Generic drugs are created to be bioequivalent to brand-name drugs; however, as they do not need to undergo rigorous testing, they tend to be cheaper than their brand-name versions. India is one of the largest producers and consumers of generic drugs. Under the Indian legal system, a generic drug manufacturing company can apply to the Central Drug Standard Control Organisation (CDSCO) for market approval even if the patent of the branded version is still valid. Unlike the United States Food and Drug Administration, which has the “orange book”, the CDSCO does not maintain a register of patented pharmaceutical products. Therefore, generic drug manufacturers act at their own risk when introducing a generic drug to the market, without necessarily being aware of the patents that are in force.
There have been several attempts by big multinational pharmaceutical companies to pressure the CDSCO to incorporate “patent linkage” . Patent linkage refers to the communication between regulatory authorities and the Patent Office to prevent market approval of generic drugs until after the patent of their branded counterpart has expired . However, the courts have rejected these attempts in the interest of public health and in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities. Under TRIPS, India is under no obligation to incorporate patent linkage.
TRIPS came into effect on January 1, 1995. It is a comprehensive and multilateral agreement that sets out the minimum standards of protection to be provided by each country’s domestic law. Before access to the TRIPS agreement, India’s Patent Act only offered patent protection for manufacturing processes and not for substances . Further, the agreement extended the term for patent protection from 14 to 20 years . Drugs that received strengthened patent protection under TRIPS allowed pharmaceutical companies to enjoy monopoly benefits; however, deadweight loss is a typical issue that is observed in monopoly markets . In other words, due to strengthening intellectual property (IP) rights, a manufacturer may benefit from maximizing profit by making the drug costlier, but fewer people may benefit from this resulting in a social loss .
For developing countries to reach their social goals, The Doha Declaration on TRIPS and Public Health of November 14, 2001, was adopted by World Trade Organization (WTO) members, which includes India. Paragraph 5(b) of the declaration states that a compulsory license can be issued by a regulatory body to a third party to exploit an invention without the patent holder’s authorization . Therefore, the amendment allows the licensee to produce a generic drug and be sold at a lesser price in the interest of promoting public health . Meanwhile, to protect the incentive for innovators to invent, TRIPS also emphasizes that member countries should negotiate with patent holders on “reasonable commercial terms and conditions”, also referred to as fair renumeration. As TRIPS does not impose uniform legal requirements for “adequate” fair renumeration, different countries observe different practices across industries. Recently, the pharmaceutical industry had a uniform agreement for royalties ranging from as high as 4–5% of the net revenue. However, since the amendment of the Indian patent Act in 2005, which was made to include TRIPS flexibilities, India has only provided one compulsory license for the manufacturing of generic versions of life-saving drugs.
Compulsory Licensing in India
Over the last 17 years, India has only issued one compulsory license for life-saving drugs. In 2012, Natco Pharma was granted a compulsory license to manufacture a generic version of Bayer’s Nexavar (sorafenib tosylate), a drug used to treat advanced thyroid, liver, and kidney cancers . The grounds for granting the license were that the drug was not manufactured in India and was unavailable to the public as it was sold at a high price of INR 2.8 lakh (equivalent to USD 3,506.36/-) for monthly treatment. Even though Natco Pharma currently pays a royalty of 6% of its quarterly sales  to sell its generic version in the Indian market, the generic version is significantly cheaper at INR 8,880/- (equivalent to USD 110.19/-) per monthly treatment; thus, allowing more people to benefit from the drug.
In 2013, BDR Pharmaceuticals Pvt Ltd applied for a compulsory license to manufacture Bristol Myers Squibb’s anti-cancer drug, SPRYCEL (dasatinib). The courts rejected the application because the company did not show enough evidence that they had tried to obtain a license from the patent holder. In 2015, Lee Pharma applied for a compulsory license to manufacture the generic version of the diabetic drug, Onglyza (saxagliptin). The courts rejected the application as several anti-diabetes drugs already exist in the market at a similar price range, and the company did not show sufficient evidence that the public would benefit from the generic version of the drug. Although these cases demonstrate that granting compulsory licenses should be adequately justified , it seems unlikely that several life-saving drugs do not meet the criteria.
