India's granting of its first-ever compulsory license to a generic firm - for Bayer's cancer drug Nexavar (sorafenib) - is "a game-changing move to overcome drug price barriers," says a leading NGO.

India's Controller of Patents - the highest authority of the Indian Patent Office - has granted Indian generics company Natco Pharma Ltd the compulsory license for Nexavar, which is used in the treatment of liver and kidney cancers, after Bayer failed to ensure affordable access to the drug, says nongovernmental organisation Medecins Sans Frontieres (MSF). The decision requires Natco to pay a royalty to Bayer for the drug.

This "landmark" decision will bring the drug's price down from $5,500 per person per month to just $175 per month - an automatic price reduction of nearly 97%, says MSF.

It also forecasts that the decision sets an important precedent, because it means that new medicines in India which are still under patent, including some of the newest HIV/AIDS treatments, could potentially have generic versions produced for a fraction of their cost, making them more affordable and widening access to those who need them most.

The agency regrets the fact that the Patent Office's decision is limited to domestic production only, but hopes that this new precedent could in future be applied and expanded to include medicines for export. "This would significantly impact the affordability of the medicines MSF and others in the developing world rely on to treat the world's poorest people," it says.

The Office's decision, which effectively ends Bayer's monopoly on Nexavar in India, was based not only on the firm's failure to price the drug at a level that made it accessible and affordable, but also because Bayer was unable to ensure that it was available in sufficient and sustainable quantities within India, says MSF.

In his decision, Controller of Patents PH Kurian notes that "a right cannot be absolute. Whenever conferred upon a patentee, the right also carries accompanying obligations towards the public at large. These rights and obligations, if religiously enjoyed and discharged, will balance out each other. A slight imbalance may fetch highly undesirable results. It is this fine balance of rights and obligations that is in question in this case," he writes.

"We have been following this case closely because newer drugs to treat HIV are patented in India, and as a result are priced out of reach," commented Tido von Schoen-Angerer, director of MSF's access campaign.

"But this decision marks a precedent that offers hope - it shows that new drugs under patent can also be produced by generic makers at a fraction of the price, while royalties are paid to the patent-holder. This compensates  patent-holders while at the same time ensuring that competition can bring down prices," he said.

The compulsory license has been granted by the Controller of Patents in Mumbai to Natco for the eight years - to 2020 - which Nexavar will remain patented in India, and against the payment of a royalty rate fixed at 6%. The patent began in 2008.

Bayer said it was disappointed at the decision and that it would be evaluating its options to further defend its intellectual property rights in India, while Natco welcomed the order, which it said would "open up a new avenue of availability of life-saving drugs an affordable price to the suffering masses in India."