Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessCompanies

How Natco Pharma put US drug giant Eli Lilly under pressure for COVID-19 drug through compulsory licensing filing

The Indian company says it has offered 7% royalty to the US drugmaker for Baricitinib. Natco has filed for compulsory licensing, arguing that Eli Lilly’s small distribution network won’t be able to serve India’s population and the 14-day, Rs 42,000 per-patient treatment regimen for the US drug is too expensive.

May 10, 2021 / 06:27 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Natco Pharma said it had approached US drugmaker Eli Lilly in December 2020, seeking a voluntary licence for the anti-COVID drug Baricitinib, offering a 7 percent royalty on net profits.

Baricitinib, in combination with Remdesivir, is used for the treatment of COVID-19 positive patients who require supplemental oxygen and invasive mechanical ventilation.

Natco said it didn't get any response from Eli Lilly. Eli Lilly holds the patent for Baricitinib in India.

Luca Visini, Managing Director for India, Nepal, Sri Lanka and Bangladesh at Eli Lilly, told Moneycontrol in an email interview that the company is working with the Indian government to donate Lilly’s COVID-19 treatments, including Baricitinib.

Section 92 of Patents Act

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Natco invoked Section 92 of the (Indian) Patents Act, 1970 – particularly, 92(1) and 92(3) -- on the grounds of drug essentiality, national health emergency, patients’ unmet needs, lack of supplies and affordability.

Moneycontrol saw a copy of the compulsory licence application filed by Natco in the Indian Patent Office.

Ready to launch

Natco, in its application, said it is prepared to manufacture and roll out Baricitinib in three separate dosage forms -- 1 mg, 2 mg and 4 mg tablets -- immediately for co-treatment with Remdesivir as per approval granted by the CDSCO/DCGI for Emergency Use Authorisation.

“Baricitinib will be made available directly to critical care patients across hospitals in India on prescriptions from registered medical practitioners, and under conditions approved by the regulatory authorities," the company said in its CL application.

The Indian drugmaker said it would devote its existing production facilities and pan-India distribution network.

Natco said it would offer the drug at Rs 30 per tablet (4mg), Rs 20 (per 2 mg tablet) and Rs 15 (per 1 mg tablet). As part of the course, a patient needs a maximum of 14 Baricitinib pills.

Natco said the per-tablet cost sold by Eli Lilly is Rs 3,230.

"For a 14-day treatment, the price works out to Rs 45,220 per patient. This is not only more than the median average income of most families, it is actually more than the monthly income of even many qualified professionals across India. Simply put, this is classic price gouging and reduces access to a very limited and extremely affluent section of the Indian population," the company said.

Natco stated that Eli Lilly, given its very narrow distribution network, would not be able to service Indian population in times of COVID-19.

“The Olumiant tablets imported through 2020 by Lilly would at best meet the needs of approximately 600 patients," Natco said.

"Any Baricitinib product imported by Lilly will have limited access at best in a few urban centres such as Delhi or Mumbai, if at all," it added.

Options before Eli Lilly

Eli Lilly is definitely under pressure. The company may have to boost supplies of the drug or will have to issue voluntary licences to generic drug makers in India to manufacture and distribute Baricitinib. This will help the company to have control over the drug and intellectual property rights.

Earlier, Gilead and MSD had signed licensing pacts with Indian generic drug makers when they were in a similar situation.

Options before Eli Lilly

The company may have to boost supplies of the drug or will have to issue voluntary licences to generic drug makers in India to manufacture and distribute Baricitinib. This will help the company to have control over the drug and intellectual property rights.

Luca Visini, Managing Director for India, Nepal, Sri Lanka and Bangladesh at Eli Lilly, told Moneycontrol in an email interview that company is engaged in active talks with several local pharmaceutical companies to explore potential royalty-free voluntary licensing agreements for Baricitinib to ensure accelerated availability of life-saving medicines to patients under best quality conditions.

What IP experts are saying

Intellectual property law experts told Moneycontrol this is a significant case. The government is already under pressure to use provisions under Section 92 of compulsory licensing. India and South Africa moved a motion at the WTO in October last year, asking its council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to provide waiver on intellectual property protection (IPP) for pharmaceutical patents during COVID times. This was vehemently opposed by developed countries.

“It’s a strategic step by Natco. The grounds for seeking compulsory licence are strong," said Sandeep K Rathod, General Counsel and Vice President (Legal), ‎JB Chemicals & Pharmaceuticals.

“Section 84 (the Patents Act, 1970) is invoked when a company asks for CL against another company. Section 92 comes into play when the central government is satisfied with the circumstances and declares a national emergency," Rathod, who is an expert in intellectual property matters, said.

Natco isn't new to compulsory licensing litigation. The company was granted compulsory licence in 2012 to manufacture and sell Bayer’s patented drug Nexavar. At that time, Natco invoked Section 84.

"Compulsory licensing is a sensitive subject for global pharma companies, constantly battling for the protection of IP rights worldwide," said Anupam Shukla, Counsel at Pioneer Legal.

"It is usually invoked as a last resort in cases of national emergencies or circumstances of extreme urgency, much like the case in India at present. In addition to the compulsory licensing protections covered under the Patents Act and the TRIPS Agreement, Section 26B of the Drugs and Cosmetics Act also empowers the central government to regulate the manufacture and sale of any drug in India -- in public interest, to meet the requirements of an emergency arising from an epidemic. However, before considering these relatively ‘hostile’ alternatives, Natco and other Indian drug companies can first try requesting Lilly for a temporary royalty-free voluntary licencing of Baricitinib to boost its availability in India, which Lilly might be inclined to grant, considering the situation in the country," Shukla said.

Viswanath Pilla
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: May 5, 2021 04:27 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347