be about money. It should be about responsibility.
It should be about public good, not private greed”
... Anita Roddick
Many CSR initiatives are initiated by pharmaceutical companies in partnership with Non-governmental organizations (NGOs) in tackling specific social problems. The corporates have clearly exhibited their ability to make a significant difference in the society and improve the overall quality of life. Pharmaceutical companies have the expertise, strategic thinking, manpower and money to facilitate extensive social change. They have effective partnerships with NGOs and the Government to boost social development in the country. However, the high prices of critical drugs for those, who need it and cannot afford the cost and their non-availability at the time of national health crises, remains questionable considering the other CSR initiatives by the pharma MNCs. Spending percentage of profits (as mandated by Government) in CSR related activities and on the other hand not reducing prices (forgoing huge profits) of critical drugs for needy ones, remains debatable under CSR definition.
The patent is an exclusive right granted for an invention, which gives a new technical solution to a problem, and is granted for a specific period to the inventor. With patent rights the inventor (individual or an organisation) is its legal owner to manufacture and sell the patented product or allow others to manufacture the product. Under the provisions of Patent Act, the compulsory license is an authorisation given to a third-party by the Government to make, use or sell a product or use a process, which has been patented, without the need of the permission of the patent owner. Although this works against the patent holder, generally compulsory licenses are only considered in certain cases of national emergency, and health crisis. There are certain pre-requisite conditions, which need to be fulfilled, if the Government wants to grant a compulsory license in favour of someone.
Compulsory License (CL) under the Patent system is an involuntary contract between a willing buyer and an unwilling seller imposed and enforced by the State. The WTO (World Trade Organisation) states that compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner. It is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property under TRIPs.
The provisions regarding compulsory licenses are given in the Indian Patents Act, 1970 and in the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement at the International level. Under the provisions of above Act of compulsory license’ are specifically given under Chapter XVI, and the conditions, which need to be fulfilled are given is Sections 84-92. The compulsory licenses may also be granted, under Section 92 A, for exports, under exceptional circumstances, in case of national emergency, extreme urgency of public non-commercial use by notification of the Central Government, or country, which has insufficient or no manufacturing power in the pharmaceutical sector to address public health issue.
The court judgment (2012) of NATCO Pharma Ltd. v. Bayer Corporation by the Controller of Patents, Mumbai is one of the first of its kind in India in the history of Patents Act, 1970, wherein the provisions of Section 84 have been invoked by the applicant for seeking the grant of a compulsory license. It has laid down the very foundation stone of the jurisprudence of compulsory licensing in patents with respect to pharmaceutical products in India and clarified the legislative intent behind provisions governing compulsory licensing under the Indian Patents Act, 1970, which is in line with TRIPs Agreement.
IPRs are mainly held by multinational corporations situated in the developed world, which not only raises egalitarian concerns, but also severely limits the possibilities of companies in poorer countries to realize improvements on existing inventions, as they cannot financially afford to secure freedom to operate, which systematically shrinks the number of potential innovators. Those inequities lead to an enormous burden for the global poor and since no institution is willing to assume the responsibility to fulfil the right to health and the corresponding right of access to essential medicines.
United Nations (UN) agency WIPO (World Intellectual Property Organization) argues that “under no circumstances human rights – which are inalienable and universal – be subordinated to intellectual property protection. Hence, IP laws must serve, and never overturn, the basic human rights to health, education, employment and cultural life”
A decisive turning point occurred in January 2001, when the Indian generics manufacturer CIPLA offered to sell the triple-therapy cocktail to Médecins Sans Frontières for & 350 US dollars per patient p.a. as against $10000-15000 pa. “Cipla’s dramatic price reduction, which received widespread media attention, has given the message home that the MNCs were abusing their monopolistic position and neglecting the service to the poor, who cannot afford the high priced patented medicines manufactured by them. It also focused attention on the effects of generic competition in bringing drug prices down.
It is observed that the general thrust of US trade policy during the last two decades or so has been to aggressively defend the global IP interests of the pharmaceutical industry. The American government has concluded several bilateral and regional trade agreements containing so-called “TRIPS-plus” provisions aimed at eliminating the “flexibilities” of the TRIPS Agreement and it has also exerted heavy economic and political pressure on Third World countries intent on using these same “flexibilities” (e.g. compulsory licensing) for the sake of protecting public health or promoting access to medicines for all.
One may insist that “all pharmaceutical companies have a responsibility to take reasonable measures to reduce the neglect of poverty-related diseases, but this moral appeal remains rather futile as against their profit motives and opportunities in markets. This creates a powerful pull in the opposite direction. Hence, for pharmaceutical companies in normal course no doubt initiate/perform CSR related activities/program, as mandated by Government, but it requires a more structural change to broaden their responsibilities under CSR.
A compulsory license is a legally sanctioned government decision that obliges the patent-owner to provide a license to another company to manufacture a generic equivalent of the medicine in question. That generic equivalent can then be distributed, under a different brand name and usually at a much cheaper price than the one set by the patent-owner. The compulsory license simply signals that the patent-owner will no longer be able to oppose the manufacturing and distribution of the generic equivalent by the company appointed by the government.
In countries that do not have domestic manufacturing capacity, however, compulsory licenses have proven less effective with regard to securing lower prices. This is due to the fact that the reach of a compulsory license is limited to the territory of the government that issues it. The government of a given country could, in theory, issue a compulsory license for a given medicine to a manufacturer (for exports) based in another country, but that license has no legal validity in that other country.
The compulsory licensing is a hugely debated issue in light of CSR. Many developing countries are giving importance to the compulsory licensing because of the unavailability and unaffordability of the medicines for critical diseases and also in emergencies (in large quantity) during epidemics. However, the developed countries are opposing this view as (according to MNCs) it would make innovation difficult for the pharmaceutical companies.
India’s first case of granting compulsory license was granted by the Patent office in 2012 to an Indian Company called Natco Pharma for the generic production of Bayer Corporation’s Nexavar. All the conditions of Sec 84 was fulfilled that the reasonable requirements of the public were not fulfilled, and that it was not available at an affordable price and that the patented invention was not worked around in India. This medicine is used for treating Liver and Kidney Cancer, and one month’s worth of dosage costs around Rs 2,80,000. Natco Pharma offered to sell it around for Rs 9,000 making this potentially lifesaving drug easily accessible to all parts of the society and not just the rich people. The Government took this decision for the general public benefit. This was heavily criticized by the MNCs as they felt the license should not have been given. However, Natco Pharma is paying the royalties to Bayer at a rate of 6% of all sales on a quarterly basis in accordance with the guidelines set by the United Nations Development Programme (UNDP)
In January 2013, the Health Ministry of India recommended three anti-cancer drugs ‘trastuzumab’, ‘ixabepilone’, and ‘dasatinib’ for compulsory licenses. This will allow the Government to sell these drugs at a significantly lower price and will also allow the people (who cannot afford the drugs originally) access to these drugs.
In conclusion, the patient versus patent issue is one of the most important problems now in the modern healthcare system. Although India has only passed one compulsory license yet, the number of compulsory licenses granted worldwide are on the rise. The underdeveloped and developing countries want to pass compulsory licenses, and the developed, and the big pharmaceutical companies do not want the compulsory licenses to be passed. Is it so that under their profit earning motives, compulsory licensing is not falling under their own CSR mandate? Hence, the major changes are required in their (MNCs) understanding and adopting CSR in more broader sense to have its benefits pass on to poor and needy in the society and bridge the gap between patient and patent.
Dr Vinod Sople, Dean (Research), ITM Group of Institutions