When policy is matter of life & death

Thanks to a troika of policymakers, a crucial anti-cancer medicine is now affordable. The story behind India’s first ‘compulsory licence’ and what it heralds for other exorbitantly costly medicines


Pankaj Kumar | March 6, 2013

The Intellectual Property Appellate Board of India on March 4 rejected the German firm Bayer AG's appeal of a ruling last year that allowed Hyderabad-based Natco Pharma to produce a cheaper generic version of Bayer’s kidney and liver cancer drug Nexavar. This would result in a treatment that more people would be able to afford. Our cover story for September 1-15, 2012 issue went behind the scenes to narrate how the initiatives of policymakers brought about this welcome change. In light of the latest ruling, we revisit that cover story.

What is the price of life? This is not a rhetorical question or about fixing compensation after a disaster. What is the price of life for a man facing death? That is the uncomfortable question many cancer specialists have to ask themselves.

Also read Shanta Kumar's interview: “This loot in pharma sector must be stopped”

Science has made some progress in battling cancer, and there are medicines that can prolong life by a few months. But these medicines are developed, largely by multinational giant companies, after investing billions of dollars and they do not come cheap. In fact, they come at a price that most middle-class families will not be able to afford. That is when the uncomfortable question comes up: can you pay (say) Rs 8 lakh to live one more month? Oncologists make a quick guess if a patient can pay the price or not, and prefer not to prescribe the life-extending drugs to most.

However, there are chinks in the market-oriented economy and the world is finding ways to make such medicines cheaper. What is needed is a policy tweak, a few good men striving to give a human face to governance.

This is the story of how a set of politicians and bureaucrats came together to come up with an unprecedented move that is now bringing a rare smile in families hit by the dreaded disease.

A doctor who can barely afford to heal himself
Take the case of 57-year-old Dr Ashok Sharma, a resident of Punjabi Bagh extension in Delhi. A renowned physician who earned a reputation of saving many a life during his practice in Bihar and then in Delhi today watches his own life slip by every other day. A Patna Medical College graduate who served in many prominent Delhi hospitals, Dr Sharma was diagnosed with renal cancer of an advanced stage in June 2011. Shock led to disbelief which was sadly disarmed by multiple test reports. Dismay seeped in, rendering him bedridden. His world came down crashing. His practice stopped. Friends and relatives replaced patients among visitors to his house.  

In the past one year since, Dr Sharma’s family has spent more than Rs 20 lakh on treatment, three quarters of which – Rs 15 lakh – were spent on medicines alone. The remaining five lakhs were spent in diagnostic tests and hospitalisation. His earnings of a lifetime are already exhausted. His lone son who works as a marketing manager in a private firm is now spending his own small savings to buy medicines and pay for the hospital bills.   

Among the medicines that Dr Sharma has been on are Sutent (which costs Rs 2 lakh a month, i.e. 120 tablets), Votriant (Rs 50,000 a month), Toricel (Rs 2 lakh a month), Avastin and Interferon (both of which cost more than Rs 2 lakh a month). The hard-to-believe prices of these drugs can affect the financial health of any family. The drug he now needs, Sorafenib (developed and marketed jointly by multinational giant Bayer and Onyx Pharmaceuticals under brand name ‘Nexavar’), costs Rs 284,428 a month.

So when the Sharmas got to know that they can get Sorafenib for only Rs 8,800 a month, it was a big relief for them, the first one for the family since June 2011 when Dr Sharma was diagnosed with the dreaded disease. 

The price of the drug has come down because Indian authorities in March invoked the ‘compulsory licensing’ provision of the trade-related aspects of intellectual property rights (TRIPS) agreement under the World Trade Organisation (WTO). Following this, Hyderabad-based firm Natco Pharma was given ‘compulsory licence’ (see explanatory box) to manufacture a generic version of Nexavar. It finally arrived in the market in end-July under the brand name Sorafenib.

