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mallikaptewari
May 31, 20204 min read

Importance Of Compulsory Licensing During COVID-19



The recent Coronavirus outbreak has left countries all over the world struggling to control the spread. While the developed nations are competing and striving to find a cure, the underdeveloped and poorer nations have another problem at hand – ‘The availability of cure at an affordable price’. Even if a cure is found, low-income groups might not be able to access the costly medicine owing to the competitive practices in the pharmaceutical field lead by patent ownership. Adding fuel to the fire, fears of ‘vaccine nationalism’ arose recently because Sanofi CEO Paul Hudson’s commented that: “The US government has the right to the largest pre-order [of Sanofi’s experimental vaccines] because it has invested in taking the risk”.


In another case in the U.S., the Trump administration reportedly tried to persuade CureVac, a German vaccine maker, to move research to the U.S. This disclosure led to an uproar in Germany and raised concerns elsewhere that the wealthier nations might try to get the first crack at useful drugs or vaccines. Such instances give rise to the notion that the poor strata might be left out to suffer because after investing millions in the R&D of drugs, pharmaceutical companies hope to recover this investment through patent royalties. To tackle this issue and maintain the ethical practices in the field of IPR, governments throughout the world came up with the concept of ‘Compulsory Licensing’. Countries like Germany, Chile, Canada, etc. have new laws to introduce compulsory licensing. India already has laws to grant ‘Compulsory License’ during such emergencies.


Compulsory licenses are authorizations given to a third-party by the Controller General to make, to use, or to sell a particular product or use a particular process that has been patented, without the permission of the patent owner. This concept has been mentioned in the TRIPS agreement and the Indian Patent Act,1970. However, certain conditions mentioned under section 84-92 which have to be fulfilled in order to obtain a compulsory license.


As per Section 84, any person, irrespective of whether he is the holder of the license of that Patent, can apply for a grant of a compulsory license to the Controller, on expiry of three years, when any of the following conditions are fulfilled:

  • The reasonable requirements of the public with respect to the patented invention have not been satisfied

  • The patented invention is not available to the public at a reasonably affordable price

  • The patented invention is not worked in the territory of India.

If the discovered vaccine or cure is not available at a reasonably affordable price, then the Controller can grant a compulsory license, under section 84(1)(a) and 84(10(b), to ensure its availability for poor people. This situation will be similar to the case in which India's first-ever compulsory license was granted by the Patent Office on March 9, 2012. Natco Pharma won the rights for the generic production of Bayer Corporation's Nexavar, a life-saving medicine used for treating Liver and Kidney Cancer. Bayer sold this drug at inflated prices, with one month's worth of dosage costing around Rs 2.8 Lakhs. Natco Pharma offered to sell it around for Rs 8,800, making it affordable for people belonging to low-income groups. Here the Controller General’s decision was aimed at the public good.


Compulsory licenses can also be issued suo-moto by the Controller General under Section 92, in accordance with a notification issued by the Central Government in case of "national emergency" or "extreme urgency" or in cases of "public non-commercial use". The current scenario is of extreme urgency hence it is likely that if a vaccine or cure for COVID-19 is found, a compulsory license will be granted to other companies to manufacture it and to make it available at affordable prices. Ideally, this procedure should be followed by the Government.


While the concept of compulsory licensing promotes public good and universal health accessibility, it comes with its fair share of drawbacks. Underdeveloped countries might rely heavily on using generic drugs through compulsory licenses rather than investing in R&D. Research-based Pharma companies might get discouraged and they may not launch their patented drugs in such countries due to the fear of losing patent. Since the production cost of drugs will be kept at a minimum, Pharma companies also fear a loss of quality control. Compulsory licensing also has a negative impact on competition and cost. The number of companies producing the generic medicines will rise and thus increasing the supply and the cost will come down.


However, patent holders should not fear for the exploitation of their rights, because in India the pre-requirements have to be strictly met and the regime seems to be more patent-holder friendly. This can be seen in the case of BDR Pharma v. Bristol Myers Squibb, where the Controller rejected the grant because the applicant had also not acquired the ability to work the invention to the public advantage. In the case of Lee Pharma v. AstraZeneca, the application was rejected because the applicant failed to show what was the reasonable requirement of the drug, their contention of the drug being sold at an unreasonable price was also unjustified, they also failed to show how the patients were not able to obtain the drug.


Considering the above-given cases, we can infer that in India the provisions of compulsory license cannot be misused to diminish the rights of the patent holders. To ensure quality control, licensing can be done with the supervision of patent holders, they should be given the right to decide minimum production cost and quality. Coming to the problem of discouragement for R&D since there will be no financial IP related benefits, the Government can handle this problem by offering financial rewards for companies who come up with vaccine or cure.


Thus, in a time when patents are considered to be an obstacle standing in the way of global health and the public good, compulsory licensing can save the day when it comes to the ethical aspect of IP.


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