India's patent appeals office has rejected international drug maker Bayer AG's plea to stop an Indian company from manufacturing a cheaper generic version of a patented cancer drug.
The ruling Monday by India's Intellectual Property Appellate Board is being hailed as an important precedent for getting inexpensive lifesaving drugs to the poor.
Last year, India's patent office allowed local drug manufacturer Natco Pharma Ltd. to produce a generic version of Bayer's kidney and liver cancer treatment Nexavar on the grounds that this would make the drug available to the public at a reasonably affordable price.
The German company filed an appeal against the Indian patents office's decision to grant a compulsory license to Natco Pharma under which the Indian company would pay royalty on net sales to Bayer.
Bayer sells a one month supply of the drug for about $5,600. Natco's version would cost Indian patients $175 a month. The patent appeals office ruled that under the license Natco must pay 7 percent in royalties to Bayer.
There was no immediate reaction to the decision from Bayer.
It was the first case of compulsory licensing under India's new patent laws passed in 2005.
Western pharmaceutical companies have been pushing for stronger patent protections in India to regulate the country's $26 billion generics industry they say frequently flouts intellectual property rights.
However, health activists and aid groups counter that Indian generics are a lifesaving resource for patients in poor countries who cannot afford Western prices to treat diseases such as cancer, malaria and HIV.
