India Steals Drugs

[Dreadnaught]

Mercantilism at its worst. If this is such a priority for the Indian government, they should subsidize its use. It's hard to imagine companies will want to do as much business in India that requires intellectual protections if this becomes a trend.

Bayer Loses Drug Ruling in India

Patent Agency Forces Drug Maker to Grant License to Local Generics Firm for Cancer Drug

By GEETA ANAND And RUMMAN AHMED

BANGALORE—Citing the high cost of one of the pharmaceutical industry's expensive new cancer drugs, India's patent authority on Monday forced Bayer AG to grant a compulsory license to a local generics manufacturer to ensure patients have access to the potentially lifesaving kidney and liver cancer medicine.

The landmark judgment represents the first time the Indian controller general of patents, designs and trademarks has granted a compulsory license to a generics drug maker. But it follows tough decisions in recent years by the office and Indian courts in rejecting patents on expensive cancer medicines, including Novartis SA's Glivec.

The decision comes as India is negotiating a new trade agreement with the European Union in which intellectual property for pharmaceuticals has been a contentious issue. Granting the compulsory license reflects Indian authorities' attempt to balance companies' intellectual property rights against the rights of patients to get access to new and expensive medicines that are seeking patents for sale here.

The patent authority, in its decision, noted that Bayer's drug, branded as Nexavar, sells for 284,428 rupees, or $5,698, rupees for a monthly supply. Natco Pharma Ltd., the generics competitor that brought the case to the patent authority, sought to sell a month's supply of the generic version of Nexavar, sorafenib tosylate, at 8,800 rupees, or $178, the patent authority said.

"The drug is exorbitantly priced and out of reach of most of the people," the patent authority wrote in its 62-page decision. "The product in question is not a luxury item but a lifesaving drug and it is highly important that a substantial part of the demand be met strictly. In the present case, even 1% of the public doesn't derive benefit of the patented drug."

In keeping with an international trade agreement India and other countries signed in 1994 as part of the World Trade Organization, the country in 2005 adopted a new patent law recognizing patents on pharmaceutical products, where previously it had only protected manufacturing processes.

This had allowed Indian companies such as Cipla Ltd. to become the champion of HIV patients in Africa, where poor people needed access to lifesaving medicines at a cheaper cost. But it was a problem for the multinational drug industry, which relies on the intellectual-property protection of innovation to fund the high cost of research.

India's new law applied a stricter standard for granting patents—forcing companies to prove new versions of their products were therapeutically more beneficial than earlier versions on which patents had expired. It is under this section of the patent law that the patent authority and the Indian courts have thus far refused to patent Glivec. Novartis is challenging the rejection in court.

In addition, India's patent law allows authorities to require patent holders to license their products if they are priced beyond the reach of patients and they don't have access to the medicines. Patent holders are entitled to royalties from the licensing.

In the case of Bayer, Natco can now legally make and sell the low-cost version of Bayer's patented drug, but has to pay a royalty of about 6% of net sales of the drug on a quarterly basis to the German company.

"The mandate of the law is not just to supply the drug in the market but to make it available in a manner such that a substantial portion of the public is able to reap the benefits of the invention," the patent authority wrote, lambasting Bayer for not bringing the drug to market in India until 2009, when it was available three years earlier elsewhere. Even after 2009, Bayer provided only "an insignificant proportion" of the medicine required for at least 8,842 cancer patients in need of the treatment, the patent authority said, granting Natco the compulsory license until 2021.

Bayer said in a statement that it is disappointed by the decision and will "evaluate our options to further defend our intellectual property rights in India."

Natco said it "welcomed" the order, which would "open up a new avenue of availability of lifesaving drugs at an affordable price to the suffering masses in India."

Natco Chief Financial Officer Bhaskara Narayana said the company might start selling the Nexavar copycat in a couple of days but declined to provide any revenue projections from the launch.

Shares of Natco, which initially jumped as much as 11% to touch their 52-week high of about $6.50, or 328.90 rupees, closed 6.2% higher at about $6.30 or 314.95 rupees on the Bombay Stock Exchange. The broader market rose 0.5%.

Surajit Pal, a pharmaceuticals analyst at Elara Securities (India) Pvt. Ltd., said the latest development—along with a government effort to bring in a new drug-pricing policy—will send out negative signals to multinational drug makers operating in India. India is proposing to bring a much larger share of its pharmaceutical products under price controls, which would hurt multinational companies that have a bigger share of premium-priced products.

