[Ip-health] Supreme Court says no to Bayer, upholds compulsory license on Nexavar

Geetanjali.Sharma geetanjali.sharma at lawyerscollective.org
Fri Dec 12 22:53:39 PST 2014

Supreme Court says no to Bayer, upholds compulsory license on Nexavar

December 12, 2014- In a momentous decision that would have wide-ranging
implication for access to medicines, the Supreme Court of India refused to
entertain Bayer's appeal to set aside the compulsory license (CL) on
Sorafenib (Nexavar). The Supreme Court's dismissal of Bayer's Special Leave
Petition against the Bombay High Court's decision upholding of the CL
concludes the legal proceedings on the first ever CL issued in India.   

The grant of Compulsory license (CL) to NATCO for the anti-cancer drug -
sorafenib tosylate - and the litigation ensuing around it is the first of
its kind in India. Sorafenib tosylate is a crucial drug for patients living
with kidney and liver cancer. Bayer was selling the product under the brand
name Nexavar for Rs. 2,84,000 per patient per month which is unaffordable to
most patients in India. On 9 March 2012, the Patent Controller granted a CL
to Natco Pharma to market a more affordable generic version  of Nexavar at
around Rs. 8, 800 per person per year. Bayer unsuccessfully challenged the
order before the Intellectual Property Appellate Board (IPAB) and later at
the Bombay High Court.

In the order granting the CL, the Patent Controller had noted that as
against the demand of 8842 patients in the year 2011, Bayer had supplied the
drug to less than 200 patients after more than three years of the grant of
the patent. Moreover, Nexavar was exorbitantly priced at Rs. 2,80,000 per
month per patient. Bayer's Patient Access Programme which was only initiated
once the CL proceedings were initiated and still only met a fraction of the
demand. Lastly, despite having manufacturing facilities in India, Bayer
imported the drug from its facilities in other countries, not fulfilling the
working requirement under the law. The Patent Controller granted a CL to
Natco with royalty rate of 6%. In Appeal before the IPAB the license was
upheld, but the royalty rate was increased to 7%.  Bayer then approached the
Bombay High Court by way of a writ petition alleging that the decision of
the IPAB was arbitrary. The Bombay High court dismissed the writ petition
upholding the order of the Patent controller and the IPAB.    

Appearing for Bayer before the Supreme Court, Mr. Sudhir Chandra, Senior
Advocate, submitted that the Bombay High Court in its judgment had made
unsustainable findings on several questions of law and fact. He contended
that, for instance, while considering whether the reasonable requirements of
the public had been met by the patentee under section 84, the Bombay High
Court should have taken into account CIPLA's infringing sales.

Refusing to concur with the submission, the bench comprising Justice Ranjan
Gogoi and Justice Rohintan Nariman asked Mr. Chandra to satisfy the court
about how the set of facts in the present case warranted interference. The
bench enquired as to how many patients in India currently required the drug,
responding to which Mr. Anand Grover, Senior Advocate appearing on behalf of
Natco answered that in fact more than 17000 patients currently need the

On the challenge to the royalty rate determined, Justice Nariman pointedly
enquired why Bayer had not made available the unaudited accounts of the
research and development (R&D) expenses to develop the drug which would have
been the best evidence to arrive at a reasonable rate of royalty. Mr.
Chandra submitted that 98% costs accrue from failed drugs, making it
impossible to provide a precise account. Unimpressed, the Bench opined that
in absence of any evidence supplied by Bayer, Natco's affidavit stating that
all R&D costs have been recouped within the first year itself, can be taken
into account. The Bench also noted that the Bayer failed to supply Nexavar
to a significant number of cancer patients require the drug despite its
patient access programme. 

Concluding that there was no reason to interfere with the order of the
Bombay High Court and that the question of law could be adjudicated in
future CL cases, the Bench dismissed Bayer's SLP.

The decision to dismiss the SLP has sent a wave of happiness and celebration
amongst patient groups. Mr. Y.K. Sapru, Chairman of Cancer Patients Aid
Association (CPAA) said, "We are extremely happy with this decision. It
ensures that the cancer patients will continue to get access to this drug at
an affordable price. MNC profits should not be allowed at the cost of
patient lives." 

The decision is also being welcomed by treatment providers who procure
affordable Indian generic medicines to increase access to treatment for
their patients. Leena Menghaney, from Medecins Sans Frontieres Access
Campaign observed, "We were fully confident that the compulsory license
would be upheld by the Indian judiciary. This license is granted to increase
access to a more affordable generic version of a medicine and we need many
more such decisions in the future with new medicines being patented in
India. We will continue to push for use of public health safeguards in the
Indian patent law to promote an increased access for patented medicines
which are being priced out of reach of patients and treatment providers."


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