The US-India Business Council says it is “encouraged” by the NDA government’s more restrained approach towards grant of compulsory licences (CL) for production of patented products without inventors’ consent. The lobby group of American business interests in India has taken note of the government’s denial of “several CL applications, providing investor certainty and predictability that their patents will be upheld”.
But this stance – reinforced by Prime Minister Narendra Modi’s commitment to align India’s patent laws with “international standards” – is quite at odds with the ongoing saga involving Bollgard-II, the proprietary Bt cotton technology of Monsanto.
On March 3, the Department of Industrial Policy and Promotion (DIPP) issued show cause to the US life sciences major’s technology licencing arm – Mahyco Monsanto Biotech India – asking why its patent for Bollgard-II should “be not revoked in public interest”.
Earlier, on December 7, the Agriculture Ministry came out with an order giving the Centre powers to fix the maximum sale price (MSP) of genetically modified (GM) cotton seeds. The order further empowered it to “fix and regulate” the royalty or trait value charged by the licensor of a GM technology from seed companies that have incorporated it into their cotton hybrids. The target here was clearly Monsanto, which is a monopoly supplier of GM Bt cotton technology in India.
Subsequently, a committee appointed under the order recommended a reduction in the MSP of Bollgard-II Bt cotton hybrid seeds from Rs 830-1,000 to a uniform all-India level of Rs 800 for every 450-gram packet. Even sharper was the suggested lowering of trait value – from a range of Rs 163.29-174.9 (excluding applicable taxes) to Rs 49 (including taxes) per packet. That recommendation has since been implemented, with the new MSP and trait value effective for 2016-17 being notified on March 8.
Both moves – a slashing of trait fees and even seeking outright revocation of a patent in Bollgard-II – are a contrast to the seeming official caution with regard to handing out CLs to domestic players for production of patent-protected drugs. In the cases where CLs were either granted (Bayer’s Nexavar) or applications made (Roche’s Trastuzumab, Bristol Myers Squibb’s Dastanib and AstraZeneca’s Saxagliptin), the multinationals concerned were accused of resorting to exorbitant pricing and not making their products adequately available in the domestic market.
But in Bollgard-II, the annual sales of around 45 million packets of seeds incorporating the technology – accounting for 90 per cent of India’s total cotton area – do not really point to the patented invention not being “worked” in the country.
On pricing, the opinion is more mixed. When Bt cotton was first introduced in 2002, the trait value of Rs 1,250 per packet, that too for Monsanto’s first-generation Bollgard technology, was definitely on the higher side. Domestic seed manufacturers claim that even the Rs 163.29 trait fee is unreasonable on a price of Rs 930 for their end-product. Monsanto’s argument, though, is that seed costs – at Rs 1,600-1,700 taking an average 1.7 packets per acre – constitute not even a tenth of total cultivation expenses of Rs 21,000-22,000. Within that, the share of trait value is even less.
The latest lowering of trait fee – sharper than the MSP reduction – would primarily benefit the sub-licensees of Monsanto’s technology like Nuziveedu, Kaveri, Ajeet and Rasi Seeds.
The NDA government has defended the slashing of trait fees and the proposal to revoke the patent for Bollgard-II granted on March 23, 2009, citing the “accelerated resistance developed by the Pink Bollworm to this technology”. Since this is likely to adversely affect the livelihood of farmers, “the Central Government is of the opinion that the said patent appears to be generally prejudicial to the interest of the public”, the DIPP’s show-cause notice has stated.
But as K.R. Kranthi, director of the Nagpur-based Central Institute for Cotton Research, has pointed out (see accompanying piece), the development of pink bollworm resistance to Bollgard-II owes more to the unchecked proliferation of privately-bred Bt hybrids than the technology itself.