Michelle Childs, director of policy and advocacy for the medicine access campaign at Médecins Sans Frontières, the international medical humanitarian agency, said India's patent decision sets the precedent for more moves by the patent authority to force the makers of expensive medicines to license them to generics competitors.

"India is adding another tool to its arsenal in trying to balance patients' need for access to medicines with protecting intellectual property," she said in an interview.

http://online.wsj.com/article/SB1000...285472654.html

[wiggin]

I actually don't think the motivation for this is mercantilism, Dread, but a serious concern about affordability. I am obviously opposed to effective theft of their IP (and this is hardly the first time India has stolen pharmaceutical IP), but I do understand their concern. They can't possibly afford to pay market price for a new blockbuster drug, even with gov't subsidies. In some governments, they just choose not to cover the treatment (a lot of socialized medical systems make these tough choices all the time). In others, they steal it. Neither is ideal, but I think it's a reasonable moral quandry and not a cut-and-dried case of 'India is bad'.

The best solution for low marginal cost drugs is for pharma companies to give the drug away at cost to the very poorest nations and at a negotiated (but still profitable) rate to middle income countries. That still gives them more profit than they would have if they just refused altogether and lost the market to illegal generics. I realize this effectively means that the rich world is subsidizing pharma R&D for the globe, but I'm willing to tolerate that providing the middle income countries don't steal IP. (BTW, I am not okay with the US subsidizing pharma R&D for the rest of the rich world, but that's a separate issue.)

The best solution for this is not a lawsuit, WTO action, or anything else, but rather arbitration.

[Aimless]

(BTW, I am not okay with the US subsidizing pharma R&D for the rest of the rich world, but that's a separate issue.)

Don't worry 'bout it Also, thanks

[Dreadnaught]

Yeah, Wiggin I don't really see how there can be a negotiation when a government is willing to basically seize intellectual property. If a state wants to mandate a price for a drug to be legally sold in a country (and risk that drug being unavailable in the country altogether), well then at least that's a real negotiation.

Don't worry 'bout it Also, thanks

The actual complaint isn't that there is no pharmaceutical development in Europe. The complaint is that the profits of non-socialized markets (IE the US) are effectively subsidizing the lower prices imposed in socialized markets.

[CitizenCain]

Arbitration or any form of negotiation require that both sides give something. With India fixing the price at 3.2% of what Bayer charges, I don't see any room for real negotiation.

And furthermore, as to India's motives for doing this: India's median per capita income is $1519 a year. At their current rigged price of ~$178 a month, a year's supply still costs $2136, substantially higher than the median PCI. Doesn't look to me like many of India's poor will be saved by this price drop, as they still can't afford it, suggesting that the benefactors of this legislation are the people who are already in the upper echelons of income or wealth by Indian standards.

Even the middle class in India is unlikely to be able to benefit... if you're a techie in India, like a software engineer, depending on your specific job, your average annual income is going to be between 300k and 350k Rs, meaning that a year's supply of this drug will still eat a third of your pre-tax salary, and I don't know many middle class folks who can afford to pay a third of their salary for medical expenses.

Looks to me like a pretty clear cut case of the rich and powerful in government stealing yet another thing for their own personal benefit.

[wiggin]

Arbitration or any form of negotiation require that both sides give something. With India fixing the price at 3.2% of what Bayer charges, I don't see any room for real negotiation.

And furthermore, as to India's motives for doing this: India's median per capita income is $1519 a year. At their current rigged price of ~$178 a month, a year's supply still costs $2136, substantially higher than the median PCI. Doesn't look to me like many of India's poor will be saved by this price drop, as they still can't afford it, suggesting that the benefactors of this legislation are the people who are already in the upper echelons of income or wealth by Indian standards.

Even the middle class in India is unlikely to be able to benefit... if you're a techie in India, like a software engineer, depending on your specific job, your average annual income is going to be between 300k and 350k Rs, meaning that a year's supply of this drug will still eat a third of your pre-tax salary, and I don't know many middle class folks who can afford to pay a third of their salary for medical expenses.

Looks to me like a pretty clear cut case of the rich and powerful in government stealing yet another thing for their own personal benefit.

I don't know how the Indian healthcare system works in detail (I know it's a patchwork to say the least), but I strongly suspect that the fixed price is likely subsidized further for some. Subsidizing from $200/month is a lot easier than subsidizing from $5600/month. (Also, even if the poorest in India won't get it, there's a few hundred million people in the middle class there, and I'd be happy to see them receive better cancer treatments. Not a perfect world, but still better than no one getting the treatment.)

