The First, but of how many? India grants compulsory licence for Bayer drug Sorafenib

A big Katpat to D. P. Ahuja & Co. and Laura Ramsay of Dehns for drawing the IPKat's attention to this Decision of the Controller of Patents Mumbai concerning compulsory licences in the field of pharmaceuticals.  Thanks to blogmeister Jeremy as well for his assistance to this Kat.

This Compulsory License Application No. 1 of 2011 concerns the anti-cancer drug Sorafenib, protected by Indian Patent No. 215758. The patentee is Bayer Corporation, and the applicant for an compulsory license is Natco Pharma Limited, an Indian generic pharmaceuticals company.

According to the decision itself, the present case is the first of its kind in the history of the Indian Patents Act 1970. The decision states that the tribunal studied the provisions of the laws of other TRIPS member countries, as well as a number of articles, and that, because of the issues involved, the hearings went on for three days for a total of eighteen hours.

According to information received from D. P. Ahuja & Co., this decision is also "decided on the last day of Mr. P. H. Kurian's position as the Controller General of Patents. Mr. Kurian has handed over charge to his successor, Mr. Chaitanya Prasad on Monday the 12th of March 2012."

The decision is long, weighing in at 62 pages, but it is beautifully written and a joy to read, and the IPKat greatly enjoyed the experience.

By way of background,  the TRIPS agreement obliges WTO countries, of which India is one, to uphold certain standards with relation to intellectual property. In particular, it requires that patents be available in all areas of technology, including for pharmaceutical products (Article 27). However, WTO countries have the right to have compulsory licence provisions under certain circumstances, subject to certain safeguards of the interests of the patentee (Article 31).  The right of WTO member countries to use compulsory licences in order to "protect public health and, in particular, to promote access to medicines for all" was enshrined in the Doha Declaration.

The current compulsory licence provisions in the Indian Patents Act 1970 were introduced by the Patents (Amendment) Act of 2002, slightly amended by the Patents (Amendment) Act of 2005, and were designed to be TRIPS-compliant.  (The IPKat cannot find a consolidated text online - apologies to you interested readers).

This decision, as the first compulsory license in India, which is an overwhelmingly important country, with a huge pharmaceutical industry and a massive healthcare requirement, is clearly of monumental importance.

According to the decision, the anti-cancer drug Sorafenib, sold under the brand-name NEXAVAR by Bayer, is used for the treatment of advanced kidney and liver cancer. It has the potential to extend the life of a patient by 4 to 5 years in the case of kidney cancer, and 6 to 8 months in the case of liver cancer. However, the cost is high - around Rs.2,80,000 per month, which is over Rs.3.3 million per year.  This is completely unaffordable to many Indian patients.  (The IPKat understands that a low income in India might be of the order of Rs. 5000-10,000 per month, to give this some context).

In a curious twist, the Indian generic pharmaceuticals company Cipla has been selling the drug at around Rs. 30,000 per month.  However, their sales were the subject of an ongoing patent infringement action.  Natco wished to sell the drug for around Rs. 8880 per month.

The Indian patents act allows a compulsory license to be granted once three years have expired since the grant of the patent, on any one of three grounds:

(a) that the reasonable  requirements of the public with respect to the patented  invention  have not been satisfied,  or
(b) that the patented invention is not available to the public at a reasonably affordable price, or
(c) that the patented  invention is not worked in the territory of lndia.

In this landmark decision, the controller of patents found that the requirements for each of the three grounds were separately met, any one of those being sufficient to order the grant of a compulsory license.  Therefore, the license was granted.

