Compulsory Licensing: An Ultimate Cure of Covid-19?

I. Introduction

COMPULSORY LICENSING AND RIGHT TO LIFE AND AFFORDABLE HEALTHCARE IN INDIA

Every intellectual property right including the patent rights causes a series of conflict of interest of the patent holder and the general public. The patentee is allowed an exclusive and in a way monopolistic right over his patent, while the general public want to utilize the invention without interference. The patent legislations all over the world was drafted to bring a balance to this conflict of interests and draw a fine line.

As Lord Bennigton rightly observed “The patentee is allowed an exclusive license or right for a fixed period.” The rationale behind allowing a set of comprehensive and exclusive right to the owner of the invention is to lift up his/her morale by providing him/her the credit and monetary benefit of their invention and thereby promoting scientific excellence in the society.

After the expiration of a specific period ie, by twenty years the patent right will expire and such invention will be completely public and the society can grow more by utilising them for further advanced developments. As every right, the patent right is also followed by certain duties. The patent holder is having a duty to provide the society with his/her invention at an affordable price.

If in case, the patent holder feels that he or she is not in a position to make available the patented invention to the society in an affordable price or at adequate quantity, then the patent holder has the option to grant voluntary license

A compulsory license can be defined as an authorization or right with limitation granted by a statutory body (for example, government) which authorizes the holder for the application or use of the patent or such other intellectual property without attaining the consent for the same from the rights-holder.

The Indian legal system has always positioned the “right to health and affordable healthcare” are at a higher pedestal. Art 21 of the Indian Constitution grants the fundamental right to life which also includes the right to health and affordable healthcare. The Indian Judiciary has helped and played a pivotal role in affirming the right of health and accessible medical care to the general public.

In Paschim Banga Khet Mazdoor Samidi & Others V. State of West Bengal & Others, the Supreme Court held that a welfare state should put its mind in the overall development of the citizens and has the primary obligation to provide adequate and affordable medical services to the general public. It was in this case the court expanded the ambit the right to life under Art 21 of the Indian Constitution and included to right to health as an inalienable survival right.²

In Parmand Katra V. Union of India, the apex court has held that the denial of health services that protect the life is a direct violation of Art 21 which includes the right to health³

In Vincent V. Union of India, the Supreme Court reaffirmed the importance of right to health by stating that “a healthy body is the very foundation of all human progress and right to health is an inevitable and inalienable human right”⁴

The compulsory licensing of vaccine and other essential drugs during the covid 19 pandemic period goes hand in hand with the Indian jurisprudential view of right to health and accessible healthcare.

II. The trips agreement and compulsory licensing

A compulsory license can be explained as a limited right granted by the operation of a statutory body established by an act of law for the application or utilisation of a patent or alike intellectual property without acquiring the prior consent and authorisation from the patent holder.⁵ The justification behind granting of limited license to a third party without the prior consent of the patent holder is that the fruits flourished by the application and extended use of that invention in the society.

As like fundamental rights is accompanied with fundamental duties, every right is couples with an obligation or responsibility. The rights granted in exclusive nature requires the holder of the right to carefully utilise the right, and to responsibly give back something to the society in which the holder of right is also a part of. The inventor who is granted the patent has the duty to make available the invention to the general public at a price which is affordable, and in also in quantity which is adequate to meet the demand. If the right and responsibility is maintained harmoniously, then the compulsory license cannot be granted by the operation of an authority by infringing the right of the inventor. ⁶

If in case, the patent holder feels that he or she is not in a position to make available the patented invention to the society in an affordable price or at adequate quantity, then the patent holder has the option to grant voluntary license, a process in which the patent holder has negotiating power over the royalty he is getting. Even, the attainer of compulsory license should must adequate compensate the actual holder of the patent the amount of royalty which is decided by the authority which actually granted compulsory license.⁷