Just look at your numbers: the price for the drug in the US is higher than US median income, but that doesn't mean only the rich will have access to it.

Without a far more detailed understanding on the Indian healthcare system than (I presume) any of us possess, I'm not sure we can arrive at your conclusions.


I also like how you're saying that the rate India chooses after negotiations break down (essentially, their preferred price) has any relationship to what the end result would have been after an arbitration process. Of course India will go for the cheapest price they can get away with!

[CitizenCain]

I don't know how the Indian healthcare system works in detail (I know it's a patchwork to say the least), but I strongly suspect that the fixed price is likely subsidized further for some. Subsidizing from $200/month is a lot easier than subsidizing from $5600/month. (Also, even if the poorest in India won't get it, there's a few hundred million people in the middle class there, and I'd be happy to see them receive better cancer treatments. Not a perfect world, but still better than no one getting the treatment.)

Though, of course, by preventing Bayer from realizing a proper return on the investment they put into this drug, that's exactly what India's doing - preventing, or at least discouraging future R&D so that EVERYBODY suffers.

Just look at your numbers: the price for the drug in the US is higher than US median income, but that doesn't mean only the rich will have access to it.

No, I would say that's exactly what it means. Unless you can afford the drug on your own, or have a premium health insurance package, you're probably not getting this particular drug state-side either. And the vast majority of people with the kind of health insurance that covers enough of a $5600 a month drug regimen are either government officials raiding the national treasury for their own benefit, or high income individuals who get the health care with their executive-level jobs.

I also like how you're saying that the rate India chooses after negotiations break down (essentially, their preferred price) has any relationship to what the end result would have been after an arbitration process. Of course India will go for the cheapest price they can get away with!

So, you're saying that if you were selling something, and someone countered with 3.2% of your asking price, there would be room for negotiation? Please. That's just too far off for there to be room to come to an agreement.

[Loki]

Agreed with Cain. The rural poor aren't getting this drug anyway. This is populism and self-interest at its worst.

[wiggin]

We've been through this before, Minx, and I'm really not interested in getting into it again (and, btw, your sources completely miss the point and spend their time destroying a straw man). Let's stick with India for this one.

[Aimless]

Hmm, I honestly don't recall having discussed this with you all I remember is the point about US patients being shafted because of the relative lack of collective bargaining in the US compared to the EU, a solution to which would be stronger bargaining by US buyers in order to lower US prices and raise European prices. I'm also not sure which straw man you're thinking of in those articles; if you can point it out at some point when you're feeling more invigorated I'd be very grateful. I'm not all that loyal to the EU, and my main concern is to make sure the role of govt. funding in pharmaceutical research is recognised.

Anyway, don't worry--Bayer is German!

[Hazir]

So we have to work from the assumption that nobody in India has health insurance? I find that a bit of a stretch.

I also find if quite unlikely that the actual per unit production price of any drug is a relevant portion of its retail price. Which means there is a wide scope of solutions for the problem that leads to an extreme measure like intellectual theft. I would dare say that selling this drug to 50m extra Indians at a price little over cost could still put a serious dent in the R&D costs of developing it. It is a bit of a re-distribution issue, as Wiggin has pointed out, but it sure as hell beats out of leaving Bayer with all of the costs and none of the profits. As it has worked out now.

[Loki]

http://www.nytimes.com/2011/11/21/bu...-in-india.html

15% have any kind of health insurance, and a few other sources suggest only 2% have decent health insurance.

[Hazir]

15% of Indians is somewhere between 225m and 250m people. That's a serious market, now lost to Bayer due to its inflexibility.

It is in general stupid to ignore the raw force of 1.5bn people just because you are against something in principle. The whole 'might breaks right' thing.

[Loki]

"Bill Atwell, president of Cigna International, said Indians pay out of pocket for 64 percent of health care expenses"

So is your median Indian going to afford even the cheaper drugs?

[Hazir]

"Bill Atwell, president of Cigna International, said Indians pay out of pocket for 64 percent of health care expenses"

So is your median Indian going to afford even the cheaper drugs?

Do you know how ridiculous your argument sounds for a third world country? You know full well that those Indians living in the income brackets between 'starvation' and 'abject poverty' will not benefit untill those drugs are handed out for free in a controled environment. Which means they will never have access to them. It's doubtfull if they even live long enough to develop cancer or kidney problems.

That does not take away from the fact that there are enough Indians who would benefit from these drugs being available at a level of cost so that their insurance will cover them.

