NEW DELHI – India's Supreme Court has dismissed German multinational Bayer AG's appeal against attempts to make and sell cheaper generic versions of its cancer drug, Nexavar (sorafenib tosylate), used to treat liver and rectal cancers.

The Bayer case, however, went beyond routine patent squabbling between a foreign drug giant and Indian generics makers, as India's first compulsory license was also at stake.

Bayer appealed a patent court's ruling that issued a compulsory license allowing an Indian firm to make a cheaper version of Nexavar, and the Supreme Court's rejection of Bayer's appeal is being widely viewed as consistent with India's determination to balance patent laws with public health concerns over affordable drugs.

In 2007, Germany's Bayer won a license to import and market Nexavar in India. In addition, it received a patent for India in 2008, which will expire in 2020.

The high cost of Bayer's Nexavar – the international medical charity Médecins Sans Frontières (MSF) put the cost at $5,500 (Rs347,727) for a 120-capsule pack required for a month's treatment – priced it out of reach of most patients who needed it.

In 2012, an Indian patent office in Mumbai granted the country's first compulsory license to the Hyderabad-based firm Natco Pharma Ltd., allowing it to make a cheaper generic version of Nexavar. Under World Trade Organization rules, a country can issue a compulsory license to firms to make cheaper versions of patented drugs without seeking permission of the original innovator company that holds the patent, under certain conditions. Natco was asked to supply the drug at less than one-third of the cost – around $175 – and to pay a 6 percent royalty to Bayer.

The patent office cited the high cost of Nexavar and the small amounts produced by Bayer in India as the basis of the decision. The company, it ruled, did not meet two stipulations under Indian patent laws: the patented invention should meet the requirements of the public and it should be available to the public at a reasonably affordable price.

Bayer appealed against the compulsory license to an Indian patents appellate board but lost the case in 2013. After the appellate board's verdict, Shamnad Basheer, a leading intellectual property rights expert and then-professor at the National University of Juridical Sciences, Kolkata, said "the ruling marked an important milestone in Indian patent history and represented a clear victory for patients and generic manufacturers."

Bayer next appealed in the Supreme Court, which earlier this month rejected its appeal. "We are disappointed with the decision of the Supreme Court. We are analyzing the order and will determine any future course of action afterward," a Bayer spokeswoman told Bioworld Today. But MSF welcomed the apex court decision, saying it "demonstrates the independence of the Indian judiciary in upholding India's right to legislate with public health interests in mind."

"MSF is encouraged by this particularly strategic win for public health and access to medicines, whereby the Supreme Court has worked to ensure continued patient access to affordable versions of this lifesaving cancer drug, in spite of a multiyear campaign by Bayer to reverse the decision," Leena Menghaney, regional head, South Asia, MSF Access Campaign, said.

Many of India's high-profile patent battles involve cancer drugs. One example took place in 2013, when the Supreme Court rejected Novartis AG's application for a patent for cancer drug Gleevec (imatinib), a ruling that received global attention.

The rulings have, however, drawn the ire of foreign firms who charge that India's "weak" patent laws are a major deterrent for their operations in the country.

Meanwhile, India's National Pharmaceutical Pricing Authority has brought in more cancer drugs under its national list of essential medicines, which means that lifesaving drugs deemed essential but unaffordable would be brought under some pricing cap to make them more accessible.

The patents for and prices of cancer drugs have been in focus in India for some time. Unlike the Nexavar case, in which the patent office concluded that a compulsory license was justified, in 2013 India's patent office rejected a second application by Mumbai-based firm BDR Pharmaceuticals for a compulsory license to make leukemia drug dasatanib, whose patent is held by U.S. pharma giant Bristol-Myers Squibb Co.

The issue is far from settled, with India's health ministry urging India's Department of Industrial Policy and Promotion (DIPP) to issue a government-initiated compulsory license for dasatanib. The health ministry argued that many publicly funded institutions with health care facilities, such as the Indian railways, army hospital and central government health scheme, are facing difficulties in procuring dasatanib,which is being produced in small amounts and is expensive in India.

The DIPP has yet to decide on the issue and in October 2014 it sought further information from the ministry and Indian patent lawyers. The health ministry argued that a month's dosage of the original patented dasatanib costs about $2,624, while a month's treatment with a generic version costs $131.