Policy planning – as if people mattered
The credit for this transition to affordable cancer cure goes to adroit policymakers including the political leaders and bureaucrats of three ministries that deal with the business of medicine: the ministries of health, of chemicals and fertilisers (the department of pharmaceuticals) and of commerce and industry.

But the trigger came from the industry. Natco Pharma, a young start-up led by chief executive officer Rajeev Nannapaneni, had first approached Bayer itself, with a request to permit manufacture of a generic version of Sorafenib. The Indian firm told the multinational that it would pay the royalty while bringing down the price tag and making it affordable for more and more patients. Bayer of course declined the proposal, but in the process Natco had made the right move towards securing compulsory licence.

In early 2011, Natco approached the health ministry with its proposal to manufacture the generic version. The company had done its homework. Natco representatives told health ministry officials that the generic version could be permitted due to a couple of factors. One, going by section 84 of the Indian Patents Act, Bayer should have started manufacturing the drug in India within three years of getting the licence, but the German giant had been only importing the medicine and selling it here. Secondly, Bayer was selling Nexavar at an “exorbitantly high price” – Rs 284,428 for the month-long dose – which makes it a fit case of compulsory licence, according to Natco.

It was LC Goyal, then additional secretary and director general (central government health scheme - CGHS), who encouraged Natco representatives and assured them full support in getting compulsory licence from the Controller General of Patents, Designs and Trade Marks, say health ministry sources who were associated with the developments.

Natco then approached the controller general. Meanwhile, Goyal, an IAS officer of 1979 batch (Kerala cadre), started doing his bit. His task was clear: to see if a case can be made to issue compulsory licence, that is to say, if an Indian manufacturer can be allowed to make generic copies of the costly drugs discovered and patented by multinationals. The World Trade Organisation (WTO) regime allows such a move on humanitarian grounds. For example, patents and copyrights can be set aside in case of an epidemic or a ‘national crisis’. Goyal and his colleagues set themselves to figure out if India could take a legal route to tame profit-hungry multinationals and save the lives of thousands of poor patients.

Health ministry officials say Goyal, determined to do his bit for the cause of cancer patients, spent six months last year researching the issue, collecting the data of patients and prices and collating evidence. Of course, health minister Ghulam Nabi Azad backed him fully, the officials add.

“Goyal is a trendsetter,” says an officer who has worked with him for long years and would not like to be named. “He does what he thinks is right. He prepared the ground by collecting data and drafted a strong argument in favour of bringing down exorbitantly high prices of lifesaving and life-extending drugs,” the officer said.

Another official in the health ministry says, “Right to Life is a fundamental right. How can a person be denied this right only because he does not have money to buy medicines? That is the logic behind the health ministry’s dream project to provide free medicines to all. As a beginning in that direction, Goyal was in a hurry to see prices of lifesaving drugs slashed.”

Goyal, now additional secretary with the cabinet secretariat, prefers to remain away from limelight.

Armed with the dossier from Goyal, the health ministry presented the case before the commerce ministry, the nodal ministry when it comes to the pricing of medicine. The top brass of the commerce ministry then went into a huddle, recall some of the officials involved.

It was now commerce and industry minister Anand Sharma’s turn to take the lead. He called a meeting of stakeholders in September last year to draw up a result-oriented strategy.

Natco Pharma’s application gave the commerce ministry an opportunity to invoke the lifesaving drugs clause in the TRIPS. There are two ways in which the compulsory licence provision can be invoked – through section 84 or section 92 of the patents law. Commerce ministry officials say all the adjudication procedures were followed “and the case was made airtight” with the application being made a year ago under section 84. It had to be “airtight”, as powerful lobbies were involved. The ministry had quietly been preparing for something like this for three years, they add.

At the health ministry, on the other hand, one of the core concerns was to see that any move towards cheap copies should not be at the cost of all-important research and development (R&D). Otherwise, funding towards developing new drugs will be hurt.

