The pharmaceutical industry received a lift Wednesday when the Indian Patent Office rejected an application from a domestic company that sought a compulsory license to make a generic version of a brand-name medicine. In this case, Lee Pharma hoped to sell a lower-cost version of Onglyza, a diabetes pill sold by AstraZeneca.

The decision was being closely watched as global drug makers look for signs that the Indian government will alter its approach toward protecting patent rights. Countries can issue compulsory licenses to a generic drug maker allowing it to copy a patented medicine without the consent of the pharmaceutical company that owns the patent. This right was spelled out in a World Trade Organization agreement.

One argument for pursuing — and issuing — a compulsory license is affordability. Thailand took this step several years ago to lower costs for different medicines and, more recently, India issued a license as well. But the pharmaceutical industry worries that the Indian government is willing to consider issuing licenses as a way to bolster its own generic drug makers as much as widen access to medicines.

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But some patient advocacy groups argue that some efforts to enforce intellectual property rights may come at the expense of patients who cannot afford medicines. When it filed its application last June, Lee Pharma argued a compulsory license was warranted on the grounds that Onglyza was not sold at an affordable price in India and that supplies were inadequate.

The tactic has had mixed success in India. Two years ago, the Indian Supreme Court rejected a bid by Bayer to block the government from issuing a license to generic company to make a lower-cost version of its Nexavar kidney cancer drug from being sold. But the patent office also rejected an application by BDR Pharmaceuticals to make a version of a Bristol-Myers Squibb cancer drug known as Sprycel.

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For these reasons, the rejection of the Lee Pharma application is seen as “very significant,” said Vince Suneja, chief executive of TwoFour Insight Group, a consulting firm that works with Indian drug makers. “There have been multiple attempts in India for such licenses, but so far only one has been granted.” Meanwhile, he noted, the country is trying to attract investment and appease US concerns about patent rights.

As for Lee Pharma, we asked the company for comment and will update you accordingly, although an attorney for the drug maker told The Business Standard that an appeal will be filed.

For now, though, it remains unclear whether this decision alters industry perception of the Indian government and its willingness to protect patent rights. This is, after all, just one decision. And despite government willingness to accommodate industry concerns, the US Trade Representative may still place India on its next annual priority watch list for countries that fail to sufficiently protect and enforce patent rights.

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