[Ip-health] News: Pharmabiz- Centre opens discussion to lay basic norms for compulsory licensing

Terri - Louise Beswick Terri at haiweb.org
Thu Aug 26 08:56:07 PDT 2010

Centre opens discussion to lay basic norms for compulsory licensing


Thursday, August 26, 2010 08:00 IST

Our Bureau, Mumbai


The Central government has initiated discussions to lay specific norms
for issuance of compulsory licensing (CL) for medicines under the Patent
Act, 1970, while strictly adhering to the provisions under the
trade-related aspects of intellectual property rights (TRIPS) agreement.


The effort is to explore the scope of provisions under TRIPS for
compulsory licensing, since there are rising concerns over the
availability and affordability of medicines in the backdrop of increased
acquisition of Indian pharma majors by foreign companies, the marketing
tie ups signed between the both and the decline in domestic sales of
companies even as there is growth in sales of drugs in Indian industry.


The draft discussion paper issued by the Department of Industry Policy
and Promotion (DIPP) suggests four options to block the emerging threat
- invoking the provision at the time of public emergency, invoking the
Competition Act 2002 to scrutinize whether the price or availability of
a drug is a consequence of an anti competitive agreement or a
combination which has an adverse effect on competition, review of
foreign investment policy for pharmaceutical companies and to expanding
the ambit of the the drug pricing authority to regulate the prices of a
larger number of drugs than the present 74.


However, the option for discussion has been narrowed down to invoking
the provision at the time of public emergency, since the other options
to be implemented on short term basis deals with broader areas for
discussion, says the paper.


The discussions would be on various related issues, including whether
there is a requirement of guideline for compulsory licensing and whether
the licenses should be issued under Section 92, and 92A Patents Act 1970
as amended in 2005 where the controller invokes the provisions in case
of emergency either following a notification from the central government
or to export to another country in case of insufficient supply of the
particular medicine to that country.


The options of Section 84 under the Act where general CLs to be issued
by the Controller on application and Section 91 for issuance of CL by
the Controller for a related patent on application where the controller
is independently empowered to issue a compulsory licence on application
and on the satisfaction of the relevant conditions are also matter for


Other major areas posed for discussion are the need of guidelines to
emphasis CL notification under Section 92, whether anti competition law
should be invoked for compulsory licensing, whether working of a patent
in the territory of India be interpreted to mean that it should be
manufactured within the territory of India and the details of royalty
payments to compensate for CLs and the timeline to be maintained by the
Patent Controller in issuing such a licence.


The department has also raised question that whether the publicly funded
Indian research organisations should stipulate that the ownership of
patents they transferred or sold to the Indian private sector companies
should be reverted to them in case the ownership of those companies
passes on to foreign hands. It has claimed that some of the recently
acquired Indian firms has received tax benefits and technology support
from the government and its research organisations, which will now be
beneficial for the foreign investor.


The discussion paper states that though imports have been growing, the
emphasis on exports has resulted in a significantly lower growth of
domestic consumption when compared to exports during most years during
this period. During 2008-09, domestic consumption in value terms fell
from Rs 45,953 crore to Rs 44,579 crore which records a decline of three
per cent in domestic medicine sales.


While the 65 per cent of the Indian population still lacks access to
essential medicines, "The gross sales turnover increased from Rs 14,200
crore in 1994-95 to Rs 75,500 crore in 2008-09. This has been
accompanied by a more than proportionate growth in exports. Pharma
exports have risen from Rs 2512 crore in 94-95 to Rs 39,538 crore in
2008-09. During 2008-09, the export growth rate was 29 per cent against
the industry growth rate of only 8 per cent," explains the discussion



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