By, Shreya Srivastava
In the face of the adversity termed as COVID-19, nations across the world are coming together for the common well-being of humanity, to combat the spread of this novel Coronavirus.[i] Currently, there is neither any vaccine nor any effective pharmaceutical treatment, which has been registered for the treatment of the rapidly spreading virus in question.
But, this situation is most likely to change in the future, because of the high-scale research and testing being done by certain research groups. A worldwide clinical trial has been announced by the WHO for testing of various drugs to treat COVID-19, while the development of these drugs is being overseen by The Research and Development Departments of several pharmaceutical companies.
But, these efforts would still be futile if the required drugs, PPE’s, diagnostic kits, vaccines and ventilators are produced, but not made available to the masses. The shutting down of world border poses as an obvious hurdle in the obtainment of the same, but unfortunately, it was not the only hurdle, the patent regimes in different countries presented themselves as another blockade to be cleared, in-turn resulting in the unexpected comeback of ‘compulsory licensing’.
The concept of Compulsory Licensing is recognized at both the national and international levels. Under the WTO’s TRIPS Agreement, Compulsory licensing is “when a government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself”[ii], whereas, under the Indian Patent Act 1970, Sections 84 to 92 cover the provisions regarding the grant of such licenses.
USAGE IN INDIA IN REGARDS TO COVID-19
As per Section 84, any person regardless of whether he is the holder of the license of a Patent, can request the Controller for grant of compulsory license on expiry of three years on fulfillment of three conditions, the same being, non–fulfillment of public requirement, unavailability of patent at affordable cost and non-working of patent in Indian territory[iii]
Section 92(1)(4)[iv] allows issuing license suo moto in case of “national emergency” or “extreme urgency”, or for “public non-commercial use”. Section 100(5)[v] of the Patent Act states that for fulfilling the “purpose of government”, the Central government is empowered to grant authorization to specific Indian companies, who then have to negotiate a royalty with patent holders.
However, in case of failure of both the parties to reach a consensus, Section 100(3)[vi] is applied, which provides for a reference to the High Court under Section 103(6).[vii] The court then fixes reasonable royalty between both parties and once the royalty is decided, the other party is under an obligation to inform the patent holder, of this at the earliest instance. If all fails, section 102 can be resorted to, which provides for immediate transfer of the patents in question, along with their stockpile to the Centre.
The first patent of such sort was granted under Section 84, on March 9, 2012, to Natco Pharma when it offered to sell a life-saving medicine at mere Rs. 9000, which was earlier sold by Bayer Corporation at a cost of Rs. 2,80,000. However, this is not always the case, since many a time these applications have been rejected, on several grounds like – a failure in proving prima facie case, not applying for a license of a patent before applying for compulsory license and failure to prove public use of the product.[viii]
Currently, the two most promising drugs which are undergoing clinical trials to see if they can be repurposed for treating COVID-19, i.e. Fevipriavir and Remidisivir, are patent protected in India.[ix] Thus, unless the patent holders insist upon their IP rights, it can be safely assumed that our domestic companies will have the capacity to produce low-cost medicines in a short time.
However, as far as PPEs are concerned, India is lacking in products such as ply masks, N95 masks, overalls and the raw material required for producing it and for fulfilling this, an international tender has been floated and initiatives by local companies are being taken to supply the requirements. However when tested, most of these masks and equipment were found to be below the standards prescribed and thus of no use. If this inability to produce quality product continues, it will lead to soaring of product prices and would force the government to take drastic measures such as enforcing the above-mentioned sections, which if done, will be a huge setback for Pharmaceutical Companies and they won’t be expected to take it quietly, which will lead to the filing of a large number of suits, making us look forward to a litigious future, post-COVID.
DEVELOPMENT ACROSS THE WORLD
Even though most countries already had some form of compulsory licensing provision on their statutes, several jurisdictions which lacked for such clause had to amend their laws. On 18th March, Israel issued its first compulsory license under section 104 of their patent statute which allows the state to circumvent the law for national defense purposes thus enabling them to import a generic version of AbbVie’s Kaletra from India.
