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Landmark case of Compulsory

Licensing in India

October 16,2015

Presented by: Kiran Patange

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Following is the brief mention of the provisions of section 84 and 92 of the Act.

Section 84 of Compulsory licenses: At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory license on patent on any of the following grounds, namely:

That the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

That the patented invention is not available to the public at a reasonably affordable price, or

That the patented invention is not worked in the territory of India.

Indian provisions relating to Compulsory Licensing

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Natco v/s Bayer was the first Landmark case of compulsory licensing being obtained in India in pharmaceutical field of discipline

Patentee: Bayer CorporationApplicant: Natco Pharma LimitedAPI: Sorafenib tosylateDosage form: Tablet; OralBrand name: NexavarStrength: 200mgCategory: Anticancer (liver and kidney cancer treatment)

Patent no. IN215758

Landmark case of Compulsory Licensing in India

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Natco, a generic drug manufacturing company requested Bayer for giving it a voluntary license

The request was denied and so Natco filed an application in the Controller of Patents Court for grant of a compulsory license

In accordance with the provision of Indian Law’s Section 84 of the Patent Act, the Indian Controller of Patents started with competing claims of both the patentee (Bayer) and the compulsory license applicant (Natco)

And finally Natco received a license from the Drug Controller General of India for manufacturing the drug in bulk and marketing in form of tablets (200mg) in April 2011 on the basis of following grounds;

Case Background

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Reasonably affordable priceNexavar cost - The cost of cancer drug Sorafenib in 200mg tablet varies vastly in branded and generic category. Branded Category- Rs 280,428 per patient per month.

The generic drug:1) Sorafenib was available from Cipla for Rs

27,960 2) Natco is providing the same at Rs 8,880/-.

After the judgment for grant of compulsory license Cipla has slashed its price further and now it is available for Rs 6,600/- per patient per month.

Per Capita Income of India (PCY) in 2011 - $1575/-Cost of Bayer’s Nexavar PP/Year in 2011 - $69,000/-Cost of Natco’s Sorafenib PP/Year in 2011 - $2,120/-Bayer was charging almost 45 times the Per Capita Income of India of India.

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Requirement of about 23,000 bottles per month. No bottles of Nexavar were imported in India in the year 2008 and 200 bottles were imported in 2009. In the year 2010 there were no imports of Nexavar.

The importance of the time period lies in the fact that the Government of India granted Bayer a patent on the drug Nexavar in the year 2008 after assessing that Bayer would fulfil the “Reasonable requirements of the Public” during that period. Also, Bayer did not manufacture the drug in India as it focused on imports of its bottles.

Reasonable requirements

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The Controller also cited that the invention (Nexavar) was not “worked” in India. Natco argued that even though Bayer had manufacturing facilities in India, it did not manufacture the drug in India.

Bayer said it did not do so because of economic reasons and argued that “worked in the territory” could not mean “manufactured in India”.

Bayer added that the “strategic decision” of manufacturing the drug in Germany was valid as had the drug had “small global demand”.

Patented invention is not worked in the territory

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On 9th March, 2012, The Controller of Patents in his judgment awarded the first compulsory license in the pharmaceutical industry in India under new WTO rules. The Compulsory License for the drug Sorafenib/ Nexavar is granted by the controller on the basis of the following terms:The applicant Natco has very limited rights to manufacture and commercially sell the drug. Natco cannot sublicense to another party. It is a non-assignable and non-exclusive license with no right to import the drug.The compulsory licensed drug can be sold only for the treatment of liver and renal cancer. Natco cannot use this license for alternate or subsequent use of the drug.

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Landmark decision

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Natco has to pay the royalty for the drug at a rate of 6% of net sales to the patent owner Bayer. This is in consonance with Article 31(h) of TRIPS Agreement read with Section 90(1) of the Act.

For one month treatment, the controller has set the price of the Natco’s drug at Rs.8800/-.

Natco, as committed before, has to provide the drug free of cost to at least 600 “needy and deserving” patients per year

Natco cannot or it has no right to “represent privately or publicly” that the product manufactured by it is the same as Bayer’s Nexavar.

Bayer has no liability for the drug to be manufactured by Natco, which must be physically distinct from Nexavar dosage form

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Following the grant of the CL to Natco, Bayer has filed a petition with the Intellectual Property Appellate Board (IPAB) to order a stay on the compulsory license.

On Friday, 14 September 2012, IPAB issued Order (No. 223 of 2012) in the case between Bayer versus the Union of India, The Controller of Patents, and Natco dismissing Bayer's request for a stay on the compulsory license granted to Natco.

Bayer, in its petition said that Indian Drug manufacturer Cipla was selling its product Soranib, at a maximum retail price of Rs.6,840 in India for one month’s treatment, lesser than Natco’s price.

Bayer also argued that, its drug Nexavar was made available at Rs. 30,000 to patients on the recommendation of the oncologist.

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Bayer argued that as the drug is already available in the market at a reasonably affordable price and the patentee is not necessarily the supplier, then Section 84(1)(b) of the Patents Act will not arise.

As also some other company is supplying the drug and as the public requirement is met, even then Section 84(1)(a) will not arise.

Additionally, there was no burden for Cipla in doing research and development, Cipla can sell the drug at any price. Therefore, Section 84(1)(c) could not arise either.

The decision noted that "The patentee, Bayer has to prove that, the patentee by its own supply has satisfied the requirements of the public.

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Other CL cases in IndiaBDR pharmaceuticals vs. BristolMyersSquibb'sPatentee: Bristol Myers Squibb'sApplicant: BDR pharmaceuticals API: DasatinibDosage form: Tablet; OralBrand name: SPRYCELStrength: 20MG, 50MG, 70MG, 100MG, 80MG, 140MGCategory: Anticancer (Chronic Myleoid leukemia(CML)Patent no. IN203937

Controller decision: applicant has failed to make out a prima facie for the making of an order under sec 87 of the Act. The application for compulsory licence, along with all the petitions for condonation of delay/irregularity, is hereby rejected.

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AstraZeneca vs Lee Pharma

Patentee: AstrazenecaApplicant: Lee Pharma API: SaxagliptinDosage form: Tablet; OralBrand name: OnglyzaStrength: EQ 2.5MG BASE, EQ 5MG BASECategory: Antidiabetic (Diabetes Mellitus (life management)Patent no. IN206543 (granted in 2007 to Bristol-Mayers Squibb, which later assigned the patent to AstraZeneca)Saxagliptin CL Round 1: Controller shoots down

Lee Pharma

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Thank You