“We are very clear that we don’t want R&D to suffer because if it does, there will be no new drugs. People will suffer. Provision of compulsory licence is an exception to the rule, only meant for exceptional circumstances like a crisis or epidemic,” says a senior health ministry official.

Controller general sets precedence
Meanwhile, the ball was in the controller general’s court, where Natco, Bayers and other stakeholders had made their pleas by February. On March 12, the then controller general of patents, PH Kurian, an IAS officer of 1986 batch (Kerala cadre), made history by granting the country’s first compulsory licence. (Incidentally it was his last day in office, he then moved to the home state as principal secretary of IT department, and commissioner, PWD a week later.)
The controller general in his 62-page order accepted Natco’s arguments that Bayer had failed to meet the requirement of the Indian market as Nexavar was available at a price few could afford. Moreover, he noted that the drug was not manufactured in India, thus opening up the option of compulsory licence.

The decision, first of its kind, sets a precedent for generic and affordable copies of patented costly drugs. When contacted, Kurian refused to take credit for the decision. “Whatever judgment I had to give, I gave it in my judicial capacity. It was based purely on merit and substance,” he said.

Bayer has approached the Intellectual Property Appellate Board (IPAB) against the order and the board is in the process of hearing out its arguments. However, there is no stay on compulsory licence.

In fact, Natco had made all preparations in advance, and started manufacturing the medicine in no time after the permission. Natco’s generic copy of Nexavar was released in the market in July under the brand name Sorafenat. Of course, Natco has to fulfil various terms and condition and it has to pay six percent loyalty to the patentee (Bayer). Natco has also committed to donate free medicine to 600 needy patients each year.

The final outcome has been welcomed by all, especially health activists. “It was a welcome decision, a trendsetter and would bring much relief to poor patients who were unable to have access to some of cancer medicines,” says Dr Mira Shiva of All India Drugs Action Network.

Multinationals and big pharma, on the other hand, are jolted. For example, the Organisation of Pharmaceutical Producers of India (OPPI), a forum largely of foreign companies, was disappointed with the controller general’s judgment. “Compulsory licences should be used only in exceptional circumstances, such as in times of a national health crisis. If used arbitrarily, compulsory licences will serve to undermine the innovative pharmaceutical industry and will be to the long-term detriment of the patient,” said Ranjit Shahani, OPPI president and head of Novartis India.

What next
The first compulsory licence can be a one-off phenomenon, or can go on to become a game-changer. Emboldened by public support, the ministries of commerce and health have started a consultative process to identify other lifesaving drugs which are beyond the reach of most patients but can be replicated.

“Though no application is pending with the commerce ministry for compulsory licensing but the health ministry has been asked to identify lifesaving drugs for compulsory licensing,” confirm sources in commerce ministry.

Once again, Goyal was named the head of an inter-ministerial committee to handpick such drugs for which compulsory licence can be justified. While Goyal has moved on to the cabinet secretariat, his successor is yet to be named, and the process remains on.

Top sources in the health ministry indicate that while no drugs have been finalised, the government is looking at the question in terms of diseases. “We are looking if treatment for TB, HIV and hepatitis can be made more affordable,” says an official.

The officials hint that in addition to section 84 of the patent law, also under consideration is section 92, which grants the government the power to allow the manufacture of generic versions through notification in crisis-like situations.

Commerce minister Anand Sharma acknowledged as much when he said recently, “While we do not intend to invoke compulsory licensing as a routine measure, we feel that for lifesaving drugs which are beyond the reach of the poor, necessary flexibilities available to developing countries like India will need to be looked at.”

In the days to come, the issue of drug pricing – and the related matter of generic/patent debate – will remain crucial to the health policy. As with Sorafenat, the outcomes will depend above all on officials who frame and implement policies keeping people in mind.

[This interview appeared in the September 1-15 issue of Governance Now.]





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