Author: Dr. Raju Narayana Swamy, IAS
As the world continues to battle the corona virus, conflicts may arise between government and private owners of patents that cover vaccines, therapies and drugs. Several drugs that are at the core of the COVID treatment protocol are under patents in India. These include Remdesivir- patented by Gilead – Tociluzumab and Favipiravir. And there is a dire shortage of many of them. Public interest dictates that any drug or vaccine developed to tackle the pandemic be available widely and at a reasonable price (i.e) the issue of access to vaccines and medical treatment amidst COVID- 19 should not be left to negotiation among private parties at a price set by wealthy corporations but must be perceived through a constitutional lens. The paper examines whether the Central Government should invoke powers for compulsory licensing to help increase the supply of these drugs in the context of the provisions under Chapter XVI of the Indian Patents Act 1970 particularly Section 92 which envisages the grant of a compulsory license, inter alia, in circumstances of national emergency and extreme urgency. Needless to say, the grant of compulsory license would aid this endeavour. The feasibility of parallel importation of Remdesivir from Bangladeshis analysed through a legal lens. The article also highlights the fact that the IP stack which causes hindrance to accessibility is by no means confined to patents, but includes data exclusivity and trade secrets as well and that hence compulsory licenses may not be sufficient to ensure access to vaccines. Moreover, while compulsory license can be a successful alternative for reverse engineering molecule based drugs like paracetamol, it falls short to ensure that complicated biologics like Covaxin or Covishield can successfully be reverse engineered to bio-similars unless there is an ecosystem wherein such inventions can be worked. The article concludes with the finding that the best course would be to embark on a path of voluntary licences and that any exercise of statutory powers can only prove to be counter-productive at this stage.
Compulsory license is one of the safeguards that international IP law provides to address the undesired effects of pharmaceutical patents on access to important medicines. It enables a competent government authority to license the use of a patented invention to a third party or government agency without the consent of the patent holder.
The TRIPS Provisions
Though TRIPS obliges countries to ensure a minimum level of patent protection, it create a permissive regime for the carving out of exemptions and limitations that further public health objectives. This is amply clear from a reading of Articles 7,8,30 and 31. For instance, Article 7 outlines the objectives of TRIPS as being to ensure effective enforcement of IP in a way that inter alia is conducive to social and economic welfare. Article 8 gives member countries freedom to take measures that protect public health and nutrition. Articles30 and 31 deal with exceptions to the rights of patent owners by allowing grant of compulsory licenses. It needs to be mentioned here that even one of the major opponents of the compulsory license mechanism-the U.S.- despite criticising Hungary earlier for its manner of granting a compulsory license has recognised the right of other Members to issue compulsory license in its notorious Special 301 Report.
Article 31(b) and National Emergency
Though one of the conditions prescribed under the TRIPS vis-a –vis compulsory license is prior negotiation with the patentee to get a voluntary license on reasonable commercial terms, one situation where this condition need not be followed is a public health crisis. To quote Article 31(b) of the TRIPS Agreement, “This requirement may be waived by a Member in the case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use”.
It is noteworthy that the term “national emergency” is not defined in TRIPS Agreement and is left to the individual countries to decide. The Black’s Law Dictionary defines national emergency as “a state of national crisis; a situation demanding immediate and extraordinary national or federal action.” Mention must be made here of the 2001 Doha Declaration which stipulates that TRIPS should be interpreted in a manner supportive of the right of Members to protect public health and to promote access to medicines. The Declaration outlines what a situation of national emergency can be: –
“5c. Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics can represent a national emergency or other circumstances of extreme urgency.”
Needless to say, the circumstances surrounding declarations of national emergency by various countries with the aim of granting compulsory license vary. An oft quoted case is the US example of 2001 in the wake of an anthrax scare that was allegedly spread by terrorists. Due to a fear that it would spread, the threat to grant a compulsory license under US federal law was put forth. Ones granted, the license would enable US to stock pile ciprofloxacin (the generic version of Bayer AG Corporation’s Cipro) unless Bayer AG agreed to reduce the price. Finally, the matter ended in an agreement between US and Bayer AG and the need to invoke a compulsory license was avoided.
