The Indian government will consider whether two compulsory licenses should be granted at a hearing scheduled for next week, IP Watch writes. And if the government agrees to the application, it would be the first time such permission has been given in India and only the second time in the world.

The hearing was scheduled in response to an application by Natco, an Indian generic maker, which wants to produce two drugs for export to Nepal - Roche’s Tarceva lung cancer drug, which was patented in India last year, and Pfizer’s Sutent, another cancer drug which, by the way, has recently been linked to heart attacks and heart failure. Nepal reportedly lacks ability to make such drugs.

Here’s the issue - if compulsory licences are granted for a national emergency or extreme urgency, then there is no requirement to try to negotiate a voluntary licence with the patent owner, according to WTO rules. What is special about the Natco case, IP Watch notes, is that it invokes new compulsory license rules that were introduced relatively recently.

A decision to issue a licence could open the door for a slew of other compulsory licence applications. Several other Indian manufacturers are said to be considering whether to apply for licences as well, says Shamnad Basheer, a research associate at the Oxford Intellectual Property Research Centre at Oxford University. “As you can appreciate, if this turns out to be a legally and administratively costly affair, it may deter more companies from applying. However, if the process is fairly easy and a good revenue model is established via this CL mechanism, then big pharma has much to fear.”

In 2003, WTO’s General Council issued an addendum, which legalized the process by which generics made under a compulsory license can be exported to countries that lack production capacity. WTO members approved a permanent amendment in December 2005, and two-thirds of the membership must be ratify it by 2009 for it to enter into effect, IP Watch writes.

India added this provision to its amended patent law, but Natco’s application is significant because, if successful, it will be the first time that particular section has been invoked, IP Watch points out. And it would only be the second time since 2003 this WTO provision has been used throughout the world - partly because the criteria under which exports can take place are believed to be cumbersome. The first compulsory licences for export were issued last year by Canada and Rwanda; the licences enable Canada’s Apotex to make and export copies of Glaxo’s TriAvir HIV drug to Rwanda.

The Indian Patent Act prevents compulsory licences that allow manufacturing for the Indian market from being issued for the first three years of a patent. However, when those three years are up, the law permits compulsory licences under some of the broadest conditions in the world, Basheer says. For instance, a compulsory licence can, in theory, be issued if the drug isn’t available in adequate quantities, not reasonably priced, not made in India, or the drug was made by a generic company before the law came into effect, IP Watch writes.

Experts believe generic manufacturers might begin to apply for compulsory licences for export, in order to build up manufacturing capacity until they can manufacture for the potentially huge domestic market, IP Watch notes.

It is unclear what the industry’s reaction will be if India issues a compulsory licence. Roche, for instance, has refused to comment to IP Watch on what
its next step might be.