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16 October 2013Asia

A giant's perspective: interview with Bayer

In March 2012, global pharmaceutical company Bayer was dealt a blow which would mark a significant turning point for the entire industry.

In India, the Controller of Patents issued the country’s first ever compulsory licence, forcing Bayer to license its patented cancer drug Nexavar (sorafenib) to Natco, a local generics company, which could then sell the drug at a cheaper price.

The controller said that Bayer, which celebrated its 150th anniversary in August, had not made Nexavar publicly available at a reasonably affordable price or sufficiently “worked the patent in India”.

Since the decision was taken, India has gone on to recommend compulsory licences for three more anti-cancer drugs: Sprycel (dasatinib) and Ixempra (ixabepilone) belonging to Bristol-Myers Squibb and Roche Holding AG’s Herceptin (trastuzumab).

In April this year, the Supreme Court also rejected an application from Swiss-based Novartis to patent an updated version of its leukaemia drug Glivec (imatinib) on the grounds that it lacked novelty, delivering a further blow to Western pharmaceutical companies.

However, Thomaier says that recent cases in India should not be seen as indicative of a global trend.

“It is important to note that an increase in compulsory licences can be observed in only a limited number of countries,” Thomaier says.

However, Thomaier questions the effectiveness of the system, particularly in emerging markets.

“Increased reliance on compulsory licensing by some countries undermines the incentives for innovation,” he says. “India is a case in point. Its policies do not, in fact, provide its poor population better access to medication. For the majority of Indians, even essential, off-patent, medicines remain unaffordable.

“The country’s generics industry takes advantage of India’s IP system, allowing it to cater to its export markets. The economic reality of India means that even after the issuance of the compulsory licence for Nexavar, the number of patients who take the drug has increased only marginally.

“Bayer is committed to enabling access to our innovative products to the largest possible extent. Such efforts can be successful only if multiple partners play an active role,” says Thomaier. Bayer appealed against the ruling, which enabled Natco to sell the drug at 8,800 rupees ($175) for a month’s dosage, instead of the 280,000 rupees ($5,500) charged by Bayer, which would be entitled to a 7 percent royalty on generic sales.

“IN ADDITION TO THE PAP, WE RUN PROGRAMMES IN COLLABORATION WITH GOVERNMENT AGENCIES AND NONGOVERNMENTAL ORGANISATIONS THAT SUPPLY CERTAIN POPULATION GROUPS IN AN ECONOMICALLY VIABLE WAY.”

“Bayer has Patient Access Programmes (PAPs) to increase availability of our drugs. In India the programme for Nexavar makes the drug available to all patients identified by their treating doctor as to medical suitability and financial need, at 10 percent of the regular price. Of the patients taking Nexavar from Bayer in India, approximately 80 percent do so under our PAP.”

The decision was upheld by the Intellectual Property Appellate Board (IPAB), but Bayer has since appealed against the ruling again, taking the case to the Bombay High Court.

Despite the fact that major stated justifications for compulsory licences are cost and ensuring all patients have access to affordable treatment, Thomaier indicates that Bayer already had systems in place to ensure equality in its pricing.

“In addition to the PAP, we run programmes in collaboration with government agencies and non-governmental organisations that supply certain population groups in an economically viable way, thus ensuring that the programmes remain sustainable.”

Thomaier points towards Bayer’s Contraceptive Security Initiative, a project in sub-Saharan Africa, launched by Bayer HealthCare and the US development agency USAID, which provides access to oral contraceptives at affordable prices.

“Bayer has also initiated assistance programmes in south and southeast Asia, Brazil and several countries in south eastern Europe, among others. They ensure that patients with diseases such as cancer or multiple sclerosis, who otherwise could not afford the necessary medication, receive treatment.”

A significant factor in the issuing of the compulsory licence was India’s patent law which, according to Thomaier, includes “several problematic paragraphs”.

