[Ip-health] Livemint and Wall Street Journal: Bayer case may set cost precedent

Thirukumaran Balasubramaniam thiru at keionline.org
Thu Feb 23 08:21:29 PST 2012


http://www.livemint.com/2012/02/20223356/Bayer-case-may-set-cost-preced.html?atype=tp

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While adjourning the matter to the last week of February, the Controller General of Patents had asked the patentee—Bayer HealthCare—to submit cost data, including research and development (R&D) expenditure on Nexavar, to justify the price. The German firm had argued it would be difficult to sell the drug at a lower price because of the amount invested in its development.

Experts said the disclosure may result in other overseas companies being forced to reveal the pricing strategy for drugs sold in the country.

“Foreign drug makers, while launching patented drugs in the local market, typically price it high, though no questions are asked about the actual cost and margin. They don’t even disclose it,” said a marketing consultant who has advised multinational drug makers in India. He did not want to be named.

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• Posted: Tue, Feb 21 2012. 1:00 AM IST
• Published on page


Bayer case may set cost precedent
C.H. Unnikrishnan, ch.unni at livemint.com

   
                           
Germany’s Bayer HealthCare AG will be forced to disclose cost data for cancer drug Nexavar next week when India’s patent office holds the second hearing for compulsory licensing of the drug, sought by local drug maker Natco Pharma Ltd, likely setting a precedent for similar revelations to be extracted from other foreign drug makers.

Compulsory licensing amounts to government permission for a drug maker to manufacture a copy of a patented drug if the patentee fails to ensure that market requirement is adequately met in terms of access and affordability within three years of the original patent grant.

Bayer India was granted a patent for Nexavar in 2008 and imports the drug from its parent’s facility abroad. The January hearing was the first on such a matter in India. Both Bayer and Natco declined to comment as the matter is sub judice.

The liver and kidney cancer drug costs about Rs.2.8 lakh for a month’s treatment. Natco said in the application that only 1% of 100,000 patients had access to sorafenib, sold by Bayer as Nexavar, because of the cost, and said it could sell the drug at Rs.8,880 for a month’s treatment.

While adjourning the matter to the last week of February, the Controller General of Patents had asked the patentee—Bayer HealthCare—to submit cost data, including research and development (R&D) expenditure on Nexavar, to justify the price. The German firm had argued it would be difficult to sell the drug at a lower price because of the amount invested in its development.

Experts said the disclosure may result in other overseas companies being forced to reveal the pricing strategy for drugs sold in the country.

“Foreign drug makers, while launching patented drugs in the local market, typically price it high, though no questions are asked about the actual cost and margin. They don’t even disclose it,” said a marketing consultant who has advised multinational drug makers in India. He did not want to be named.

Natco’s application to the patent office was made in August.

“Since affordability was at the centre of the matter in this case, a balanced view on the price of the drug is important to a take decision on it,” said Gopakumar Nair, director of Gopakumar Nair Associates, a Mumbai-based patent law and services firm. “So the patent office’s decision to look at the cost of Bayer as well as the claim of Natco is quite appropriate in this matter.”

Bayer’s disclosure will be critical in the light of Natco’s lawyer alleging in the first hearing that Nexavar was developed as an orphan drug. Such drugs normally receive government grants and other concessions, lowering R&D costs.

An orphan drug is one that addresses a tiny patient population that’s normally ignored by researchers and manufacturers as it doesn’t make commercial sense for them.

“The cost disclosure by Bayer will expose the pricing of many other patented drugs launched by both multinational and local companies in the market,” said a lawyer familiar with the case.

Natco had earlier unsuccessfully approached Bayer for a voluntary licence to allow it to manufacture and sell a generic version.

Bayer’s lawyer said his client refused the voluntary licence as Natco’s “approach was not appropriate” and the correspondence in this regard implied “a tone of a threat” that it may seek a compulsory licence.

According to Natco’s lawyer, Bayer imported only 200 bottles of the drug, which was insufficient to meet market demand. A compulsory licence applicant has to prove that it’s capable of selling the product at a lower cost to meet demand.

Bayer’s working status filing to the patent office for fiscal 2010 showed that it posted sales of Rs.16 crore for the drug.

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org



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