The German drug major Bayer's appeal against the grant of compulsory license on its anti-cancer drug Nexavar to Natco Pharma will be heard by the Intellectual Property Appellate Board (IPAB) in Chennai on August 21.

On March 9 this year, the Patent Controller of India had issued the first-ever compulsory licence (CL) to an Indian generic drug manufacturer, Natco Pharma, to manufacture an affordable generic version of sorafenib tosylate (Nexavar) the anti-cancer drug for which Bayer had obtained a patent IN215758 in India in 2008. The patent expires in 2020.

The patent office acted on the basis that not only had Bayer failed to price the drug at a level that made it accessible and affordable, it also was unable to ensure that the medicine was available in sufficient and sustainable quantities within India.

In the landmark decision, Indian Patent Controller P H Kurian stated that the decision was given against Bayer as it was found during the investigation that the patented invention Nexavar by Bayer was not available to the public at a reasonably affordable price which was against the provision of Section 84 (1) (b) of the Patents Act. In his 62-page decision, Kurien stated that the price of the drug covered by the patents sold by the company shall not exceed Rs.8,880 for a pack of 120 tablets which is the requirement for one months treatment. It also demanded the company to pay royalty of six per cent of the net sales of the drug on a quarterly basis.

Earlier in July 2011, Natco had filed a CL application, proposing to market generic version of sorafenib tosylate at Rs.8,800 per patient per month if the patent office grants it a compulsory license. The granting of CL has brought down the price of the medicine by 97 per cent lower than what Bayer is charging. Bayer currently markets the drug at an exorbitant price of approximately Rs.2,80,000 per patient per month.

Bayer then filed an appeal against the compulsory licence 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.

This case is also important as it will test Section 84 of the Indian Patent Act, under which the CL mechanism kicks in when generic competitors request a CL.