In 2005, India signed the WTO-TRIPS agreement and moved from a process to a product patent system for pharma products. Process patents allowed pharma companies between 1970 and 2004 to produce low-cost generic versions of patented medicines. After 2005, the MNCs with patents were allowed marketing exclusively for 20 years from the date of filing the patent application. This in other words prevents generic drug makers to produce low-cost versions for 20 years. However, in line with WTO-TRIPS agreement, the Indian Patent Act incorporates CL or Compulsory Licence. A CL is issued by the government to authorize procurement, import, manufacture and marketing of an affordable generic version of an expensive patent medicine on the payment of royalty to the patent holder. The aim is to make medicines affordable.

Sorafenib tosylate ( Nexavar ) is an anti-cancer drug patented by Bayer.It is used for kidney and liver cancer. Bayer priced it at Rs. 2.8 lac per patient per month. Natco made an application to the Patent Controller for a CL. In 2010, Cipla entered the market launching soratenib tosylate at a price of Rs. 30,000 per patient per month. Natco’s application for CL was made in 2011. It proposed to offer the drug at Rs. 8800 per person per month. Natco received the first CL in March, 2012 against a payment of 6 per cent royalty of on sales to Bayer. Cipla dropped the price to Rs. 6840.Bayer sued Cipla for infringement. Natco’s case was challenged by Bayer before the Intellectual Property Appellate Board (IPAB). Bayer had made the drug available to a small percentage of patients which did not meet the requirements of public interest.The IPAB upheld Natco’s claim for CL and dismissed Bayer’s petition.