Patent Baristas

More commentary on the compulsory license granted by the Indian Patent Office for Bayer’s drug Sorafenib Tosylate (Nexavar):

I read your follow-up post on compulsory licensing.  In it, you state that average income in India is $8000.  I have no idea what your source is, but you are regrettably wrong.  Average gross salary in India in 2010 (per Wikipedia) was $1,330.  Nominal GDP per capita was $1,527 in 2011.  You can’t use purchasing power parity numbers for this analysis (and even then you would be off by about $5000) because the whole issue is that Indians can’t buy Nexavar in rupees at locally-sensible prices in the same way that milk in India is priced locally and is probably a lot cheaper than the approx. 40 rupees per liter that we pay in the U.S.

Also consider that $1,330 per year is the average, gross salary.  Because of income equality, something like 80% of the population in India lives on less than $400 per year per family.  This is a gross salary, and does not reflect disposable income after income taxes, payroll deductions and local sales taxes.  Also consider that the in the vast majority of households only men work, so the $1330 earned by the average male head of household is the total income.  Finally, family sizes are much larger than in the West, and there is no safety net so people need to save for their own medical care and retirement.

In light of this income disparity and poverty, it makes sense for India to have a compulsory licensing regime.  Nothing says that Indian values or laws have to mirror American ones — whether it relates to IP, freedom of speech, or speed limits.

Your point that the government is not helping is not helpful — India has something like $3 per person per year to spend on healthcare.  Treating one patient with Nexavar would mean leaving almost 2,000 people with absolutely no healthcare at all.

While Bayer may have faced some difficulties dealing with the local market, by pricing the drug where they did they made it clear that they intended to capture the few thousand upper class cancer patients in India who have wealth comparable to U.S. upper-income households, and leave the rest of the country without access to Nexavar during Bayer’s patent exclusivity period.

The compulsory licensing scheme does not really hurt Bayer except for the few million dollars they may have earned from the wealthy cancer patients in India.  Bayer is free to charge very high prices to recoup its investment and earn its ROI in the part of the world that can afford Nexavar.

What Bayer should have done is manufacture Nexavar in India through a local joint venture, sell it at a locally-affordable price, and use its control of the JV to prevent export.

Sachin Jay Darji
Certified Specialist in Real Property Law

Not sure what to say other than I agree with the points in this letter. I couldn’t fine the original document that listed salaries but gapminder.org lists the Indian income per person (GDP/capita) as $2,972.  Regardless, my point wasn’t that many in India cannot afford expensive drugs.  That’s a given.

I want people to have access to drugs  and I’m not suggesting people with the inability to pay should be denied healthcare.  My issue is why must Bayer pay the full brunt?  Why only Nexavar?  Once you make the argument that people without means should gain access to drugs based on income regardless of property rights, why isn’t every drug subject to the same license?

I agree Bayer did not do themselves any favors in not making the drug more widely available.  I just am uncomfortable that no one else has to pay.  Not the wealthy.  Not governments.  No sharing of economic burden.  Oh, well, I think this horse has been beaten enough.

It is a conundrum.