How Natco Pharma put US drug giant Eli Lilly under pressure for COVID-19 drug through compulsory licensing filing

Section 92 of Patents Act

Natco invoked Section 92 of the (Indian) Patents Act, 1970 – particularly, 92(1) and 92(3) -- on the grounds of drug essentiality, national health emergency, patients’ unmet needs, lack of supplies and affordability.

Moneycontrol saw a copy of the compulsory licence application filed by Natco in the Indian Patent Office.

Ready to launch

Natco, in its application, said it is prepared to manufacture and roll out Baricitinib in three separate dosage forms -- 1 mg, 2 mg and 4 mg tablets -- immediately for co-treatment with Remdesivir as per approval granted by the CDSCO/DCGI for Emergency Use Authorisation.

“Baricitinib will be made available directly to critical care patients across hospitals in India on prescriptions from registered medical practitioners, and under conditions approved by the regulatory authorities," the company said in its CL application.

The Indian drugmaker said it would devote its existing production facilities and pan-India distribution network.

Natco said it would offer the drug at Rs 30 per tablet (4mg), Rs 20 (per 2 mg tablet) and Rs 15 (per 1 mg tablet). As part of the course, a patient needs a maximum of 14 Baricitinib pills.

Natco said the per-tablet cost sold by Eli Lilly is Rs 3,230.

"For a 14-day treatment, the price works out to Rs 45,220 per patient. This is not only more than the median average income of most families, it is actually more than the monthly income of even many qualified professionals across India. Simply put, this is classic price gouging and reduces access to a very limited and extremely affluent section of the Indian population," the company said.

Natco stated that Eli Lilly, given its very narrow distribution network, would not be able to service Indian population in times of COVID-19.

“The Olumiant tablets imported through 2020 by Lilly would at best meet the needs of approximately 600 patients," Natco said.

"Any Baricitinib product imported by Lilly will have limited access at best in a few urban centres such as Delhi or Mumbai, if at all," it added.

Options before Eli Lilly

Eli Lilly is definitely under pressure. The company may have to boost supplies of the drug or will have to issue voluntary licences to generic drug makers in India to manufacture and distribute Baricitinib. This will help the company to have control over the drug and intellectual property rights.

Earlier, Gilead and MSD had signed licensing pacts with Indian generic drug makers when they were in a similar situation.

Options before Eli Lilly

The company may have to boost supplies of the drug or will have to issue voluntary licences to generic drug makers in India to manufacture and distribute Baricitinib. This will help the company to have control over the drug and intellectual property rights.

Luca Visini, Managing Director for India, Nepal, Sri Lanka and Bangladesh at Eli Lilly, told Moneycontrol in an email interview that company is engaged in active talks with several local pharmaceutical companies to explore potential royalty-free voluntary licensing agreements for Baricitinib to ensure accelerated availability of life-saving medicines to patients under best quality conditions.

What IP experts are saying

Intellectual property law experts told Moneycontrol this is a significant case. The government is already under pressure to use provisions under Section 92 of compulsory licensing. India and South Africa moved a motion at the WTO in October last year, asking its council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to provide waiver on intellectual property protection (IPP) for pharmaceutical patents during COVID times. This was vehemently opposed by developed countries.

“It’s a strategic step by Natco. The grounds for seeking compulsory licence are strong," said Sandeep K Rathod, General Counsel and Vice President (Legal), ‎JB Chemicals & Pharmaceuticals.

“Section 84 (the Patents Act, 1970) is invoked when a company asks for CL against another company. Section 92 comes into play when the central government is satisfied with the circumstances and declares a national emergency," Rathod, who is an expert in intellectual property matters, said.

Natco isn't new to compulsory licensing litigation. The company was granted compulsory licence in 2012 to manufacture and sell Bayer’s patented drug Nexavar. At that time, Natco invoked Section 84.

"Compulsory licensing is a sensitive subject for global pharma companies, constantly battling for the protection of IP rights worldwide," said Anupam Shukla, Counsel at Pioneer Legal.

"It is usually invoked as a last resort in cases of national emergencies or circumstances of extreme urgency, much like the case in India at present. In addition to the compulsory licensing protections covered under the Patents Act and the TRIPS Agreement, Section 26B of the Drugs and Cosmetics Act also empowers the central government to regulate the manufacture and sale of any drug in India -- in public interest, to meet the requirements of an emergency arising from an epidemic. However, before considering these relatively ‘hostile’ alternatives, Natco and other Indian drug companies can first try requesting Lilly for a temporary royalty-free voluntary licencing of Baricitinib to boost its availability in India, which Lilly might be inclined to grant, considering the situation in the country," Shukla said.