Cipla, a Mumbai based pharma major, received the first ever compulsory licence (CL) for the supply of anti-retroviral medicines used in the treatment of Acquired Immuno Deficiency Syndrome (AIDS) from Malaysian government. The company is the first to receive such licence under the paragraph 6 of the Doha declaration on TRIPS and public health. Under this provision of Doha declaration, countries can waive patent claims and source medicines from low-cost non-patent producers in case of a public health crisis.

Now Cipla will be able to export and sell three active pharma ingredients (APIs) to the Malaysian government for exclusive supply to government hospitals for the next two years. The Malaysian government has authorized its domestic firm Syarikat Megah Pharma & Vaccines to hold a CL to import four specified anti-retroviral formulations from Cipla.

Currently, Bristol-Myers Squibb holds the patents of Didanosine and GlaxoSmithKline holds that for Lamivudine and Zidovudine. The Malaysian government issued CL on the grounds that compensations to the patent holder have to be paid within two months of the date of import. The Malaysian government has not yet worked out the rate of compensation to patent holder companies i.e. Myers Squibb and GlaxoSmithKline. The compensation would be based on the economic value of per capita income in Malaysia and the value of each life, which would have been lost in case the drug was not supplied by waiving patent rights.

The Malaysian government is in process of putting up orders for more medicines to combat AIDS and the ministry of external affairs and finance are working out the details for a line of credit for pharmaceutical exporters. It is estimated that the corpus of the fund could be over $1 billion. Exim Bank would be the nodal agency for extending the lines of credit.

According to market sources, current development of CL is an interesting test case to assess whether the August 30 decision is workable or needs modification. In this case, Cipla has to take a complementary licence from the Government of India for exporting above-mentioned drugs.