The conditions of the licence were:

a.   The price of the drug covered by the Patent, sold by the licensee shall not exceed Rs.8880 for a pack of 120 tablets, required for one month's treatment.
b.   The licensee shall maintain accounts of sale etc. in a proper manner and shall report the details of sales to the Controller as well as the Licensor on a quarterly basis, on or before fifteenth day of the succeeding month.
c.   The licensee shall have the right to manufacture the drug covered by the Patent only at his own manufacturing facility and shall not in any whatsoever outsource the production.
d.   The license is non-exclusive.
e.   The license is non-assignable.
f.   The licensee shall pay royalty at the rate of 6% of the net sales of the drug on a quarterly basis and such payment shall be affected on or before fifteenth day of the succeeding month.
g.   The  license  is granted  solely  for the  purpose  of  making,  using, offering to sell and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the Territory oflndia.
h.   The licensee shall supply the drug covered by the Patent to at least 600 needy and deserving patients per year free of cost. The licensee shall annually submit in the form of an affidavit the details of such patients, i.e. name, address and the name of the treating oncologist, to the Office of the Controller of Patents and such report shall be submitted on or before 31st January of the year, in respect of the preceding year.
i.    The licensee shall not have the right to import the drug covered by the Patent.
j. The license is for the balance term of the patent.
k.   The  license  does  not  include any  right to  represent  publicly  or privately that the Licensee's  product is the same as the Licensor's or that the Licensor is in any way associated with the Licensee's product. The Licensee's  product must be visibly distinct from the Licensor's  product (e.g. in color and / or shape); the trade name must be distinct, and the packaging must be distinct. The Licensor will provide no legal, regulatory,    medical, technical, manufacturing, sales, marketing, or any other support of any kind to the Licensee.
I.   The Licensee is solely and exclusively responsible for its product and for all associated product liability. The Licensor, its Directors, Officers, Employees, Agents, and affiliates shall not be held liable in any manner whatsoever for any action of the licensee.
m. The Licensor is free to do whatever it wishes with its residual patent rights subject to the non-exclusive license to the Licensee, and is free to compete with the Licensee and to grant licenses to third parties to compete with the Licensee.

Points that caused the IPKat's whiskers to twitch were:

A. Bayer's imports into India were low.  Bayer argued that Cipla's sales should be considered when deciding whether the reasonable requirements of the public were being satisfied (even though Cipla were being sued by Bayer for these actions).  This was dismissed by the Controller: "In such circumstances,  the Patentee appears to be indulging in two-facedness  by adopting one stand before this tribunal and another stance before the Hon' ble High Court of Delhi, in order to defend the indefensible."

B. The controller was clearly strongly influenced in the decision by the high price and low sales by Bayer, and concluded:  "It stands to common  logic that a patented article like the drug in this case was not bought  by the public due to only one reason,  i.e. its price was not reasonably affordable  to them."  The IPKat wonders whether the alternative possibility that patients were preferring to take other medicines was fully explored in the arguments presented, because it does not appear strongly in the decision.

C. The third limb by which a compulsory licence can be granted, "that the patented invention is not worked in the territory of lndia" does, according to the decision, generally mean that the drug must be manufactured in India, not imported.  Although the term "worked" is not apparently defined in the Act, the controller concluded "I am therefore convinced that 'worked  in the territory of India' means 'manufactured to a reasonable extent in India'".  He was guided in this conclusion by "Section  83(b)  [of the Act as amended, which] states  that  Patents  are  not  granted  merely  to enable patentees to enjoy a monopoly for importation of the patented article. Upon a reading of this provision, it becomes amply clear to me that mere importation cannot amount to working of a patented invention."

This decision can now be appealed, and it is to be expected that Bayer will appeal.  The patent is itself apparently the subject of a validity challenge by Natco and Cipla, which, if successful, would render the compulsory licence moot.  (Merpel has noticed that Bayer wished the licence to include a no-challenge provision, but this was not included in the terms).

The IPKat awaits the result of any appeal with eager anticipation, and any reader who sends news of this will receive his eternal gratitude.  Readers' thoughts on this fascinating decision are, in the meantime, earnestly solicited.

Meanwhile, Merpel wonders why India has a Controller of Patents while the UK has a Comptroller.