India’s Patent Act of 1970 did not grant exclusive product patents in pharmaceutical field, rather only granted patents for process only. But this has changed since the implementation of the TRIPS mandated standard of law in Intellectual Property Rights. Art. 27.1 of the TRIPS made it mandatory for the member nations to allow patents to all the inventions which included the products and processes in entire technological fields including pharmaceutical industry. This has resulted in the granting of exclusive rights over pharmaceutical inventions and other such inventions in India since 2005. The TRIPS guidelines also contained certain exception to the exclusive rights granted to the inventor. Art. 30, and art. 31 of the TRIPS which was the result of the Paris Convention has given liberty to the member nations to adhering to the absolute rights given to the patent holder in certain special or emergency circumstances. This is termed as compulsory license. ⁸

The monopoly granted to the patent holder can often lead to the exorbitant pricing of life saving drugs. The pharmaceutical corporates are often only focus on maximising their profits. This has been shown and proved during the HIV/AIDS spread in African nations. The advocates for public health and the NGO’s working in this sphere has called for the removal of product patent protection in the field of pharmaceutical industry. But, the majority of the pharmaceutical players were based on the developed nations, especially the US. This was the reason why these developed nations pressurised the developing or under-developed nations to adhere to the strict pharmaceutical product patent regime. The developed nations persuaded the developing nations to give up by intentionally pressuring by way of threatening with the trade sanctions. ⁹

Even though, the TRIPS Agreement lead way for stricter patent regime for product patents, there are some flexibilities left open for the member nations to utilise. The flexibilities such as compulsory license and public health emergency can be opted during the appropriate times where the greater interest of the society should prevail over the interest of the patent holder or the inventor. The original TRIPS agreement which was signed in the year of 1994 during the Uruguay round of negotiations of GATT had contained limited provisions of compulsory license and other such exceptions. ¹⁰After the bitter experience the African nations had faced during the outbreak for HIV/AIDS, the member nations demanded and raised voice in WTO for the betterment in the relaxations granted to the nations for using during the health emergencies. This had led to the Doha Declaration of 2001.

III. Doha declaration

The Doha Ministerial Conference of WTO, 2001 has seen the voices raised by the developing nations especially those from African region on granting of compulsory licensing to address the public health concerns. The member nations had negotiated the public health and the provisions of TRIPS agreement in detail. The developed nations which were advocating for the interests of the money-minded pharmaceutical corporates could not succeed in protecting the evil intentions of the companies; as the concerns raised by the member nations regarding the public health emergency were shown to be true in the light of the outbreak of the HIV/AIDS in African Nations. This had led to the Doha Declaration of 2001 which rescored and explained the relaxations which can be resorted in case of emergency health situation or to address the public health concern which were originally available under the TRIPS agreement in lighter note.

The Doha Declaration exempted the member nations from the liability in situations where they grant compulsory license to address the public health concern of the hour. The declaration clearly stated that the sovereign governments have the right to utilise or invoke the exemption and flexibilities such as compulsory licensing and public health emergency provisions. Also, the declaration further clarified that the governments has the sole authority to define the reasonable grounds and circumstances in which the compulsory license or other such flexibilities can be deployed. ¹¹

The only legal criteria out to have completed for utilising these flexibilities is that the member nations of WTO have to reframe their domestic patent and IPR laws statutes to accommodate the provisions which explains these flexibilities and the circumstances in which it can be brought to be in action. India has already rightfully left out certain flexibilities in Act of 1970 in conformity with the exceptions granted by the TRIPS agreement and Doha Declaration. ¹²

Even though, the TRIPS Agreement had initially contained the flexibilities which can be brought to action during the health emergencies, it’s the Doha Declaration which reassured the flexibilities and absolutely exonerated the member nations from liabilities in situation where they have granted compulsory license or proclaimed health emergency.¹³ But the larger question is still pending regarding the technological transfer in cases of granting compulsory licenses. Usually, the holder of the compulsory license initially funds out more money to reverse engineer the patented product by resorting to all their abilities. If the issue of technological transfer is also addressed correctly, then the consumer of pharmaceutical product or the consumer will be the one gaining from it.

