India’s Decision to Invoke Compulsory Licensing

A variety of factors such as growing population and economy, increasing life expectancy, expanding middle class, higher income levels, rise in incidence of diseases, increased government outlays and better awareness about health are expected to make India’s health care a US$ 280 billion industry by 2020[1].

Despite this growth, health care delivery and services in India continue to be lacking. India houses 16% of the world population, 21% of the global diseases and the largest burden of communicable diseases in the world[2], yet its health care infrastructure is one of the weakest and not comparable with other developing nations. The government spends just 0.9% of GDP on health care.

Health care costs in India have risen in the last few years.  As new technology and better products are introduced, and medical negligence cases are brought under the purview of consumer courts, health care costs have increased. To make matters worse, health insurance covers only 14% of the population[3]. A WHO study has reported that 40 per cent of Indian families end up in debt due to high medical expenditure.

On one hand, it is in this context that the decision by the Indian Patent Office to issue a compulsory license (CL) to Natco for Bayer’s anti-cancer drug Sorafenib must be viewed. The CL means the drug will now be available at Rs 8,800 per month, a 97% reduction from Bayer’s Rs 2.8 lakh. Globally, people working on public health and access to medicines have welcomed the decision.

On the other hand, the first CL issued in India, has set a precedent. This is a rare instance globally where a general CL has been issued, not bound by ‘government use’ provisions or those allowed only in cases of ‘extreme urgency ‘ or ‘national emergency’. A CL that can be utilized by a generic company unconditionally means CLs could possibly be used to promote competition. In certain quarters, the CL on sorafenib is viewed as a step towards building domestic manufacturing capacity and know-how in a new range of drugs. Recently, the government decided to issue CLs on three more cancer products, two from Roche – including Herceptin, the popular drug to treat breast cancer – and one from BMS.

In the past, its decision to invoke CL added to the embarrassment of the Indian government during the 2012 visit of US Secretary of State, Ms. Hillary Clinton. As such the relationship between India and the US has seen a downward spiral, with widening differences on trade and diplomatic issues. During Ms. Clinton’s visit to India, she also raised the case of a first time grant of the compulsory licence[4]. While Trade Minister Anand Sharma has strongly objected to the US move of tightening the screws on India at the WTO, could the Indian government have better balanced the need to create access to life-saving medicine to its citizens and the WTO regulations?


[1] Source: http://www.indianhealthcare.in; Wikipedia article on Healthcare in India

[2] Source: WHO Health Statistics 2011

[3] Source: Rashtriya Swasthya Bima Yojna website [http://www.rsby.gov.in/about_rsby.html]

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