Another classic example is Zimbabwe which was faced with the situation of AIDS threatening the very future of the country. On May 24, 2002, a period of emergency was declared for 6 months (which was later extended till 31 December 2008) enabling the State or a person authorised by the Minister to make, use or import any generic antiretroviral drug. There are other examples too. To quote a few,
i. Ghana declared an emergency with regard to HIV/AIDS in 2005, there by issuing compulsory license for all drugs for import into Ghana of generic HIV/AIDS drugs for non-commercial purpose (government use)
ii. Eritrea declared an emergency for HIV/AIDS in 2005 and issued compulsory license to import drugs to fight the disease.
iii. Zambia issued a compulsory license under a national emergency for the triple combination of lamivudine, stavudine and nevirapine anti-retroviral drugs in 2004 for a period of 5 years in the background of sizeable number of its population being HIV-infected.
iv. Mozambique declared a national emergency in 2004 and granted a compulsory license for the local manufacture of the same triple combination as that of Zambia (lamivudine, stavudine and nevirapine) clearly specifying that the grant will expire as soon as conditions of national emergency and extreme urgency created by the HIV/ AIDS pandemic will come to an end. The decree also outlined that anti-retroviral drugs are already available, which prolong lives of those infected with HIV/AIDS, but that international patent owners have failed to make such drugs available at affordable prices to most of the Mozambican populace.
v. Indonesia issued a compulsory license in 2004 (in the light of the need to control HIV/AIDS) regarding exploitation of patent by the government on ARV through provision of patented ARVs, nevirapine and lamivudine, for 7 and 8 years respectively. In 2007, the decree was amended to add one more ARV under compulsory license- efavirenz. In 2012, the government announced that they were going to issue compulsory license on seven HIV/AIDS and hepatitis B medicines citing urgent need to improve access.
vi. Swaziland too declared an emergency with regard to HIV/AIDS in 2004 leading to issuance of compulsory license to import drugs to address the public health crisis.
vii. Rwanda announced a plan in 2007 to import pharmaceuticals from Canada using a compulsory license to address the country’s AIDS epidemic.
Other countries that issued compulsory licenses in the 2000s for one or more anti-retroviral drugs to respond to the plight of their HIV-infected citizens who could not afford anti-retroviral therapy included Brazil, Ecuador, Malaysia and Thailand. Out of them, Brazil and Thailand had notable success with decreasing the price of anti-retroviral drugs. Specifically, both sought to procure and provide efavirenz (marketed as Sustiva by Merck) and lopinavir /ritonavir (marketed as Kaletra by AbbVie, then Abbott Laboratories) to their patients. However, despite the opportunity to lower drug prices, many low-income countries do not use compulsory licenses for pharma products- sometimes due to restrictions in bilateral relations such as FTAs (Free Trade Agreements) with provisions limiting their use, but most often due to fears of trade retaliation. For instance, Abbott withdrew its products from Thailand after imposition of a compulsory license.
COVID-19 and the potential of compulsory licensing for essential drugs in the Indian context
As the world continues to battle the corona virus, conflicts may arise between government and private owners of patents that cover vaccines, therapies and drugs. Several drugs that are at the core of the COVID treatment protocol are under patents in India. These include Remdesivir- an antiviral drug patented by Gilead, Tociluzumab and Favipiravir. And there is a dire shortage of many of them. This is amply clear from a petition filed in Delhi High Court by the brother of a COVID-19 patient who had been prescribed a toiluzumab injection (Actemra 400 g) by the doctor, but could not be administered due to non-availability of the drug. In fact, only Cipla Limited imports and markets this drug in India and the same is not meeting the overwhelming needs of the second wave of COVID-19.
