India's patent chiefs ruled this week that German drug giant Bayer was charging an "exorbitant" price for a cancer medication.
It currently costs 4,200 euros ($ 5,500) per month to treat an Indian patient with Nexavar, which is used to extend the lives of advanced kidney and liver cancer patients. The drug slows down the growth of cancer cells by reducing blood supply to the tumor and prevents them from spreading through the body.
On Monday, the Indian Patent Office in Mumbai issued an order allowing domestic firm Natco Pharma to make and sell the drug, which would bring the price down by as much as 97 percent.
"This is an event which will cause multinationals to start thinking about differential pricing and how they price products in countries such as India," Rajeshwari Hariharan, a lawyer for Natco, told the news agency AFP.
'Pharmacy of the poor'
Long known as the "pharmacy of the poor," India has been a key supplier of cheap generic medicines for years. Some 80 percent of the drugs used to treat AIDS patients in the developing world are currently from India. "That's why the country is so important," Philipp Frisch from Doctors Without Borders told Deutsche Welle.
But India's status as a "pharmacy of the poor" came under threat in 2005 when the government was obliged to adhere to World Trade Organization intellectual property regulations.
Drugs that have come onto the market since 2005 are extremely expensive.
Activists and patients' groups have campaigned ever since to ensure that India can continue to manufacture generics. Philipp Frisch points out that HIV patients in particular are extremely dependent on new drugs and these have to be affordable.
Could 'compulsory licenses' set a precedent?
There is one way that India can get around the WTO regulations, which is by granting a "compulsory license" to produce a patented drug. Under the WTO's TRIPS Agreement that governs trade and intellectual property rules, these are a legally recognized way of overcoming barriers in accessing affordable medicine.
Monday's ruling over Nexavar marks the first time such a "compulsory license" has been granted by India's Patent Office.
Jörg Schaber from the BUKO Pharma Kampagne, an NGO which monitors the activities of German pharmaceutical companies in the developing world, said the ruling did not represent a "breakthrough, but it was an important step." He added that India had demonstrated it was possible to make drugs more accessible and affordable.
Philipp Frisch from Doctors Without Borders hopes the ruling will set a precedent and that such licenses will be granted for other patented drugs in future.
Mira Shiva from Health Action International Asia Pacific was also pleased: "When such high prices are demanded, of course people are angry - especially when the drugs can be sold for much less," she told Deutsche Welle.
A spokesperson for Bayer AG told Deutsche Welle that the company was "disappointed." On Tuesday, it was looking at ways to challenge the ruling.
Author: Klaus Dahmann / Anne Thomas (AFP, dpa)
Editor: Gregg Benzow