Pratyusha Ganesh is a final year law student at Symbiosis, Hyderabad. She is also a paralegal and has been working with Wordict-IP for over three months, starting July ’21.
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On 27th May, 2021, the NITI Aayog released a press statement, titled ‘Myths & Facts on India’s Vaccination Process’ and it seemed to be problematic at so many levels and raised an enormous number of concerns especially with respect to the compulsory licensing of COVID-19 vaccines.
According to the statement made by the NITI Aayog, India was not planning to issue any compulsory licenses for COVID-19 vaccines and this statement was justified by stating that, “it is not a ‘formula’ that matters but active partnership, training of human resources, sourcing of raw materials and highest levels of biosafety labs”.[i]
The second wave of the virus has left us traumatised and has seen the collapse of the Indian Pharma sector due to the lack of preparedness and the minimal health sector. In the past few months, we have witnessed doctors pleading for drugs, patients dying due to the shortage of hospital beds, the health care workers scrambling to catch a breadth, drugs, vaccines and oxygen cylinders being sold for enormous rates and the list goes on.
The courts are taking a stand and fighting on behalf of the government but there is answer and justification to the loss of lives caused.
Compulsory and voluntary licensing is what India desperately needs in this emergency situation.
What is Compulsory licensing?
According to Section 84 of the Indian Patent Act 1970, a compulsory licence can be provided at the expiration of three years from the date of a patent grant,
on any of the following grounds:
- reasonable requirements of the public with respect to the patented invention have not been satisfied; or
- patented invention is not available to the public at a reasonably affordable price; or patented invention is not worked in the territory of India.[ii]
Purpose of compulsory licensing:
Compulsory licensing of a patented product is done in order to prevent the exploitative control over importation and monopolistic rights derived from the patent to avoid any anti-competitive practices. The license is granted by the controller to promote the growth on a commercial scale and that to the fullest extent without any undue delay.[iii] This is done to meet the public obligations and utilise the patent to its fullest extent.
Compulsory licensing, in cases of “national emergency”, “public heath crises” or “extreme urgency”, can only be directed by the governments in order to ascertain that the requirements of the citizens with respect to the patented drugs are met. And the power remains the same irrespective of the domestic production or imports of such patented drugs.
By the compulsory licensing of the patented drugs, the government can allow pharma manufacturers to produce the generic versions of such medicines. To explain in simpler terms, the generic version of a drug can be manufactured at a fraction of its original cost, which would largely benefit the public. This mechanism encourages the production of affordable drugs and also increases availability and supply.
It is safe to say that what we are experiencing now, has never been experienced before. The death curve has been on the increase and drugs like Remdesivir, Tocilizumab, Favipiravir etc., are expensive and in scarce supply. Licensing of these would lead to an increased production and improve its affordability. Pharma companies can also monetise on this form of licensing (even though not milk extreme profits) as they get a license fee for their patent rights.
Can compulsory license be substituted for voluntary licensing
Voluntary Licensing of patented drugs is another such effective approach that the government can resort to in times of such emergency situations.
Voluntary licenses are private contractual agreements through which patent-holding pharmaceutical corporations (licensors) set out the terms under which a generic version of a patented medicine can enter the market from alternate suppliers (licensees). [iv]
This mechanism allows the generic manufacturers who have been granted a license, to manufacture and supply the pharmaceutical drugs at lower prices than the licensors. But voluntary licensing also comes with a lot of restrictions and confidential information that undermine access to medicines. The licensors have the right to limit the territory and the entities to whom the licensed drugs can be sold and can also control the supply of active pharmaceutical ingredients (API) and impose other restrictions on licensees.
For instance, the government had played an active role in developing Covaxin. The Indian Council of Medical Research (ICMR) and National Institute of Virology, Pune along with Bharat Biotech have joined forces to make Covaxin a reality. Therefore, the government has the right to grant voluntary licenses so that its production can be ramped up and its cost brought down for poor people. Such a voluntary license will also ensure reasonable profits for Bharat Biotech in the form of license fees.[v]
As discussed earlier, NITI Aayog issued a statement and made it very clear that compulsory licenses will not be issued for the patented drugs. And by doing so, it undermined the powers vested in statutory authorities who are legally empowered to deal with the issuance of compulsory licenses.[vi]
The statutory provisions of the Patents Act 1970, explicitly provide the detailed measures for compulsory licensing of patents and for the Centre to acquire inventions and patents. The central government engages in a quasi-judicial function by following the due process and by taking into account the various legal and factual issues.