It is in this context that the provisions under Chapter XVI of the Indian Patents Act 1970 particularly Section 92 which envisages the grant of a compulsory license, inter alia, in circumstances of national emergency and extreme urgency assumes relevance. Once a declaration of national emergency is made and the relevant patents notified, any person interested in manufacturing the drug can make an application to the Controller General of Patents who can then issue a compulsory license. In the past, the government has pondered over Section 92 notification for drugs such as Bristol Myers Squibb’s Dastinib and Ixabepilone (used for treatment of leukaemia and breast cancer respectively) and Roche’s Herceptin (also used for treatment of breast cancer). Moreover, under Section 100 of the Patents Act, the Central Government can authorize certain companies to use any patents for the “purpose of the government.” In fact, the power vested with the government under Section 100 is very wide and can be employed under any conditions for any disease unlike the power under Section 92that can only be exercised under conditions of extreme urgency or national emergency. Moreover, for using the flexibility u/s 100 there is no need for a patent to be registered. Central Government can use it any time after an application for patent has been filed. Mention must also be made of the provisions under Section 102 whereby Central Government can acquire the patents from the patentees. Needless to say, the powers under these sections can be used to increase production of essential drugs to ensure that it is commensurate to the demand. And under Section 66, the Government of India can revoke a patent in public interest.
Discussions are also galore that since IP concerns related to COVID-19 are by no means confined to a single patent but related to many patents, the need to use these patents without permission of the patent holders can be effectively facilitated by invoking Section 157 A (that empowers the Central Government to suspend or even revoke patents in the security interest of India) which incorporates the security exception in Art 73 of the TRIPS.
It was in these circumstances that the Supreme Court raised a query (in Re Distribution of Essential Supplies and Services During Pandemic, Suo Motu Writ Petition (Civil) No 3/2021 (LL 2021 SC 236)) as to why the Central Government was not considering invoking powers for compulsory licensing or government authorized use, while considering a case on COVID-19 issues. During the hearing, the Court observed that India was in the forefront of TRIPS negotiations regarding provisions on compulsory licensing and that the present scenario was a Public Health Emergency- a fit case for using the same. The Court also mentioned the fact that several countries such as Canada, Germany and France have issued compulsory licenses in respect of essential drugs and reminded that India was the first country to issue compulsory license – in the Natco case- to produce a life-saving drug for kidney cancer. Reference also needs to be made of the suggestion of the Delhi High Court that the Centre should consider compulsory licensing of COVID-19 drugs. In an order passed on April 20, 2021, the Division Bench of the Court observed as follows: –
“Looking to the present day situation, there can be no doubt that a case is made out for exercise of its power by the Central Government / Controller… At the same time, the interests of the patent holders/ licensees should be kept in mind…… the lives of thousands of people are being lost each day in the country due to COVID. The lives of the people take priority or everything else……”
NATCO’s Compulsory License Application for Baricitinib
It is noteworthy in this context that NATCO has approached the Controller of Patents for a compulsory license u/s 92 for the drug Baricitinib – a drug mentioned by the Delhi High Court in the COVID case as one of those for which compulsory license should be considered. Though used primarily to treat rheumatoid arthritis, the drug is more effective for COVID-19 patients in connection with Remdesivir (as compared to Remdesivir alone) with less side effects too. The patent for Baricitinib is owned by Incyte Holdings Corporation with a license to the US drug maker El Lilly who markets it under the name Olumiant. NATCO relies on Form 27 data to show that this drug is not manufactured in India. Moreover, imports in 2019 and 2020 accounted for less than 9000 tablets and the average cost per tablet is nearly Rs. 3230. With the current number of COVID-19 patients running into lakhs, they point out that at best El Lilly’s supply would meet the needs of a miniscule share of 600 patients. NATCO says they are willing to make the tablets available at prices between Rs. 15 and Rs. 30 per tablet (depending on the dosage) and have put forth bioequivalence studies that show equivalence to Olumiant. Interestingly, El Lilly has now announced that it will issue voluntary licenses for Baricitinib to three of India’s largest drug makers- Sun Pharma, Cipla and Lupin – in order to expand access. In this connection, it is also worthy of mention that the USFDA has granted emergency use authorisation for Baricitinib in combination with Remdesivir.
Government of India’s Stand
The Central Government in an affidavit filed before the Supreme Court seemed sceptical in making a call on compulsory license. To quote from the affidavit,
“When there is a surge in cases and in demand of patented medicines/drugs/vaccines from all over the world, the solution needs to be found out essentially at an executive level engaging at diplomatic levels. Any exercise of statutory powers either under the Patents Act 1970 read with TRIPS Agreement and Doha Declaration or in any other way can only prove to be counter-productive at this stage…..the Central Government is very actively engaging itself with global organisations at a diplomatic level to find out a solution in the best possible interest of India. It is earnestly urged that any discussion or a mention of exercise of statutory powers either for essential drugs or vaccines having patent issues would have serious, severe and unintended adverse consequences in the country’s efforts being made on global platform using all its resources, good will and good offices through diplomatic and other channels.”