IV. The patents act, 1970 and compulsory licensing

In 1911, the then British Government who ruled the Indian province has enacted Indian Patents and Designs Act for dealing the field of patents. When India got independence, the government felt that the patent regime existed that time was not in conformity with the India’s patent policy. Thus, the parliament has enacted the Patents Act, 1970 by consolidating and amending the existing patent laws¹⁴. India had signed and became the member of TRIPS Agreement in the year of 1994 itself. The TRIPS mandated that the member nations had to amend their domestic laws on or before the 1^st January, 2005 in conformity with the standards set by the TRIPS.¹⁵ India had amended the Act of 1970 three times to completely adhere to the standard of IPR law set by the TRIPS. The original Act of 1970 has contained a chapter allowing the compulsory license initially itself. The chapter XVI of the Act, 1970 provided the provisions for compulsory licensing. But with the amendment in the year 2002, a new chapter replaced the earlier one and it now allows product patents, as well as compulsory licenses also.

The Act in very clear language has elaborated that the government has every right to grant compulsory license, and to declare public health emergency. If the patent holder fails to cater to the needs of the market, and the invention has not yet addressed the society in a manner it was supposed to address, then the government can grant compulsory license. Sec. 83(e) of the Act, 1970 ensures that the it’s in the ambit of the government to take measures to protect and save the public health, and the patents granted in no manner prohibits the government from taking measures for protecting public health.

Sec. 84(iv) of the said Act of 1970 denotes the circumstances in which an applicant can apply for the granting of a compulsory license. The said section mandates that the applicant must have resorted to all the efforts for acquiring a voluntary license on logical terms and conditions. Also, reasonable time should have elapsed since the efforts taken. But this mandate can be waived in cases where there is a national emergency or other such similar circumstance where it demands the non-commercial usage for public good.

Chapter XVI of the Act of 1970 explains the compulsory licenses and revocation, and also the working of the patents. The Sec. 53 of the Act has enumerated that the term of the patents shall be twenty years running from the date of applying for the patent. But, on certain circumstances provided under the Chapter XVI, the government or the authority concerned can grant a third party the limited right to use of the patented technology. This is termed as the compulsory license.¹⁶ The Controller General of Patents (hereafter referred as CGP) is constituted by virtue of Sec. 73 of the said Act. Sec. 84 of the said Act provides for the pre-requisite conditions which has to be complied in order for successfully attaining a compulsory license.¹⁷ The consent of the patent holder is not a condition in case the third party satisfies all the conditions stipulated under the said section. ¹⁸

The said Act of 1970 provides that a third party no respect to the fact that whether that party is a licensee of the patentee can make an application to the CGP for the granting of the compulsory license on the expiry of the three years from the date of patent. But the applicant has to satisfy the controller that the patent holder could not address the needs of the public in the matter of invention. Also, the patent holder has not affordably placed the invention in reasonable price, and the public could not access the invention due to it. Another pre-requisite which needs to be fulfilled is that the invention has not yet used or worked in the territory of India.

Apart from the provision of compulsory licensing, the government has another viable option of invoking public health emergency by virtue of the sec. 92 of the said Act. The applicant for the patent has to duly satisfy the controller that he has tried all reasonable communication with the holder of the patent for the granting of voluntary license. Unlike, the compulsory license, the sec. 92 provides that the government can in case of (i) national emergency, (ii) situation of extreme urgency, or even (iii) situation of public non-commercial use which is being arisen due to the public health crisis related to HIV/AIDS, tuberculosis, malaria or other such epidemics. The highlight of this provision is that the procedure enumerated in sec. 87 does not apply in this scenario.

