This is the first application for a compulsory licence in India and, if successful, could pave the way for a series of claims from other generic companies.
"On the merits, they have a decent case," said Shamnad Basheer, a professor of IP law in Kolkata the founder of the Spicy IP blog.
Under India's Patents Act, domestic companies can approach innovator companies with a request for a licence three years after a patent is granted. If no agreement is reached, the domestic company can then apply to the Controller General of Patents and Trade Marks for a compulsory licence.
The three grounds for granting a compulsory licence set out in the Indian Patents Act are:
"(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
(b) that the patented invention is not available to the public at a reasonably affordable price, or
(c) that the patented invention is not worked in the territory of India."
"They have got a tick in all the boxes," said Essenese Obhan, a partner of Obhan & Associates in Delhi.
Natco's application, which was published on August 12, is for the patent 215758, which covers the compound sorafenib and is marketed by Bayer as Nexavar. It is used to treat kidney cancer.
The application claims that Nexavar is "exorbitantly priced", with a 1 month course costing Rs280,428 ($5,700).
Natco notes that in the UK the National Institute for Clinical Excellence decided not to subsidise Nexavar as it was too expensive and states that it could bring the cost of a 1 month course in India down to Rs8,800 ($179).
The application states that the drug is only available in India's largest cities – Delhi, Mumbai, Chennai and Kolkata and reaches only 1% of patients who need it.
Natco has also used the argument that Bayer is not working the invention in India "to the fullest extent that is reasonably practicable" as required by India's Patent Act.
It is still unclear whether importing a patented product constitutes working an invention. Bayer is importing the medicine, but is not manufacturing domestically. Natco has said that it asked Bayer for a licence to manufacture the drug in December last year (as required before it could apply for a compulsory licence) but was refused "point blank, without any discussion whatsoever".
Obhan told Managing IP that Bayer could try to avoid the compulsory licence application by licensing production in India to a generic company.
It is not known when a decision on the application will be made, although Basheer admitted that "protracted delay could be a problem". The current controller general, PH Kurian, has already announced his resignation, but is staying in position until a successor is found.
Bayer is now preparing its response to the application. "They should argue that you can't disregard the R&D costs of this drug," said Obhan.
Although this is the first official application for a compulsory licence for India, in 2008, Natco asked for a compulsory licence under the Doha declaration on TRIPs and public health to export Roche's drug Tarceva to Nepal. Natco later withdrew the application.