Thus while the US is supporting the right to issue compulsory licenses, India is relying o voluntary cooperation of IP holders. To put it a bit differently, the positions of the parties appear to have been switched. Critics feel that this is an outcome of the verbal assurance given by India to USIBC against using compulsory licenses for pharmaceutical products.
Parallel Importation of Remdesivir from Bangladesh: Will law stand in the way?
Though the grant of compulsory licenses could help increase the supply of Remdesivir, it will take time for the new manufacturers to produce and bring the same to the market. It is in this circumstance that import of the drug from Bangladesh has been projected as a faster way to ease the current shortage. Jharkhand for instance has indicated its plan to import 50000 vials of the generic version of Remdesivir from Beximco Pharma in Bangladesh. Maharashtra Government too put forth intentions to import 10000 vials. Moreover, there are reports of individual patients importing the drug from Bangladesh for personal use (due to its unavailability in India) with the drug regulator’s approval. The question that arises in this context is: Is such parallel importation of patented inventions permissible as per law?
This question can be answered in the backdrop of Section 48 of the Patents Act whereby the patent holder is given the exclusive right to prevent third parties from importing it into India without its consent. But this right is by no means an absolute one. For instance, Section 107 A(b) enables any person to import the drug (without the patentee’s consent) “from a person who is duly authorised under the law to produce and sell or distribute the product.” In this context, it is to be mentioned that Bangladesh is a LDC (Least Developed Country) and is not obligated to protect product patents under TRIPS till 2033. Thus any person in Bangladesh can manufacture, sell or distribute a drug which is patented in other jurisdictions without a license from the patent holder. As long as these persons have obtained marketing approval for Remdesivir from the drug regulation authority of Bangladesh, they would be considered to be ‘duly authorised under the law’ and import by persons in India from them (without obtaining permission from the patent holder) would be perfectly legal thanks to Section 107 A (b). Perhaps the day is not far off when Indian companies use this provision to set up operations in an LDC, manufacture the drug there and export it to India for supply to the Indian market. Needless to say, provisions other than Section 107 A (b) vis-a-vis import of Remdesivir are Section 47(4) (which allows for import of any patented medicines or drugs by the Government (State or Centre) for the purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or any other such institution notified by the govt.) and Section 100 (which empowers the Central Govt. or any one authorised by it to exercise or vend an invention for purposes of government). But import of drugs under these provisions can only be made by the government and not by private individuals.
Compulsory Licenses for Vaccines- A Myth or a Reality?
This dilemma needs to be answered in the light of the question- Are there any patents on the vaccines? The answer is “no”, except for the fact that patents on the underlying technology affords them IP protection. Thus internationally, Pfizer-Bio NTech’s BNT 162 vaccine uses patented lipid nano particle technology to deliver mRNA to cells. On the national front, the technology behind Astrazeneca vaccine (Covishield) is patent protected. In this connection, it needs to be mentioned that the IP stack which causes hindrance to accessibility is by no means confined to patents, but includes data exclusivity and trade secrets as well. The former refers to exclusivity over clinical and preclinical trials data filed before the drug regulation authority. Under Article 39.3, TRIPS prescribes protection for clinical trial data which can be disclosed when it is necessary to protect the public. However, Indian law does not comply with this Article and there are no express provisions in the Indian legal system that prevent disclosure of test data results to third persons. As regards trade secrets, India does not have a specific law. But it is protected by the principles of common law or under the Indian Contract Act. Indian courts have, therefore, relied on common law cases in arriving at decisions on trade secrets. In UK, the seminal case in this regard is Coco vs A.N. Clark wherein the Court held that to be considered a trade secret, the information must have the necessary quality of confidence about it, it must have been imparted in circumstances imparting an obligation of confidence and it must be an unauthorised use of that information to the detriment of the party communicating it. Trade secrets are not disclosed before any authority and therefore to access the same, voluntary co-operation with its holder is required. If measures like compulsory licensing are resorted to, the holder of the trade secret will have a tendency to protect the information in a more aggressive manner. Thus compulsory licenses may not be sufficient to ensure access to vaccines. To put it a bit differently, via compulsory license the generic manufacturers can only overcome the patent barrier and use the information disclosed by the patentee to the patent office in exchange for patent monopoly, but still there is a host of substantial information that remains undisclosed, making the generic manufacturer oblivious to the same despite getting the compulsory license. This is true even in India which mandates best mode disclosure (and definitely in Europe that talks of only sufficient disclosure) as it is required to disclose only the best way known on date of filing, implying that information found at a later point of time regarding a better way may be kept under the carpet thereby denying the company who gets a compulsory license some information that is required to carry out the invention in a commercially viable fashion. Moreover, while compulsory license can be a successful alternative for reverse engineering molecule based drugs like paracetamol, it falls short to ensure that complicated biologics like Covaxin or Covishield can successfully be reverse engineered to bio-similars unless there is an ecosystem wherein such inventions can be worked.
