Russia’s Supreme Court rejected US Company Gilead Sciences lawsuit challenging the Russian government’s decision for development and marketing anti-covid-19 drug Remdesivir with the consent of Gilead.  Pharmasyntez, a Russian drugmaker has been granted a compulsory license by the Russian government to manufacture the drug under various names without Gilead’s consent.

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This move was in the interest of Russia’s security, which the government said in the decree. The decree also stated the government’s compensation to the patent-holder but did not specify the amount.  Pharmasyntez asked Kremlin to allow for producing the generic version of Remdesivir before the issuance of the decree.  It produces Remdesivir under the name of Remdeform, a shipment of which has been arrived in India as a part of humanitarian aid.

Disappointed by the decision of the Supreme Court’s ruling and calling the issuance of a compulsory license as “unnecessary and counterproductive,” it said, “...We have stood ready to work with Russia to expand access to Veklury (Remdesevir) since mid-2020. Intellectual property is not, and has never been, a significant barrier to access to medicines in Russia." It said it believed the original Russian government decision fell short "of the requirements of Russian law." While criticizing what it called inconsistency in the Russian government's pricing policy, it said it had maintained Remdesevir supplies to all eligible patients in Russia.

Understanding compulsory licensing

Compulsory licensing is the process whereby an authorization is given to the third party by the government to make, use or sell the particular product and even to use the process of the patent, without the consent of the patent owner. This process gives a free hand to the third party to exploit the patent as they want according to the use in that particular circumstance. This compulsory license found its genesis in the Agreement on Trade-Related Aspect of Intellectual Property Rights (TRIPS). The adoption of TRIPS which formed a part of the agreement establishing the World Trade Organization (WTO), established a minimum level of protection concerning various forms of Intellectual Property Rights, replacing the erstwhile General Agreement of Trade and Tariff (GATT).

Article 31 of the TRIPS Agreement specifies the ‘Other Use without authorization of the Right Holder’. Through this article TRIPS explains the provisions which the member countries should follow while pursuing with the “other use”. Interestingly, TRIPS does not use the phrase ‘compulsory licensing’ in Article 31, rather we see this phrase being used under Article 21 where it talks about the Licensing and Agreement with regards to Trademark. Under article 31(b), it specifies the requirement of having previous efforts to obtain authorization from the right holder on reasonable commercial terms. This way it gives the scope to the member states to obtain authorization without even issuing compulsory licensing. If the country states to make the patent product and process available, which can be effectively reached on a commercial basis, then there seems no need to issues compulsory licensing. But these types of agreements are seldom reached. In the same clause, TRIPS specifies to waive the above requirement in time of national emergency or extreme urgency. This particular clause becomes the basis of using compulsory licenses by various member states during the pandemic. But it has to be understood that having a national emergency is not the prerequisite of issuing a compulsory license. The countries are free to determine the grounds for granting the license without even resorting to the voluntary license, as was also reiterated under the 2001 Doha Declaration on TRIPS and Public Health. 

It is imperative to discuss some of the leading cases in India concerning Compulsory licenses. Bayer vs. Natco (2012) was the first-ever case which made to grant a compulsory license to Natco for the production of a generic version of Bayer’s Nexavar. This case brought the regime of compulsory license in India. In BDR Pharmaceuticals International Pvt. Ltd. vs. Bristol-Myers Squibb Co. (2013) the controller rejected the BDR’s application for a compulsory license as the plaintiff failed to make a prima facie case under section 84 of the patent law. Another recent case in 2015 was that of Lee Pharma vs. AstraZeneca AB in which the plaintiff was again denied to have a compulsory license on the ground of reasonable requirements of the public for the drug. Till now, India has not resorted to a compulsory license for the Covid-19 vaccine.

Author: Saransh Chaturvedi an associate at Global Patent Filing,  in case of any queries please contact/write back us at support@globalpatentfiling.com.