India may kill compulsory licensing based on price

India is considering killing compulsory licenses in some cases, replacing that detested provision with price controls--another law Western drugmakers dislike but prefer over having their patents rendered meaningless.

The Department of Pharmaceuticals has issued a draft guidance that says once patented drugs come under proposed price controls, their cost should be considered reasonable and it should not be possible to issue a compulsory license based on affordability, the Economic Times reports. Other reasons might still be invoked. Compulsory licenses can be granted to makers of generic drugs when the government believes the price of a lifesaving drug keeps many patients from affording it.

Last year, India granted its first compulsory license to Natco Pharma to make a generic version of Bayer's kidney cancer drug Nexavar. It justified the decision on price. Natco began selling it for $170 a month, compared with Bayer's $5,000 a month price. Cipla, another Indian generics maker, jumped right in as well, offering it at $130 a month.

Bayer fought but lost the decision, which generated great angst among Western drugmakers fearful of losing their pricing leverage on their most expensive drugs in a market they believe is ripe for expansion. Natco and others have said they intend to seek compulsory licenses for other drugs.

Western drugmakers are also leery of the price controls that India is instituting. India for years had prices set for about 75 generic drugs but has upped that now to about 350. Generic drugs made by the Indian subsidiaries of Western drugmakers are believed to be hardest hit because they are priced higher than locally made generics. Western drugmakers believed their brand name gave them an edge in the market. India is also creating a health program that would pay for more drugs for the poor, which should benefit drugmakers but is too new to determine by how much. 

- read the Economic Times story