A. FIRST COMPULSORY LICENSE

It is up to the central government to fruitfully utilise the flexibilities granted by the said Act of 1970. But the provision of compulsory licensing was only utilised once. Only in the year of 2012, the India’s patent office has allowed a compulsory license. The Natco, a pharmaceutical manufacturer who mainly focuses on generic drugs manufacturing has applied for the compulsory license for the manufacturing of the drug Nexavar, which the Bayer pharmaceutical company had the patent right. The CGP has rightfully granted the compulso7ry license to Natco for manufacturing the drug Nexavar. The order of the CGP has withstood the reasoning of the courts of the law, especially the apex court. At one point, the argument in this case in apex court has lasted for 18 hours in consecutive three days. ¹⁹

The drug in question was the drug used to treat liver/kidney cancers. The patent holder, Bayer Corporation was a company headquartered in United State of America could not even supply to the 2% of the patient population. The corporation has patented the drug for importing. The efficacy of the drug was very high, and it was in high demand throughout the patients who were fighting the kidney/liver cancer. The CGP has pointed out that the drug was priced at an exorbitant pricing of 2 lakhs per month. The pricing of the drug was not affordable, and hence majority of the patient could not depend on the drug for their treatment. The treatment for the cancer often may take months to complete, and the cost involved with the drug is very exorbitant, and the majority had not been even able to get the single dose of the medicine. Also, the drug was being imported to the India, the company did not take effort to manufacture the drug in India domestically. (Bayer Healthcare Ltd v. Natco Pharma ltd, 2021)

The CGP has taken note of all these points and granted the Natco, a Hyderabad based generic drug manufacturer, the compulsory license to manufacture the drug Nexavar. But the generic manufacturer was directed to adequately compensate the patent holder by way of royalties for the drugs the generic manufacturer has produced.

During the process through which the application for compulsory license is processed, the controller examines many factors which includes the credibility and the potential capacity of the compulsory license applicant to manufacture the said product. The applicant must have enough capital to invest for initial manufacturing of the drug. The application must be driven by the intention to deliver betterment to the public at large.

V. Compulsory licensing of phar-maceutical patents and covid-19

The crisis of COVID-19 has proven that the capitalist companies are driven to maximise profits even when their actions are against the interest of the general public. The rush and cries for the drug Remdesivir has shown the world that, even when the world is burning, the interests of the capitalist companies remain unchanged. The companies must have given back something to the society, in way of, giving more licenses to other manufacturers and increasing the supply of the said drug, and reducing the cost of the said drug. ²⁰

The easiest and most intelligent way to overcome the crisis of this pandemic, is to achieve maximum vaccination, and to maintain all the social precautions. For reducing the more harms of this pandemic, there needs to be rapid vaccination drives where majority of the society can access it affordably. Even if the wealthy section of the society gets vaccinated, they are not safe alone, as entire society needs to have immunity to resist the disease; otherwise, the infection will stay around for more time.

Brazil and India had raised voice in WTO-TRIPS council for the temporary waiver of IPR protection for effectively resisting the pandemic. The US has also expressed their willingness to support the demand. ²¹But, the experts in IPR law have pointed out that even the existing laws made in consonance with the TRIPS agreement has certain flexibilities which can aptly be used during these times. For increasing the medical equipment supply, and medicines supply, India can very well utilise the existing provisions under the said Act of 1970. Natco pharmaceutical which had gained the first and only compulsory license in India had already made an application for the production of the drug Baricitinib, which used in the treatment of COVID-19. Even, some High Courts like that of Kerala has asked the Central government whether the existing compulsory license, and public health emergency provisions under the said Act of 1970 can invoked now to combat the COVID-19 vaccine shortage.²²

But the government so far has not taken any measures to utilise the same, when it is completely justified. India had played a crucial role in the negotiating during the Doha Declaration in support of public health concerns, and now it has chosen to keep silent when it came the right time to act upon the flexibilities which is granted by the TRIPS and said Act of 1970.

For strongly raising voice for more TRIPS waivers, developing nations like India had to utilise the already available flexibilities granted by the TRIPS Agreement, as well as Doha Declaration. Sec. 92 and Sec. 100 provides adequate legal framework for issuing compulsory license to third parties to manufacture required drugs and vaccines to combat the COVID-19 pandemic. It’s completely legal for the sovereign nations to grant compulsory license by virtue of the provisions of the Doha Declaration and TRIPS Agreement.

