The Economist: Governments and Pharma Need to Compromise

Dramatic improvements for the health of children in developing countries contributes to an overall rise in life expectancy. One emerging challenge from this shift is the increasing burden of non-communicable diseases, such as cancer, on developing nations. More and more people are in need of care and medicine that is rather expensive. It is estimated that emerging markets will represent over 25% of drug spending by 2016. That is nearly the same as the United States.

The changes have led to discussions concerning the prices of drugs. A recent article in The Economist argues that drug companies and governments need to compromise in order to find solutions that meet the interests and needs of all involved from the producer to the patient.

India is quickly becoming ground zero for the battle over drugs, patents and generics.

In 2006 India refused to grant a patent to Novartis, a Swiss drug giant, for Glivec, a blockbuster cancer drug, saying it was merely a new form of an older medicine. That case is now before the country’s Supreme Court. Meanwhile Germany’s Bayer is appealing an order, issued in March, which forces it to license its patented cancer drug to an Indian firm, Natco. The Novartis case is a test of what qualifies as incremental innovation. The Bayer one sets a more dangerous precedent.

Natco’s “compulsory licence” for Nexavar, a kidney-cancer drug, is India’s first. This device, by which a country orders a patent-holder to license a product against its will, has been accepted in international treaties for more than a century. It was reaffirmed in the hotly contested Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of 1994. But views differ on when it should be used. It can be a negotiating tactic: America threatened to employ it (against Bayer, again) to get hold of Ciprofloxacin during the anthrax scare of 2001. It serves a purpose in emergencies: African countries invoked it against Big Pharma to get cheap drugs to fight HIV. But compulsory licences for chronic diseases are more controversial.

India’s patent controller justified using it on three grounds. Bayer did not make Nexavar “reasonably affordable”; it did not provide enough of it; and the patent was not “worked in the territory of India” (implying that Bayer should have made its drug locally). The patent controller ordered Natco to sell Nexavar for one-thirtieth of Bayer’s price and pay a 6% royalty.

The article says that the disputes “are likely to get worse, with America wanting new protection for drugmakers and China talking about allowing compulsory licensing.” As the debate continues, this will be an important development to monitor over the coming years.