Marijn Dekkers, the Chairman of German drug MNC Bayer AG, is a powerful man but not a name that many Indians had heard before. Things would probably have continued that way, if not for a recent episode.
Speaking at an industry forum a few days ago, Dekker characterised India's compulsory license to Bayer's “blockbuster” cancer drug Nexavar as “essentially theft”, and added, "We did not develop this medicine for Indians. We developed it for western patients who can afford it."
This outburst (reported in the 21 January edition of Businessweek) was followed by an explanation. The comment, said Dekkers, had been a "quick response" to the Nexavar issue but added that he had been "particularly frustrated" by the Indian regulator's decision, the first time a so-called compulsory licence of a patented drug had been awarded in India. Bayer, said Dekkers, wanted "all people to share the fruits of medical progress regardless of their origins or income".
The fact that the wolf has finally come out from under its rather moth-eaten sheepskin disguise probably calls for a round of (slow) clapping. But the explanation actually explains nothing. If Nexavar was not developed for India, why is Bayer so upset about someone else making and selling a cheap copy to poor Indians who can't afford the real thing? Why is Bayer trying to sell Nexavar in India anyway? Is it because the rich people it was made for are now shopping for the next generation of drugs, and India looks like a good place to squeeze the last drops of profit out of Nexavar before it becomes a has-been?
Dekkers and his tribe have long been ranting about India's Patent Act, more frenzied now because many other developing countries see it as a good model to follow. Two provisions are most often singled out for attack: Section 84, whereby the patent controller can override a patent monopoly and allow marketing of generic versions by a competitor when high prices keep the drug out of reach of the majority of patients; and Section 3(d), that disallows attempts at “evergreening” or prolonging the life of a patent by seeking fresh protection for insignificant changes to the original product.
Both these provisions are characterised by big pharma and its backers as unfair and unwarranted. The fact is that compulsory licensing is perfectly legal, including under the WTO. The Doha Declaration states that “Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.” The US government has granted compulsory licences for everything from night vision glasses to nuclear technology, apart from hundreds of drugs and pharmaceuticals.
In contrast, the compulsory licence for Nexavar (sorafenib tosylate, a drug used in the treatment of kidney and liver cancers), was India's first, granted on the grounds that Bayer had failed to make the drug affordable and available in the required quantities. This resulted in a 97 percent drop in the price of the drug – from around $8,000 a month to less than $200 a month. Big pharma's standard justification for high prices is that developing a new drug is a time¬consuming, costly and risky endeavour.
According to the Pharmaceutical Research and Manufacturers of America's 2006 Pharmaceutical Industry Profile, developing a new drug and bringing it to the market takes up to 10 to 15 years and on average costs $ 800 million. However, a little digging into the arithmetic tells a different story. The breast cancer drug Herceptin (trastuzumab) is a case in point. The drug was developed by Genentech and approved by the FDA in 1998.
The Genentech balance sheet shows that Herceptin brought in US$ 1287 million for Genentech in 2007, the year that it was taken over by Roche. Along with two other cancer drugs (Avastin and Rituxan), Herceptin has accounted for 32% of Roche’s total revenue for at least five years. The money Roche has earned from Herceptin is therefore likely to be several thousand times more than the upper figure of $ 800 million quoted for the cost of development.
Pharma companies are also silent on the hidden public funding that goes into drug development – for instance, clinical trials and supplementary research are usually carried out in hospitals and laboratories that are supported by public grants. Drug companies also enjoy significant tax breaks in several countries, including the US and India. In fact, the billion dollar price tag for new drugs has been recently challenged by none other than the CEO of pharma giant Glaxo Smith Kline.
Calling it one of “the great myths of the industry”, he pointed out that the cost calculation includes the cost of failed drugs. According to him, the rate of return on R&D investment has gone up by as much as 30 percent in recent years because fewer drugs have flopped in late-stage testing. Pharma companies and their backers are pushing for a patent system that will protect their monopolies and allow them to reap extortionate profits – regardless of the fact that this system has skewed research towards “blockbuster” drugs for particular high-value diseases, and has cut short the lives of millions by denying them access to life-saving drugs and technologies.
The call for decisive action by the government to regulate and control drug prices is growing louder. There are reports that an Expert Committee set up by the Health Ministry is going to keep a watch on patented drugs and will recommend compulsory licensing for more cancer drugs in 2014 if necessary. A proposal for putting a cap on foreign investment in Indian pharma companies has been turned down by this government, but may well be revived by its successor.
Pharma patent warriors are now pinning their hopes on the EU-India Free Trade Agreement, which includes potentially lethal proposals such as giving customs authorities the power to seize and destroy drugs being exported to other countries on complaints from pharma companies claiming infringement of intellectual property rights. The long drawn out process of the EU-India FTA is on ice for the moment, but will come back to life after the Lok Sabha elections.
The outgoing government may already have queered the pitch by agreeing to negotiate on drug patent issues instead of rejecting the EU's demands outright. The next round of the battle will be hard fought on both sides. The stakes are high – on the one hand, unchallenged monopolies and unimaginable profits for pharma companies; on the other, life or death for millions of people in India and the developing world.
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