The Intellectual Property Appellate Board (IPAB), Chennai has upheld India’s first ever compulsory license (CL) issued to Hyderabad-based generic drug company Natco for manufacturing and marketing generic copies of Bayer's cancer drug Nexavar.

Pronouncing the judgement after several months of hearing all the parties, IPAB chairman Justice Prabha Sridevan said,"In three years, Bayer has not taken any steps in revising the marketing strategy and cut the price of the product."

Citing "affordability" and "product access" as the reasons for the decision in favour of the Indian generic company, the judge also noted that since 2010, Bayer has only been importing the drug for its philanthropic activities in India and not a single import was made for commercial use.

However, the IPAB has increased the royalty due to Bayer from Natco under the compulsory licence to 7%, from 6%. The Nexavar issue dates back to March 9, 2012, when the then Indian Patent Controller P H Kurian issued the first-ever CL to Hyderabad-based Natco Pharma to manufacture an affordable generic version of sorafenib tosylate, the anti-cancer drug for which Bayer had obtained a patent IN215758 in India in 2008.

However, after the patent controller issued the CL to manufacture the Bayer's patented anti-cancer drug sorafenib tosylate, the German drug major filed an appeal against the compulsory license order before the IPAB in Chennai and has in particular sought to have the operation of the CL order stayed till the appeal hearings are completed and IPAB passes its decision.

However, the IPAB in September 2012 rejected the German drug major Bayer's request for a stay order against the grant of compulsory license on its anti-cancer drug Nexavar to Natco Pharma. The final hearings in the case had started on January 23 and the IPAB heard all the parties involved in the case, Bayer Corporation, Union of India, the Controller of Patents and Natco Pharma Ltd.

In its appeal, Bayer has argued that the Patent Controller erred in the decision to grant a compulsory licence (CL), and should have allowed the company more time to ‘work’ the patent, over and above the three years entitled under law. Indian CL provisions require a generic competitor to wait three years after the grant of a patent before an application for a licence to market a more affordable generic version can be filed.

On the other hand, Natco has defended the Patent Controller’s decision before the IPAB. India’s Controller of Patents deemed that Bayer had failed to price the drug at an affordable level and had made insufficient efforts to make the medicine available.

Earlier, the patent on the cancer drug sorafenib tosylate was granted to Bayer in March 2008. After that the generic company Natco applied for a CL in July 2011, which was granted by the Indian Patent Controller in March 2012.

The CL allows a more affordable version of sorafenib tosylate to be produced and marketed, and brought the price of the patented drug down from over US$ 5,500 per month to $175 per month - a reduction of 97 per cent. Under the terms of the compulsory licence, Bayer is being paid a six per cent royalty on sales by Natco.