On Friday, the Central Government was questioned by the Supreme Court as to why it was not considering invoking the Patents Act's powers for compulsory licensing or government-authorized use of drugs such as Remdesivir, Tocilizumab, and Favipiravar, which are used to treat COVID-19 patients.
While hearing the suo moto case on COVID-19 issues, a bench comprised of Justices DY Chandrachud, L Nageswara Rao, and S Ravindra Bhat raised the question (In Re Distribution of Essential Supplies and Services During Pandemic).
"Has the Centre considered invoking Section 92 of the Patents Act and issuing mandatory licences so that drugs can be manufactured while royalties are sorted?", Tushar Mehta, Solicitor General, was questioned by the bench.
The Centre was requested by the Bench to explain why the Court should not issue orders invoking Sections 92 or Section 100 of the Patents Act to allow the manufacture of generic drugs in the case of Remdesivir, Tolicizumab, and other drugs.
Section 92 of the Patents Act is a special provision. In the event of the public health emergency, this section allows the Central Government to issue mandatory licences for the manufacture of patented drugs. Section 100 of the Patents Act allows the Central Government to use patented inventions for government purposes.
During the hearing, Justice Ravindra Bhat stated that, "This is a perfect example of when we should impose mandatory licensing...This is a Public Health Emergency.
Justice Ravindra Bhat also noted that India was at the forefront of the TRIPS negotiations regarding compulsory licensing provisions, and that the current situation might be a good fit for using them. He also brought up the NATCO case, in which the Indian government granted a compulsory licence to Hyderabad-based drug maker NACTO to produce a life-saving drug for kidney cancer that was patented by a German company.
In the NATCO case, where a life-saving drug was involved, we were the first country to issue a compulsory licence. "A case is made out under section 92(3) of the Patents Act (for compulsory licensing) in light of the current national emergency," said Justice Bhat.
"Of course, we do not mean it as a direction, only as an ongoing dialogue," Justice Bhatquickly added.
Mandatory Licenses for essential drugs are issued by many states such as Germany, Canada, and France. "The government may even take over (the invention) under Section 100 of the Patent Act, or there may be licensing through the patent controller," the judge continued.
According to Justice Bhat, the state of Jharkhand had recently requested permission to import the less expensive generic drug Remdesivir from Bangladesh. The judge also mentioned that Bangladesh was producing a generic Remdesivir drug and was being exported to a number of countries.
The bench also stated that the Drugs Control Act gives the Central Government the authority to regulate drug prices.
The bench also raised serious concerns about the Centre's dual-pricing policy for COVID vaccines, which allows for different prices to be charged on vaccines sold to the Centre, states, and private hospitals. The bench expressed concern on whether private companies will be able to ensure state equity.
"Do not entrust price fixing and distribution to private manufacturers," the bench cautioned.
"In times of crisis, we cannot rely on the private sector model. Yes, we must incentivize them, but we must also adhere to the National Immunization Program. How will the private sector determine how much money to give to Maharashtra, Uttarakhand, Manipur, or Gujarat? This cannot be left to the manufacturers.This is an example of equity over public goods. You must accept responsibility for this." Justice Chandrach added.
The bench also noted that the AstraZeneca drug was sold at much lower prices in the United States and Europe than it was in India. It questioned why the vaccines are priced at the current level when their production is subsidizedby government grants.
The matter will be revisited on May 10. The Centre has been asked to respond to the bench's concerns.
The Delhi High Court recently suggested that the Centre consider mandatory licensing of COVID-19 drugs.
In an order issued on April 20, a division bench comprised of Justices Vipin Sanghi and Rekha Palli stated as follows:
"Looking at the current situation, there is no doubt that a case can be made for the Central Government/Controller exercising its power under the aforementioned provisions of law, but the interests of the patent holders/ licensees should be considered at the same time, because it is through their investments, inventions, and hard work that such medicines are made available to the general public.The best course of action would be to encourage existing manufacturers to ramp up production on a war footing.They should also be encouraged to grant voluntary licences to other entities in order for them to manufacture the required drugs….
However, if such efforts do not bear fruit soon enough, the Government/Controller should not be afraid to exercise their jurisdiction and powers under the aforementioned provisions of the Patents Act, because the COVID claims the lives of thousands of people in the country every day.People's lives take precedence over everything else. Even if such powers are exercised, patent holders/manufacturers can be adequately compensated by establishing a reasonable licence fee. The Central Government should act immediately in accordance with this order and report progress on the next date of hearing".
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