Also, the COVID-19 vaccine, Covaxin was developed in collaboration with the taxpayers’ money funded institution ICMR. It is morally and legally accurate for the central government to grant compulsory license for the manufacturing of the Covaxin which was developed by Bharat Biotech. Unlike other vaccine manufacturers who have conducted the research and development with their own funds, the Bharat Biotech, the manufacturer of Covaxin had the financial support of a government institution. Hence, the government has all the edge to persuade the manufacturer to either issue voluntary license, or the government can themselves issue the compulsory license. The timeframe required for reverse engineering the technology used to develop the vaccine is very crucial in this pandemic period. If the manufacturer willingly issues voluntary license, then this time required for reverse engineering the invention can be saved, and the vaccine can be manufactured in a speedy manner.

The central government can utilise the flexibilities provided by the sec. 92, and sec. 100 of the said Act of 1970 to solve the crisis of vaccine shortage. If the government takes steps to invoke the said provision, this can be helpful for other developing nations who were earlier depending upon India for the vaccine supply. ²³After the outbreak of second wave, India has decided to stop the vaccine export to focus on vaccinating the entire population. But this had severely affected the nations like Bhutan who were solely depending upon India for the supply of vaccine. There nations who had done first dose of vaccination, and could not find supply for second dose vaccination. ²⁴If the government issues compulsory license, or pressurises the Bharat Biotech for issuing voluntary license, then it will definitely be a solace to the entire humanity around the globe. Almost 91 nations were severely affected by India’s vaccine export ban. All these nations would be able to vaccinate their population, and the communities around the world would be able to attain immunity against this COVID-19 virus. Only if the entire world is vaccinated, then only the world can return to the normal that the world used to have. The world is now a borderless globalised world, otherwise there will be mutation of the virus, and the COVID-19 will stay around for time. Hence, it is up to the central government to utilise the flexibilities provided under the said Act as mentioned earlier.

VI. Compulsory licensing – a panacea for covid-19?

As the researcher has mentioned in the earlier chapters, the process of compulsory licensing was devised and made to make life saving drugs and healthcare affordable to all and protect the general public from the monopolistic rights and greedy interest of pharmaceutical companies. The on-going Covid-19 pandemic which can be termed as the catastrophe of the millennium has taken an enormous toll on the healthcare sector. The covid-19 second wave proved to be nightmare in India which forced the Supreme Court to term the same as a national emergency.

Along with the ever-growing Covid cases, the non-availability of medicines such as Remdesivir, Tocilizumab and Favipiravir at sufficient quantities has exaggerated the gravity of the situation. One of the reasons for the shortage of these lifesaving drugs and vaccines during the Covid period is due the monopolistic and exclusive rights of these drugs hold by their inventors. During this time of peril, the way of compulsory licensing can act as a help for the common people of the underdeveloped and developing countries.

On the twentieth of April 2021, the Apex court of India proclaimed the second wave of the Coronavirus as "national emergency" and also directed the union government to invoke the powers vested under Section 92 of the Patent Act of 1970 to curb the non-availability of medicines and vaccines. Even the Delhi High court and the Kerala High court has strongly criticized the central government and asked them to consider invoking Sec 92 as the subcontinent is going through the greatest tragedy of the millennium.

Then why is the government not using the provisions of the patent act, TRIPS agreement and Doha Declaration to contain the Covid-19 pandemic is still a mystery. As more and more people are dying due to this deadly virus, the silence of the government in this area is becoming more alarming. Compulsory licensing cannot be termed as an ultimate cure for the ongoing crisis at hand, but it may aid in the increasing of production of the drugs by third parties which would in turn benefit the public. It should be noted that a company from Bangladesh was given the compulsory licensing of Remdesivir drug and they produced the first generic version and helped the citizens.

On the other hand, compulsory licensing may not be effective in the case of vaccines. Typically, pharmaceutical companies protect vaccines using a combination of trade secrets and patents. Therefore, obtaining a compulsory license is not enough for a third-party entity to produce vaccines as some of the crucial information related to the production of vaccines may be protected as trade secrets. Compulsory license is a means to contain the pandemic but not the end. The government should bring the stakeholders together and devise a plan where the interest and basic human rights of the general public is not infringed without causing much trouble to the patentees and their respective exclusive rights on their inventions.

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