Under Section 84 of the Indian Patents (Amendment) Act of 2005, a compulsory licence may be granted if “the reasonable requirements of the public with respect to the patented invention have not been satisfied”, or “the patented invention is not available to the public at a reasonably affordable price”, or “the patented invention is not worked in the territory of India”.

“In this last requirement we see a clear breach of international standards, in so far as India seems to interpret ‘worked’ as ‘manufactured in India’,” Thomaier says.

Bayer’s IP world

As chief IP counsel, Thomaier has the task of managing the Leverkusen, Germany-based company’s entire IP portfolio including the 76,000 patents and patent applications it currently holds (as of December 2012).

Besides its patents, the IP team, which is made up of around 350 employees, is also responsible for trademarks, designs, copyright and the company’s know-how.

The team supports Bayer’s subgroups Bayer HealthCare, Bayer CropScience and Bayer MaterialScience as well as the company’s service companies, Bayer Technology Services and Bayer Business Services, in all IP-related matters.

There are also separate specialist teams to tackle litigation, trademark services and licensing and transactions.

“Our tasks include giving advice and assistance in the acquisition, enforcement and licensing of rights in patents, trademarks and related IP rights.

“We are also responsible for all the administrative tasks concerning IP as well as inventor remuneration,” Thomaier says.

With offices on every continent and globally recognised brands such as Aspirin to its name, it is not surprising the company finds itself the target of attempted infringements and hijacking of its IP rights.

“We observe a decreasing appreciation of the value of innovation—not only in developing and emerging countries, but also in industrialised economies,” says Thomaier, adding that pharmaceutical and plant protection products are the most commonly targeted.

“We are facing a significant number of counterfeit products such as fake plant protection products, in particular in non-EU companies. Those products present a significant threat to users and the environment.

“We are therefore working in close cooperation with customs authorities to prevent counterfeit products from entering the market.” However, as with any global company trying to protect its IP, there are some jurisdictions which have proved more problematic than others.

“There are a number of challenging jurisdictions but it is important to differentiate,” says Thomaier, outlining “restrictive” patent criteria as one of the biggest challenges faced.

“There is a tendency to implement patentability criteria that are too restrictive. In addition there are countries that link patent decisions to local industrial policy objectives.

“THERE IS A TENDENCY TO IMPLEMENT PATENTABILITY CRITERIA THAT ARE TOO RESTRICTIVE. IN ADDITION THERE ARE COUNTRIES THAT LINK PATENT DECISIONS TO LOCAL INDUSTRIAL POLICY OBJECTIVES.”

“Some jurisdictions are problematic in terms of their substantive patent law such as patentable subject matter and patentability criteria, while others are difficult because of formalities and procedures (time to grant a patent) or because of the enforceability of patents (pre and post-grant opposition, litigation, court system).” However, Thomaier points out, the problem is not restricted to India.

“Some countries, for instance Argentina, have implemented new patentability criteria targeted at secondary patents. However, secondary patents are in no way referring to ‘lesser innovations’.”

As Thomaier points out, the existence of a secondary patent does not deter generic competitors.

“A generic competitor can still enter the market despite the existence of secondary patents, as soon as the patent term of the original invention— the patent on the active ingredient and the formulation of the original drug—has expired.

“China by contrast, offers an increasingly innovation-friendly IP environment while there is, of course, still room for improvement, especially regarding the enforcement of patents,” he says.

Thomaier says it is important to look towards European laws when protecting IP rights, particularly in pharmaceutical and chemical industries.

“The pharmaceutical and agrichemical business is highly regulated. Costs incurred by long innovation cycles and regulatory requirements for new products are ever-increasing. We believe that the European IP system balances well the interests of consumers, inventors and their competitors.”

Referring to the problems in India and countries with problematic patent laws, Thomaier adds that effective IP strategies will be essential in the future.

“The effectiveness of IP rights is a crucial component of long-term economic development within these countries and an important incentive to develop new innovative products.”

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