Compulsory licensing

Patent challenge

Print edition : November 15, 2013

The generic cancer drug sorafenib tosylate drugs manufactured by Natco. Bayer Corporation's May 2013 petition challenges an order of the Intellectual Property Appellate Board, issued in March 2013, upholding the compulsory licence granted to Balco. Photo: Mahesh Kumar A. /AP

Pharma giant Bayer’s petition in the Bombay High Court against the issue of compulsory licence to Natco is one in a series of patent infringement suits filed against generic drug companies.

IT has been more than a year since the first compulsory licence was granted to an Indian company manufacturing generic drugs to produce a patented drug. In March 2012, the compulsory licence granted to Natco for manufacturing sorafenib tosylate (brand name Nexavar), a drug whose patent was owned by the pharma giant Bayer Corporation, had significant implications for public health as it promised to make available a life-saving cancer drug at an affordable price.

Compulsory licence is a provision in the Indian Patents Act, 1970, which balances the rights of the patent holder with the need to make life-saving medicines affordable by allowing government and quasi-judicial bodies to issue a licence for manufacturing patented drugs that are exorbitantly priced and are thus out of the reach of the general public and not available in adequate quantities.

While the issue of the first compulsory licence was welcomed by public health activists across the country, it also saw a consolidation of attacks on generic drug manufacturing companies by the pharmaceutical giants in judicial and quasi-judicial fora. The latest in the series of such attacks is a petition filed by Bayer in the Bombay High Court against the issue of compulsory licence to Natco, which came up for hearing on October 11. The court deferred the hearing on the matter to October 29.

This, along with a series of patent infringement suits filed against generic drug-manufacturing companies, poses a grave threat to the compulsory licensing regime and the affordability of medicines. Anand Grover, senior advocate and director of Lawyers’ Collective, said: “There has been a barrage of patent infringement suits against generic drug companies since 2009.”

The most recent challenge to Natco’s compulsory licence that has come up for hearing asserts the rights of the patent holder and seeks to dilute the pro-public health impact of a compulsory licence. The Bombay High Court will have to decide on significant public health concerns in adjudicating on the petition filed by Bayer in May 2013. Bayer’s petition challenges an order of the Intellectual Property Appellate Board (IPAB) issued in March 2013 which upheld the compulsory licence granted to Natco. Interestingly, Bayer Corporation had also filed a patent infringement suit against Natco and Cipla in November 2011 in the Delhi High Court. The case is pending.

The petition filed by Bayer Corporation accuses Natco of deliberately choosing to suppress the fact that Cipla was manufacturing the same drug and making it available to the public at approximately Rs.30,000 a month. The petition also tries to prioritise the rights of the patent holder granted under the TRIPS (trade-related aspects of intellectual property rights) regime over concerns of access to medicines. It critiques the IPAB’s decision to rely on the “Ayyangar report”, which focusses purely on process patent and vehemently discourages product patent.

A careful analysis of this petition shows how the patent infringement suit filed against a generic drug company is further being used as ammunition to challenge the compulsory licence provisions. The petition argues that a generic drug company infringing patents and manufacturing patented products penetrates the market of the patentee and thereby blocks the patentee from meeting the requirements of the public. It states, “A government cannot allow third parties to market a patented product during the term of a patent, undercut and steal patentee’s market, then grant a compulsory licence based on patentee’s obvious inability to meet the market demand covered by the alleged infringer. If this is the case, infringing companies will be able to get compulsory licences for all patented products, employing the strategy as stated above.”

The petition makes a strong case for the rights of the patent holder to determine the price. It further contends that the Mumbai Patent Controller General did not consider the fact that the price of the marketed product must include the cost not only of its own development but also of earlier, failed, research and development, and further must underwrite the R&D for the next generation of innovations.

In an attempt to dilute the issue of affordability of the drug, the petition also mentions a Patient Assistance Programme (PAP) of Bayer which provides the drug to needy patients at a subsidised rate of Rs.30,000 (the cost of Nexavar is Rs.2.8 lakh a month).

The petition tries to make a case for differential pricing of cancer drugs premised on an elitist assumption that some sections of the population can afford to pay for the exorbitantly priced drug. It states, “It is submitted that as a matter of fact as of today, the drug covered by the Subject Patent is available to ‘public’ at two different prices (differential price)—at Rs.2.8 lakh for that sect of the public who can afford the original price of the drug and Rs.30,000 under PAP for those who cannot afford the original price of the drug.”

Speaking to Frontline, Rajeshwari of Rajeshwari and Associates, counsel for Natco, made a strong case for the compulsory licence: “Sorafenib tosylate is used for treatment of liver and kidney cancer. Most of the patients who get kidney and liver cancer are in the middle and lower income groups, who cannot afford a drug that costs Rs.2.8 lakh a month. Some of the patients have an annual income in the range of Rs.1–2 lakh. Most of the existing insurance companies do not want to cover cancer patients. Also, you cannot anticipate if you’re going to get cancer. The estimated cancer prevalence in India is about 30,000 for kidney and liver cancer patients combined. Bayer’s drug has only been able to reach 200–300 patients a year.”

The BDR case

In a significant development, the Delhi High Court on October 3 recorded a statement from BDR Pharma that it would not manufacture the patented cancer drug Dasatinib until a patent infringement suit filed by the pharma giant Bristol-Myers Squibb (BMS) was heard on January 9. BMS had filed a patent infringement suit against BDR Pharma in August 2013. It is important to note in this context that BDR Pharma has also applied in March 2013 to the Mumbai Patent Controllers’ Office for a compulsory licence to manufacture Dasatinib, the exorbitantly priced cancer drug (Rs.1.6 lakh a month) whose patent is owned by BMS. The final decision on the matter is awaited.

The recent BMS petition is the latest in a series of suits filed for alleged patent infringement. In 2009, a patent infringement suit was filed by BMS against MJ Chempharm Pvt Ltd alleging that the generic drug company had applied for a marketing approval for Dasatinib. An ex-parte, ad-interim injunction was issued in 2009 by the Delhi High Court for a limited period, which prevented the generic drug company from manufacturing, selling, distributing or advertising directly or indirectly any product which infringes on Bristol Myers’ patent on Dasatinib.

MJ Chempharm Pvt Ltd (now BDR Life Sciences) filed an application to dismiss the suit in July 2012, stating that the application for marketing approval by the company in itself did not constitute patent infringement and therefore the BMS suit was not maintainable. The matter will come up for hearing again on January 9, 2014. In a similar suit filed against BDR Pharma in 2013, BMS alleged patent infringement by the company and asked for the injunction order issued in 2009 to be extended to BDR, as it was a related concern of MJ Chempharm Pvt Ltd. Both the suits are being heard in the Delhi High Court.

The patent infringement suits are premised on an assumption of threat of alleged infringement rather than real infringement by the generic drug company. They are filed even when a generic drug company has only applied for marketing approval of a drug. Anand Grover explained, “Under Section 107 (a) of the Indian Patents Act, 1970, applying for marketing approval for a patented drug is permissible and does not by itself constitute patent infringement. The Drugs and Cosmetic Act, 1940, permits the application of a marketing approval, irrespective of whether the drug is patented. The process of obtaining marketing approval takes several years, which is why a generic drug company might apply for the same much before the patented drug goes off-patent.”

The first compulsory licence issued for a cancer drug in India had brought relief to thousands of patients and their families who were finding the rising costs of treatment unbearable. With the new challenge to compulsory licence in a court of law, it remains to be seen whether the court will protect the common man’s access to affordable health care from multinationals’ greed.

This article is closed for comments.
Please Email the Editor