In his trademark audacious style Cipla Chairman Yusuf Hamied is back at doing what he is best known for -- making life-saving medicines affordable. In business language that reads; PRICE WARS. The difference is -- a decade ago Hamied -- a Ph.D in chemistry from Cambridge -- took on global companies GSK, Boehringer Ingelheim and Bristol-Myers Squibb by slashing prices of leading anti-HIV therapies from USD 12000 per patient, per year to USD 370 per patient, per year. This time he has sought to breech the lowest price set by Natco Pharma -- a fellow Indian rival.
In March, Natco was granted India's first Compulsory License and has since been preparing to launch its cut-price versions of Bayer's kidney cancer treatment sorafenib (branded Nexavar) at a pre-set price of Rs. 8,800 for a month's treatment (Nexavar costs Rs 2.8 lakhs). But before Natco could hit the market Cipla took the controversial price debate to a new level -- offering to slash prices of not just its sorafenib brand Soranib but two more anti-cancer drugs by as much as 75%.
As things stands now, Cipla's brand will be available to patients at below Rs 7000 and if market dynamics are anything to go by, the stage looks set for an intense price war. For cancer patients it's a life and death situation -- from the time Bayer gained product patents for its Nexavar back in 2007 and introduced it at approximately Rs. 2,80,000 to now -- as these price moves bring anti-cancer drugs within the reach of many more of India's billion plus population.
The new market situation can perhaps be traced back to a few years ago. In 2010, a defiant Cipla ignored Bayer's product patents and took sorafenib to the market at an astounding one-tenth price on grounds that it had obtained a market authorization from India's Drug Controller General of India. Some said it was a legitimate launch that must be viewed from the patient affordability angle whereas others argued that India had shown scant regard for the international patenting system and had violated multi-lateral WTO rules.
What followed were many rounds of a legal battle between Cipla and Bayer before it culminated at the Supreme Court, whose refusal to grant Bayer an injunction was seen as a tacit backing of Cipla's position. Separately, a 2009 judgement by the Delhi High Court overlooked Bayer's product patents and instead directed the German company to pay Rs. 6.70 lakh to Cipla and the Indian government in legal charges. Unfazed by the decision, Bayer appealed to a divisional bench at the same court calling for the drug approval process to be linked to patents, in line with the prevalent practice in the United States, so as to prevent the launch of generic versions of drugs that have been granted product patents.
On the policy side, Bayer noted that India, being a signatory to the WTO, was obliged to protect IPR. That argument is often countered by those who believe that, within the framework of multi-lateral trade agreements, every country must have the freedom to design policy safeguards in order to serve the health needs of its population.
On its end Cipla also challenged the validity of Nexavar patent. It found support from lawyers representing public health activists who contended that the high prices of patented drugs are a big hurdle to an effective healthcare system, especially in a country like India where citizens foot the bill.
Cipla's aggression ran the risk of being challenged as patent violation and a loss would have entailed a hefty penalty. Natco on the other hand followed a more subtle but sure approach. The Hyderabad-based company fired its first salvo at Bayer by applying for a voluntary license for sorafenib. As was expected, Bayer saw no valid grounds to award a license and in turn argued that global research companies needed to recoup their R&D spending via successful launches.
By driving Bayer to that defence, Natco opened a new frontier for a compulsory license. It became more certain that if the Controller General of Patents (India) denied Natco a license, it would be accused of acting against the needs of patients in India.
No matter how steadfastly the proponents of world intellectual property rights (IPR) may call for an overhaul and demand more certainty in India's patent regime, the clear fact remains that prices of drugs are moving lower, despite the arrival of product patents in India. Natco's compulsory license has acted as an indirect price control mechanism, not just for global companies but, going by Cipla's latest action, for Indian firms too.
Where does one find the balance between patients and patents? Maybe this time, patent holders will have to reconcile to the realities of the changing world. No drug launch can be relevant without an affordable pricing strategy to make it accessible to those who most need it.
Roche's latest alliance with India's Emcure Pharma to introduce second brands bears testimony that global companies are tweaking their basic strategies to be relevant to emerging markets. That sounds to be a more robust option than engaging in endless legal battles and needlessly earned ire. Global companies acknowledge they ended up in a veritable PR disaster about a decade ago - that folly can be avoided now.
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