The Indian government will consider the use of price controls rather than the controversial compulsory license tool to provide affordable medicines for their citizens, according to a draft guidance issued by India’s Department of Pharmaceuticals.

Under a compulsory license, an individual or company seeking to use another’s intellectual property can do so without seeking the rights holder’s consent, and instead pays the rights holder a set fee for the license. Although rarely put into practice, governments in developing countries have issued compulsory licenses to allow local generic drug manufacturers to produce expensive patented drugs without the consent of the patent holder and then sell those drugs to patients for a price that is much cheaper than the original drug.

In the new draft policy on price negotiation for patented drugs, the Department of Pharmaceuticals says that once patented drugs are regulated by government pricing controls, the provision to issue a compulsory license on the basis of not being affordable will no longer be relevant, since the drug’s cost should be considered reasonable at that point.

Most innovator drug companies don’t like the compulsory license tool, established in the Trade Related Intellectual Property Rights Agreement, arguing that it dampens their ability to recoup costs from expensive research and development efforts. In 2012, Bayer appealed the Indian government’s decision to grant its first compulsory license to Hyderabad based Natco Pharma to make a generic version of the cancer drug Nexavar, selling for $5,000 a month in the U.S. and Europe, well above what the average Indian citizen could pay. The kidney and liver cancer drug was co-developed and marketed by Bayer and Onyx, who say they spent more than $2.5 billion developing the drug. Their appeal hearing before the India Intellectual Property Appeals Board began early this year.

But not everyone is happy with the proposed new policy either. Healthcare activists object to negotiated pricing for patented drugs. “This policy undermines the importance of compulsory licenses, and the efforts done by other governments,” says Leena Meghlaney of Medécins Sans Frontier.

The debate over India’s pricing will only grow, as the number of generic drugs in India continues to rise. That number currently stands around 350 drugs and the Indian market for generics is growing. It may be worth up to $74 billion by 2020, six times its value in 2010, according to The Economist .

Drug makers outside India and other developing countries will need to get creative in order to establish local markets for their expensive products. As an example, last year Roche announced plans to cut the price of two cancer drugs sold in India, switched to the local manufacturer Emcure Pharmaceuticals, and rebranded the drugs to distinguish the Indian products from those sold elsewhere. Roche will discount 31 percent off the price of trastuzumab, known as Herceptin, and 53 percent off the price of rituximab for patients in India, the Economic Times reports.

This solution satisfies both the TRIPS Agreement and local government pricing controls, with the added benefit of honoring the World Trade Organization’s desire for TRIPS member states to provide better access to essential medicines.