There are no explicit statutory provisions with respect to Voluntary Licensing of drugs in India but the mere existence of statutory provisions on compulsory licensing is more than enough to encourage voluntary licenses. The voluntary licenses are based on the mutual contractual agreement between the patent holder/licensor and the third party/licensee who is a generic manufacturer. Voluntary License is more favourable as they can save litigation time and cost of both the companies and could save many patient lives.[vii]
On the contrary, NITI Aayog, had no statutory powers vested in it to determine the grounds for issuing a compulsory license for a patent or to even decide upon when the government may use an invention or a patent according to the procedures provided under patent law.
It should be noted that the purpose of law or a statute is to be implemented in these unprecedented times.
Provisions under the Indian Patent Act
The Indian Patent Act, 1970 talks about the compulsory licensing u/s 84. Additionally, sections 91, 92, 92A are also concerned with the practice of Compulsory Licensing.
An application for grant of compulsory licensing can be made to the controller, at any time after the expiration of three years after the patent has been granted, either through Form 17 (Restoration of a Patent) or Form 19 (Compulsory License) as prescribed under the Rules.[viii]
The following are the grounds for application u/s 84(1) of the Patents Act:
- Failure of the Patentee to meet the public requirements of utility, novelty and inventive step.
- The patented innovation being exorbitantly priced and not affordable to the public.
- Failure to make the fullest use of the innovation in the territory of India.
Section 92 of the Indian Patents Act,1970 authorizes the Central government, to make a declaration in the Official Gazette, after which, the Controller General of Patents, Designs and Trade Marks may grant licenses to applicants who are willing and can manufacture the said drugs.[ix] The Controller has the authority to decide the terms and conditions of such grant. Such a grant would be cost-effective for the public and advantageous for the patentee in the form of license fee.
Suggestions & Conclusion:
Immediate production of vaccines and critical drugs is the need of the hour and the government must do all that it can to make use of the Patents Act to make this possible.
The manufacturers and the government can work out a way which is beneficial for the public welfare. The Compulsory licenses need not be granted for long periods of time but granting them for a span of 1-2 years would ease the current situation to a great extent. Granting of licenses for a limited period of time, would amp up the immediate production and help save millions of lives, while profiting the manufacturers.
The global pandemic has caused many other nations to resort to the practice of compulsory licensing. In the March of 2020, Israel and Canada swiftly issued compulsory licenses for the manufacture and production of life-saving drugs, in order to increase the availability.
2020-21 probably will be the worst years to go down in History, where more and more lives were lost with every passing minute. We can’t buy time, but we can definitely buy the cure if they were made affordable and available.
[i] ARUL GEORGE SCARIA, “NITI Aayog’s Position on Compulsory Licensing Fails Both Niti and Nyaya”, May 29, 2021, found at https://science.thewire.in/health/niti-aayog-position-compulsory-licensing-covid-19-vaccines-ip-waiver/
[ii] The Indian Patents Act, No 37 of 1970, Art 84(1), India Code (2017)
[iii] Ansh Singh Luthra, “Politics, pharma, patent, profit or the people of India? A case for compulsory licensing”, 01 May, 2021, found at https://www.barandbench.com/columns/patents-covid-19-drugs-case-for-compulsory-licensing.
[iv] Access Campaign, “VOLUNTARY LICENSES AND ACCESS TO MEDICINES”, October 2020, found at https://msfaccess.org/sites/default/files/2020-10/IP_VoluntaryLicenses_full-brief_Oct2020_ENG.pdf
[v] Supra 3.
[vi] Harshit Rakheja, “NITI Aayog seeks to bust ‘myths’ about Centre’s Covid vaccination drive”, May 27, 2021, found at https://www.business-standard.com/article/current-affairs/niti-aayog-seeks-to-bust-myths-about-centre-s-covid-vaccination-drive-121052700861_1.html
[vii] Sarthak Chawla, “Voluntary Licensing of Patents in India – An analysis”, June 30, 2018, found at https://blog.ipleaders.in/voluntary-licensing-patents/
[viii] https://ipindia.gov.in/form-and-fees.htm
[ix] Ansh Singh Luthra, “Politics, pharma, patent, profit or the people of India? A case for compulsory licensing”, 01 May, 2021, found at https://www.barandbench.com/columns/patents-covid-19-drugs-case-for-compulsory-licensing