In the light of the above, it is to be concluded that undisclosed information behind Covishield might require co-operation from Astrazeneca. But the situation is different on the Covaxin front wherein government is one of the IP owners. In this context, it deserves to be mentioned that a Canadian company has already sought a compulsory license to manufacture Johnson &Johnson’s single-dose vaccine. Moreover, in May, 2021, the High Court of Kerala sought a response from the Government of India on a PIL filed by Adv. Gopakumar seeking direction to invoke compulsory licensing provisions for COVID -19 vaccines.
The basis of the grant of compulsory license is balancing the rights of the inventor and the public. Needless to say, public interest is paramount in deciding such a grant. Given the fact that COVID- 19 has been declared as a pandemic by World Health Organisation and falls under the definition of a disaster u/s 2 (d) of the Disaster Management Act 2005, the present situation can no doubt be labelled as a” national emergency” or “extreme urgency”. This would imply that in case any innovative vaccine or drug is developed and patented, the government can very well issue a compulsory license for the same to combat the public health crisis. Put it a bit differently, public interest dictates that any drug or vaccine developed to tackle the pandemic be available widely and at a reasonable price (i.e) the issue of access to vaccines and medical treatment amidst COVID- 19 should not be left to negotiation among private parties at a price set by wealthy corporations but must be perceived through a constitutional lens. The grant of compulsory license would aid this endeavour. But it should be borne in mind that issue of a compulsory license is a drastic step that impinges on the right of exclusivity of a patentee who has spent large sums of money in developing such a drug/vaccine. A balance between the two can be made if the patentee acts reasonably and enters into voluntary licences thereby making sure that there is a wide distribution of the said drug/vaccine. On the vaccine front, the focus should shift from IP to undisclosed information and technology transfer. The best bet will be to ramp up production of Covaxin (which has been developed as part of a PPP and in which ICMR shares the IP) by roping in more PSUs and by sharing Covaxin formula with interested manufacturers. On the drug front, a silver line in the horizon is that Gilead has signed non-exclusive voluntary licensing agreements with various generic pharmaceutical manufacturers in India and has agreed not to charge any royalty until WHO declares the end of public health emergency or until a pharma product other than Remdesivir is approved to treat/prevent COVID- 19 whichever earlier. Thus the situation of resorting to a compulsory license can be avoided, thereby arriving at a middle ground beneficial for both the company and the public. Perhaps that is the letter and spirit of the affidavit filed by Government of India before the Supreme Court. And that is what the Division Bench of Delhi High Court meant when it ordered the Central Government to reach out to the patent holders to immediately ramp up manufacturing on a war footing, to encourage voluntary licenses and if it did not materialize, to consider the compulsory licensing options available.
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11. On March 24,2020 Israel issued a compulsory license to import generic versions of lopinavir /ritonavir under the impression that the anti-retroviral drug could be a possible treatment for COVID-19patients (because AbbVie was unable to provide sufficient supplies). Also legislatures in Canada, Chile and Ecuador laid the legal groundwork for issuance of compulsory licenses to address the pandemic.