In the Indian market, there are currently three targeted-therapeutic drugs that are used together with other treatments for optimal results to treat advanced-stage breast cancer. All three drugs, which include Novartis’ Kryxana (ribociclib), Pfizer’s Ibrance (palbociclib), and Eli Lily’s Vezenio (abemaciclib), are patent-protected and are imported to India resulting in high treatment costs (INR 48,000–95,000 per monthly treatment). In June 2022, a writ petition was filed by a retired bank employee who was diagnosed with HER2-negative advanced (metastatic) breast cancer. The Kerela High Court observed that most of her monthly treatment costs were spent on ribociclib, which alone costs INR 58,140/- per month (equivalent to USD 735.50/-) and was substantially more than her monthly pension of INR 28,000/- (equivalent to USD 354.20/-) . The petitioner urged the government to use section 92  and section 100  of the Indian Patent Act to make the drug more accessible to the public. Shortly after the death of the petitioner, the Kerela High Court directed the Department for Promotion of Industry and Internal Trade to consider issuing a compulsory license for ribociclib.
In December 2022, in a letter to Prime Minister Modi, Dr. Lorho S. Pfoze, a member of Lok Sabha and joint convenor of the Indian Medical Parliamentarian Forum , urged the government to appoint an expert panel to assess the high costs of cancer treatment. The letter also demanded that the government invoke section 100 of the Indian Patent Act. While it remains silent on this direction, on January 3, 2023, the Kerela High Court passed a final order on a petition filed by breast cancer patients to nudge the Central government to reduce the costs of ribociclib .
Incidentally, on January 10, 2023, the Indian patent for palbociclib expired  and the following day, Sun Pharmaceuticals launched a generic version of the drug. Although Sun pharmaceuticals have not announced the exact price of their version of palbociclib, it is expected to be at least 80% less than that of the branded version .
On January 16, 2023, Dr Reddy’s, an Indian generic drug producer, announced that it has acquired the trademark rights of the breast cancer drug Ibrance (sold as Primcyv in India [palbociclib]) from Pfizer. Following the trademark acquisition, Dr Reddy’s will manufacture the generic version at 85% less than the price of its brand-name version .
Conclusion: With an expanding geriatric population and looming recessionary fears globally, the social costs of patents should be thoroughly assessed. Even after accessing the TRIPS flexibilities, generic drug manufacturers have largely failed to make life-saving drugs more accessible to the Indian public. A possible deterrent to applying for compulsory licenses may be the high cost of royalties that these companies might have to pay patent holders. Therefore, there seems to be more incentive to wait for the patent to expire before introducing a generic version to the market. This would mean that several years would need to pass before the Indian public may have access to the same drugs as developed countries or worse, the medicines available in the Indian market will always lag by 20 years.
- Bristol-Myers Squibb Company & Ors v. Dr. BPS Reddy & Ors, I.A.No. 3696 of 2013, I.A.No. 13386 of 2013, I.A.No. 11383 of 2014 in CS (OS) No. 2680 of 2008 prohibiting the Drug Controller General of India (DCGI) from granting market approval for a generic version of Sprycel (dasatinib, used to treat chronic myeloid leukemia) and secured an exparte injunction.
- Patent linkage regulation does not exist in India. According to the high court’s decision on Bayer Corporation and Ors v. Cipla of India (UCI) and Ors, 162 (2009) DLT 371, where Bayer attempted to prevent the Drug Controller General of India (DCGI) from granting market approval for the antiplastic agent, Soranib (Bayer’s Nexavar [patent number IN 215758]), the Indian Patent Office (IPO) and the CDSCO act as two separate entities working under different laws.
- Article 27.1 of the TRIPS agreement https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
- Article 33 of the TRIPS agreement https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
- Deadweight loss can be an economic measure of when a socially optimal quantity of a good or service is not produced.
- By 2001, the need to include flexibilities when it became apparent as developing countries were still struggling to abate public health crises, including those related to HIV/AIDS, tuberculosis, and malaria.
- Paragraph 5(b) of The Doha declaration on The Doha Declaration on TRIPS and Public Health of November 14, 2001
- Article 31 of the TRIPS Agreement, https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
- A compulsory license requires that the public will substantially benefit from the generic version; that the generic manufacturer has demonstrated evidence that they have tried to obtain the license from the patent holder; and that the application for the license is made three years after the patent was filed.
- Section 92 of the Indian Patent Act empowers the Central government to issue compulsory licenses subject to conditions; a) it is a national emergency; b) there is an urgent need for the generic drug; c) the manufacturing of the generic drug must be for non-commercial use.
- Section 100 of the Indian Patent Act
- The IMPF constitutes qualified medical doctors among the members of the Lok Sabha and Rajya Sabha
- The US patent was set to expire on the same day, but an extension was provided, and Pfizer now has patent protection for Ibrance until March 2027.
- Most generic drugs are 80% cheaper than their branded versions. https://www.fda.gov/media/107601/download
Disclaimer: The present article intends to provide general guidance on the subject, and you can also consult us in your specific case.