In a decision closely watched by other developing countries, India has decided that a domestic company can sell a generic—and much cheaper—version of a cancer drug manufactured by Germany’s Bayer AG, despite its patent protecting exclusivity and higher prices for the medication.

Last year, the Indian patents office authorized Natco Pharma to sell generic Nexavar at 8,800 rupees ($160) for a month’s dose. Bayer had been charging 280,000 rupees ($5,120) for Nexavar.

The German pharmaceutical maker challenged the decision to grant Natco a “compulsory license” at the Intellectual Property Appellate Board (IPAB). Compulsory licenses permit local drug companies to offer generic versions of other, more costly drugs made in the West.

The IPAB ruled against Bayer and upheld Natco Pharma’s right to sell a generic of Nexavar. It was the first time the Indian patent board established that the use of compulsory licensing in India is legal. The decision was described as “a blow for global drugmakers’ efforts to hold on to monopolies on high-price medicines,” according to Anupama Chandrasekaran of Reuters.

The ruling also may embolden officials in China and other countries to grant compulsory licenses. Compulsory licenses are legal under a global Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which says the licenses can be used when foreign medicines become unaffordable to large sections of the population. Such licenses have previously been issued in Brazil, Thailand, Ecuador, and Indonesia.

-Noel Brinkerhoff

To Learn More:

India Board Rules Against Bayer in Cancer Drug Patent Case (by Anupama Chandrasekaran, Reuters)

India Patent Ruling on Cancer Drug a Blow to Bayer AG (by Lisa Shuchman, Connecticut Law Tribune)

Will Continue Selling Nexavar Drug Post IPAB Verdict: Bhaskar Narayana, Natco Pharma (Economic Times)

Generic Drugs under Siege by Biotech Firms Out to Reclaim Multi-Billion-Dollar Turf (by Noel Brinkerhoff, AllGov)

Court Bucks Judicial Trend of Approving Big Pharma’s Anticompetitive Generic Drug Deals (by Matt Bewig and David Wallechinsky, AllGov)