[wiggin]

Though, of course, by preventing Bayer from realizing a proper return on the investment they put into this drug, that's exactly what India's doing - preventing, or at least discouraging future R&D so that EVERYBODY suffers.

The counterfactual in this case is that they don't make a dime more (actually less, since at least theoretically they're getting miniscule royalties here), but they also don't sell anything. So, definitely some discouragement there, but it's not like they're losing any money.

No, I would say that's exactly what it means. Unless you can afford the drug on your own, or have a premium health insurance package, you're probably not getting this particular drug state-side either. And the vast majority of people with the kind of health insurance that covers enough of a $5600 a month drug regimen are either government officials raiding the national treasury for their own benefit, or high income individuals who get the health care with their executive-level jobs.

Uhm, I don't think this is true. You don't need premium health insurance to have decent prescription coverage and out of pocket maxima.

So, you're saying that if you were selling something, and someone countered with 3.2% of your asking price, there would be room for negotiation? Please. That's just too far off for there to be room to come to an agreement.

Actually there's plenty of room for negotiation. Plenty of drug companies negotiate on price all the time.

15% of Indians is somewhere between 225m and 250m people. That's a serious market, now lost to Bayer due to its inflexibility.

It is in general stupid to ignore the raw force of 1.5bn people just because you are against something in principle. The whole 'might breaks right' thing.

To be fair, this is for a cancer drug, so it's not like they have an additional 250 million customers, just a tiny fraction of that. That's why the drug is so expensive in the first place - it's not Lipitor or something taken by a significant proportion of the population on a chronic basis, but used to treat a specific disease. That makes it harder to recoup costs. So, the Indian market isn't small, but since the total potential pool of customers is not numerically large, you'd need decent sized margins to make a difference. I just think that some profit (and the goodwill of one of the largest developing countries in the world) is better than no profit.

"Bill Atwell, president of Cigna International, said Indians pay out of pocket for 64 percent of health care expenses"

So is your median Indian going to afford even the cheaper drugs?

Americans will routinely spend large proportions of their income on combating cancer; why wouldn't an Indian?

[Loki]

Americans will routinely spend large proportions of their income on combating cancer; why wouldn't an Indian?

Because they don't have any expenses to cut. You're expecting people to spend a third of their annual income on one drug, when all their money is already going to food and shelter? Let's be honest: this is mainly going to help low-level bureaucrats and well-educated children of said bureaucrats.

[Lebanese Dragon]

Because they don't have any expenses to cut. You're expecting people to spend a third of their annual income on one drug, when all their money is already going to food and shelter? Let's be honest: this is mainly going to help low-level bureaucrats and well-educated children of said bureaucrats.

It does seem that way. I still think it increases the demographic who can afford it substantially, but the poor will not benefit at this price. Not unless they all live together in one house, buy food and share it, and use all the extra money for those with cancers. You'd have to have a gathering of non-cancer poor pooling together to help those with cancer.

[wiggin]

You'd have to have a gathering of non-cancer poor pooling together to help those with cancer.

It's called, you know, insurance, which 15% of Indians have.

[CitizenCain]

The counterfactual in this case is that they don't make a dime more (actually less, since at least theoretically they're getting miniscule royalties here), but they also don't sell anything. So, definitely some discouragement there, but it's not like they're losing any money.

Only if you pretend that these Indian-produced generics will only be sold in India, and not by mail-order pharmacies to clients of all nationalities.

Uhm, I don't think this is true. You don't need premium health insurance to have decent prescription coverage and out of pocket maxima.

Well, you're wrong. A standard health care package will provide you with great deals on generics and older, less pricey drugs, but will expect you to foot the vast majority of the costs of pricey new medications, to which there are "alternatives" available.

Actually there's plenty of room for negotiation. Plenty of drug companies negotiate on price all the time.

Really?

I'd like to employ your services in a full-time job role for a salary of $3200 a year. Let the negotiations begin!

[Loki]

If you read the article, you'll see that the 15% figure is quite generous.

"The subscribers are usually from the middle and upper class, especially since there is a tax benefit in subscribing to Mediclaim. The standard Mediclaim policy covers only hospital care and domiciliary hospitalization benefits. Most medical conditions are reimbursed though there are important exclusions, such as pre-existing diseases, pregnancy and child birth, HIV/AIDS, etc. Hospitals with more than 15 beds and registered with a local authority can be identified as providers. The insurance company (or the TPA, where applicable) administers the scheme. Being an indemnity scheme, the patient pays the hospital bills and submits the necessary documents to the company. The company in turn reimburses the patient."

http://whoindia.org/linkfiles/commis...e_in_india.pdf

So who does this benefit? The rich get cheaper drugs, while Bayer gets pissed off and probably provides fewer below cost drugs for the poor.

