India focus: Better protection for big pharma?

The last 12 months have brought a lot of change in India. First, a new government, the Bharatiya Janata Party, was voted into office in May 2014 and said straight away it would be focusing on, among other things, intellectual property.

Then, shortly after the election, Nirmala Sitharaman, the new commerce and industry minister, said India would “constructively engage” with the US—a long-term critic of its IP regime—about it.

The US Trade Representative’s annual Special 301 Report had included India on its ‘priority watch list’ (the report assesses US trading partners’ efforts to protect IP, and was released a few weeks before the general election). However, these two developments suggested that fears concerning India’s patent laws, particularly those surrounding pharmaceuticals, might soon be addressed.

One of those fears centred on compulsory licences, with major pharma companies worrying that Indian courts favour providing access to cheaper medicine over protecting patent rights.

Almost three years have passed since what was arguably the catalyst for much of the concern. In 2012, India’s controller general of patents and designs granted Natco Pharma a compulsory licence to produce a generic version of anti-cancer drug Nexavar (sorafenib), made by German pharma company Bayer.

The licence, which at the time enabled Natco to sell the drug at 8,800 rupees ($175) for a month’s dosage, rather than Bayer’s 280,000 rupees, was divisive. Some commentators claimed that it rightfully granted cheaper access to medicine for those who could not afford it, and others claimed it showed a disregard for patent rights.

Before that ruling, there were three other applications for a compulsory licence in India, but none has come to fruition.

In 2007, Natco filed applications against Roche’s anti-lung cancer drug Tarceva (erlotinib) and Pfizer’s carcinoma treatment drug Sutent (sunitinib malate), but later withdrew them. The third, also filed by Natco, concerned Bristol Myers Squibb’s drug Sprycel (dasatinib), and was dismissed by the Indian Patent Office (IPO) in 2011.

The compulsory licence issue has now reared its head once more, in the form of a closely followed battle between European pharma company Novartis and Indian generic maker Cipla.

An ‘urgent unmet need’

The case centres on Onbrez (indacaterol), Novartis’s treatment for chronic obstructive pulmonary disease (COPD).

In October 2014, in a submission to India’s health ministry, Mumbai-based Cipla requested either a compulsory licence or the indacaterol patent’s revocation. To back up its request, Cipla claimed that Novartis was “not working” its patents in India and that only a small quantity of the product was being made available despite a large demand for it.

Cipla followed this by launching a generic version of the drug, citing an “urgent unmet need”.

In response to the launch of the generic, dubbed Unibrez, Novartis sued Cipla for alleged infringement of its patent and trademark.

In January, the Delhi High Court issued a temporary injunction barring Cipla from selling the generic, a ruling that the Indian company has appealed against. The lawsuit concerning actual alleged infringement of the patent will be heard at a later date.

A spokesperson for Cipla tells LSIPR it was concerned that the judgment will deny patients access to the drugs they need. Unsurprisingly, Novartis tells us on the other hand that it “welcomes the positive outcome”.

But with an appeal against the injunction decision, the full case, and a government ruling on the compulsory licence looming, could there yet be success for Cipla?

What makes the case interesting, says Ashwani Balayan, partner at ALG India Law Offices in New Delhi, is that the injunction against Cipla’s generic actually has no bearing on its attempt to obtain a compulsory licence.

He tells LSIPR: “This ruling is limited to the court’s prima facie view on the alleged infringement of patents.”

"That a judge has ruled in favour of a pharma company with a view to “protecting innovation” sends out a positive message about the state of IP protection in India."

However, he adds, since Cipla’s defences were “heard and rebutted”, it might “set the tone” that it doesn’t have a good case for a compulsory licence.

Archana Shanker, partner at law firm Anand and Anand in Mumbai, says it will be difficult to predict what will happen.

“A compulsory licence is typically filed only after the voluntary licence route has been exhausted and the applicant has not already marketed the product,” Shanker tells LSIPR.

“In the present case, Cipla’s generic is already on the market. We will have to see how the IPO interprets the court order and whether the lack of a voluntary licence route and the sale by Cipla of the allegedly infringing goods will be bypassed.”

Shanker says Cipla will also have to show that the drug is not meeting the “reasonable” requirements of the public at a “reasonable” price.

She adds that this may be difficult because as Novartis has local partners that license the patented drug, including Mumbai-based Lupin Pharmaceuticals, some lawyers in the industry believe that the demand for the drug is in fact being met.

“To get an idea, the working statements Novartis has filed with the IPO will need to be examined,” Shanker adds.

Cipla’s application for a compulsory licence fell under a special provision, section 92(3), of the Patents Act, which grants licences only in cases of emergency.

This means, according to Balayan, that in addition to establishing grounds for granting a licence (invention not available at reasonably affordable price, or the invention not being ‘worked’ in India), Cipla will have an “additional burden of proof”.

This will be to establish that COPD has assumed “epidemic proportions” in India and has created circumstances described as a national emergency or extreme urgency.

Balayan adds: “Considering that the patented drug is only for a subset of patients with COPD—Onbrez is targeted at patients with a mild or moderate condition—and may not be categorised as the exclusive life-saving drug for patients, the chances of a compulsory licence succeeding under this provision appear low.”

Positive signs

In its January order, the Delhi High Court observed that Cipla did not provide any figures about the alleged inadequacy or shortfall in the supply of Onbrez. The court added that it did not agree with Cipla’s proposal to allow it to make a generic version of the drug without compensating Novartis for its “innovation”.

According to Shanker, regardless of what happens with Cipla’s compulsory licence application, that a judge has ruled in favour of a pharma company with a view to “protecting innovation” sends out a positive message about the state of IP protection in India.

Although Balayan says he believes that courts go “by the merits of the case” when granting an injunction, irrespective of the industry involved, he adds that the wording of the judgment could show that the courts are “getting more sensitive” about the IP rights of pharma companies.

Shanker explains that while Novartis had a “very good case and a strong patent”, Cipla’s product already being on the market was a key factor in Novartis being granted its request for a temporary injunction.

“Having said this,” she adds, “Judge Manmohan Singh dealt with protecting innovation as being equally important as public interest issues.”

Despite the positive signs of a court supporting innovation, Balayan adds that Cipla’s patent challenge was somewhat “half-hearted”.

“The fact that Cipla attempted to revoke the patent, applied for a compulsory licence and said it was willing to pay royalties from the sales of its generic to Novartis, was deemed an admission of validity of the patent-in-suit.

“Since neither a pending application by the defendant for a compulsory licence nor the revocation of the patent is a valid defence in a lawsuit for infringement ... an injunction seemed inevitable,” Balayan says.

Cipla could yet prove that there is indeed an “urgent” unmet need for Onbrez in India and, if so, news of another compulsory licence could soon be making the headlines, although there are no clear signs when the decision will be made.

Regardless of any decision, that this dispute has attracted a high level of interest and has been carefully considered by both the courts and the government, shows just how important pharma issues are in India.

The final outcome of the case is still up in the air, but the signs are there that India could be turning a corner when it comes to protecting the patents of big pharma companies.