Canada followed this trail and passed Bill C-13 which specifies that, in a situation of public health emergency the PM would have the power to produce, sell and use a patented invention, without negotiating with the patent holders, although there are provisions for compensating them later with a reasonable amount.
Germany enforced ‘The Prevention and Control of Infectious Diseases in Humans Act’, which grants them the power to issue compulsory licenses under Section 13(1) of the Patent Act. The expiry date for this law is March 202. French government introduced article L.3131-15 which gave PM the power to seize the goods, labeled as necessary for fighting this pandemic and granted him the temporary control of prices of these products.
A resolution was passed by Chile, requesting its government to support compulsory licensing and to report on the vaccines, drugs, tests and equipment that should be considered essential for purposes of issuing a patent license. Ecuador followed similar steps and urged its government to use article 501 which provides access to patentee’s data to third parties. The opposing party in Australia has requested for invoking ‘Crown Use’ provisions, to face the current shortage of essential goods.
All these amendments point out the growing concerns of countries and how they fear the mounting angst of their public, if the prices increase. Even-though introduced in haste, these clauses carry with themselves, reasonable restrictions and if they prove to be successful, their prolonged future use can be anticipated.
WHAT CAN BE EXPECTED?
Against this background, several innovators have voluntarily waived their IP rights, to make their products more easily available[x], including major giants such as AbbVie which waived off any restriction on the MPP licenses, which prevented generic companies from producing Kaletra. Gilead requested to cancel its seven-year orphan drug exclusivity, thus allowing the production of Remdesivir, whereas, Medtronic agreed to share publicly its design for the PB560 ventilator.
These measures are only voluntary and cannot be treated as an assurance that other companies will follow their footsteps, since there are still companies such as Swiss multinational Roche, the world’s leading diagnostic kit maker, which was recently accused of withholding the chemical formulae for a reagent, which is a buffer used in its ‘polymerase chain reaction-based test’ for COVID-19.[xi] Reliance can no longer be placed upon charity moves, these ambiguities and inadequacies in the law call for global collaboration for drafting concrete laws, large scale public funding and specific agreements on access and affordability of upcoming medical technologies.
Coming to the Indian government, it can be said that, it usually has cold feet when it comes to using compulsory licensing, but if situations get worse and the above-discussed sections are implemented, then it won’t be a smooth ride for the centre, since it is highly expected that big pharma companies will fight back leading to several litigations and conflicts.
All in all, the demands are going to rise and supplying adequate essential items at the right time is going to be a tough task for IPR holders until and unless a well thought out intervention in the form of legislation is done by state governments or international organizations.
[i] Covid-19 and Intellectual Property Law, LEXOLOGY (March. 31, 2020), https://www.lexology.com/library/detail.aspx?g=67dfcc56-c968-40ed-aef7-1ba00e42a926.
[ii] Compulsory licensing of pharmaceuticals and TRIPS, (March. 1, 2018), https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm.
[iii] Indian Patent Act, No. 15 of 2005, INDIA CODE.
[iv] Indian Patent Act, No. 15 of 2005, INDIA CODE.
[v] Indian Patent Act, No. 15 of 2005, INDIA CODE.
[vi] Indian Patent Act, No. 15 of 2005, INDIA CODE.
[vii] Indian Patent Act, No. 15 of 2005, INDIA CODE.
[viii] Compulsory Licensing, (Aug. 3, 2017), http://www.khuranaandkhurana.com/2017/08/03/compulsory-licensing/.
[ix] COVID 19: Will Intellectual Property be a hurdle in India’s fight against Covid 19, (Apr. 5, 2020), https://www.businesstoday.in/latest/trends/coronavirus-will-intellectual-property-be-a-hurdle-in-indias-fight-against-covid-19/story/400200.html.
[x] The key Covid 19 compulsory developments so far, (Apr. 7, 2020), https://www.iam-media.com/coronavirus/the-key-covid-19-compulsory-licensing-developments-so-far.
[xi] COVID 19: Will Intellectual Property be a hurdle in India’s fight against Covid 19, (Apr. 5, 2020), https://www.businesstoday.in/latest/trends/coronavirus-will-intellectual-property-be-a-hurdle-in-indias-fight-against-covid-19/story/400200.html.