[Hazir]

No, the group above 'starving' or 'living in abject poverty' gets a better shot at access to the medication. Which is effectively still adding the same number of people using that drug in the US to the number of users (I know that doesn't mean 250m people will be using it, but as many Indians as Americans will be using it).

It is also quite funny to hear people blabber about 'India pissing off Bayer'. Not much into realism these days are you?

Oh, and by the by, typically 'the rich' in third world countries don't trust or want generic drugs. They would still go for the Bayer original even if the generic stuff were for free. In Turkey people who can afford it don't go to free state hospitals that actually offer quite decent health care at low or no cost. They go to outrageously expensive private hospitals, just to show that they can.

[GGT]

The patent authority, in its decision, noted that Bayer's drug, branded as Nexavar, sells for 284,428 rupees, or $5,698, rupees for a monthly supply. Natco Pharma Ltd., the generics competitor that brought the case to the patent authority, sought to sell a month's supply of the generic version of Nexavar, sorafenib tosylate, at 8,800 rupees, or $178, the patent authority said.

India's new law applied a stricter standard for granting patents—forcing companies to prove new versions of their products were therapeutically more beneficial than earlier versions on which patents had expired. It is under this section of the patent law that the patent authority and the Indian courts have thus far refused to patent Glivec. Novartis is challenging the rejection in court.

"The mandate of the law is not just to supply the drug in the market but to make it available in a manner such that a substantial portion of the public is able to reap the benefits of the invention," the patent authority wrote, lambasting Bayer for not bringing the drug to market in India until 2009, when it was available three years earlier elsewhere. Even after 2009, Bayer provided only "an insignificant proportion" of the medicine required for at least 8,842 cancer patients in need of the treatment, the patent authority said, granting Natco the compulsory license until 2021.

I'm not seeing the "mercantilism" here, Dread. Sounds more like international patent lawyers duking it out in court (adding millions of dollars to pharmaceutical costs) and fighting over a 6% royalty instead of higher mark-up profits.

The question is: should each new generations of medicine, while only being slightly different compounds---without proof they're much different than the original version--- retain or extend an expired patent? At what point could a generic version ever come to market, if a pharmaceutical company expects one "tweak" to protect their IP?

The same thing happens in the US all the time, the battle between brand-names or generics, awaiting patents to expire in order to get an affordable generic. The cost differences are HUGE, and it's not just for cancer drugs. Most Americans have no idea, if they have that premium health insurance Cain mentioned, with generous prescription plans. (Sorry, wiggin, but you're wrong about what a "decent" prescription plan costs, if it doesn't stipulate generics only.)

[Aimless]

Not the same drug.

[Aimless]

They're charging as much as they can charge. It's not that they're losing money in either market, it's just that they want more profit and the US market provides them with a way to get that. You guys should become better bargainers--it might dramatically reduce your drug costs and, at worst, lead to a small increase in our drug costs. I think we can be solidaric

[Loki]

They're charging as much as they can charge. It's not that they're losing money in either market, it's just that they want more profit and the US market provides them with a way to get that. You guys should become better bargainers--it might dramatically reduce your drug costs and, at worst, lead to a small increase in our drug costs. I think we can be solidaric

And what are they doing with their income? Eating it?

[CitizenCain]

Price fixing laws are not the same thing as "bargaining," comrade.

[Aimless]

I have no idea, I just assumed they were spending it on more free pens, ads and brochures because they only get government grants and tax-exemptions for R&D (and possibly the occasional ad-campaign-disguised-as-research)

It WOULD be fun to know exactly what the pharmaceutical industry does with its profits besides producing more drugs to gouge Medicare with.

Price fixing laws are not the same thing as "bargaining," comrade.

I'm not sure if you mean Europe or India. I was talking about Europe

[CitizenCain]

Pretty pathetic, Minx.

[Aimless]

My impression was that the "price-fixing" by various European nations (with socialized healthcare) was accomplished through a negotiation process that took into account eg. comparable treatments etc; if that's incorrect then you're welcome to just say so. There is after a great deal that I do not know. Even Ron Paul wants to negotiate. If you were indeed talking about India then yes I agree, I think