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India mulls overriding drug patents in test case

NEW DELHI, Feb 27 (Reuters) - India's patent office will consider this week whether to override patents on cancer drugs made by Pfizer and Roche and allow a generics firm to export copycat versions to Nepal in the first case of its kind here.

The case, brought by Hyderabad-based Natco Pharma, is the first time India's patent office has considered granting so-called compulsory licences since the law was updated in 2005 in keeping with World Trade Organization (WTO) rules.

"It will be a moral victory, making drugs more affordable to developing countries," said Adi Narayana, Natco's corporate affairs manager, when asked about the significance of the case.

It would also be a business victory for India's massive generic pharmaceutical sector, he said. India is the main supplier of essential medicines to poor countries, according to aid group Medecins Sans Frontieres (MSF).

The patent office will begin hearing the case on Thursday and Friday and rule at a later date.

The WTO's Trade-Related Aspects of Intellectual Property Rights agreement (TRIPS) lets governments override drug patents and allow the production of generic copies of drugs deemed critical to public health in poor countries.

Since the agreement, several countries have used TRIPS to produce generic AIDS therapy drugs for their domestic markets.

In October, Canada became the first to allow one of its companies to export a generic copy of a patented drug, sending AIDS therapy drugs to Rwanda.

Last year Thailand was the first to override patents for drugs to treat diseases other than AIDS, issuing licences for patented cancer drugs despite intense industry resistance and criticism from the United States for disrespecting patents.

DO PATENTS HELP OR HINDER?

Natco

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has a licence from Nepal to import Erlotinib, patented in India by Swiss firm Roche

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under the brand name Tarceva, and Sunitinib, patented by U.S. firm Pfizer Inc

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under the name Sutent.

It says it can make generic versions at about a fifth of the cost to sell through a private distributor in Nepal.

Drug research companies and public health activists argue over how much patents hinder poor countries from getting hold of new and improved drugs for AIDS and other public health issues.

Drugmakers say tight patent laws stimulate vital research; activists say the ensuing price monopolies prevent the drugs from reaching people in developing countries.

Pfizer said in an e-mail that it supplies discounted Sutent to some patients in India, and is extending that programme to Nepal, although it did not say how many patients are eligible.

Natco has offered 5 percent royalties on sales it makes to Roche and Pfizer, in keeping with TRIPS guidelines.

Asked to comment on Natco's offer, a Roche spokesman said: "Tarceva is already available in India through Roche and therefore patients in Nepal have access to Tarceva."

Both Pfizer and Roche said they could not comment further on the case while it was still being decided.

Shamnad Basheer, an associate at the Oxford Intellectual Property Research Centre, says the India case will force big drugmakers to look at their pricing.

"If there's one thing they've got wrong all these years it's pricing evenly across the world," he said. "Pfizer's easiest option would be to drop the prices in Nepal -- then Natco doesn't have a case."

In the last big test of drug patents in India, Swiss firm Novartis

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lost its challenge in a Chennai court in August to a law blocking patents for minor improvements to existing drugs. (Editing by Simon Denyer and Sugita Katyal}

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