India’s Generics-Big Pharma Battle Drops Drug Prices, Raises Legal Debate 20/05/2012 by Patralekha Chatterjee for Intellectual Property Watch 11 Comments IP-Watch is a non-profit independent news service, and subscribing to our service helps support our goals of bringing more transparency to global IP and innovation policies. To access all of our content, please subscribe now. You also have the opportunity to offer additional support to your subscription, or to donate. The escalating battle between Big Pharma and India’s generic drug manufacturers is pushing down medicine prices in one of the world’s fastest growing pharmaceutical markets. German drug major Bayer AG is currently pitted against two of India’s leading generic drug manufacturers – the Mumbai-based Cipla Ltd and the Hyderabad-based Natco Pharma Ltd. Both are selling a key cancer drug at a fraction of the price of Bayer’s branded version and both are fighting a legal battle against Bayer. On 28 July 2011, Natco filed an application before the Controller General of Patents for grant of compulsory licence (CL) for Bayer’s patented drug Sorafenib, which was granted in March. “After hearing both parties, the Controller General granted the CL to our company for Bayer’s patented product on 12 March 2012 .This is the first ever compulsory licence being granted in India. Natco can now manufacture and sell Sorafenib in India, even before the expiry of the patent for the said product The patent is valid up to 2020,” Adi Narayana, company secretary at Natco, told Intellectual Property Watch. Bayer holds an Indian patent for the chemotherapy drug sorafenib tosylate, which it manufactures under the trade name Nexavar. The drug is used to treat liver and kidney cancer. Section 84 of the Indian Patents Act provides that an interested person may apply for a compulsory licence to work the patented invention on any of following grounds: that the reasonable requirements of the public with respect to the patented invention have not been satisfied; that the patented invention is not available to the public at a reasonably affordable price; or that the patented invention has not been worked in the territory of India. While granting the CL to Natco, the Patent Controller imposed certain conditions. This includes that the price of the drug for a pack of 120 tablets shall not exceed Rs.8,880 (US$163), and the licence is non-exclusive and non-assignable. In addition, Natco must pay royalty at the rate of 6 per cent on net sales, manufacture on its own and sell only in India, and supply the drug free of cost to 600 needy and deserving patients each year, Narayana said. The landmark decision of the Indian Patent Controller has brought down the costs of the medicine by 97 per cent. Bayer’s branded drug costs Rs 280,000 ($5,128) for a month’s treatment (120 tablets). Unsurprisingly, the ruling was not to Bayer’s liking. In an emailed statement to Intellectual Property Watch last week, Bayer spokesperson Alok Pradhan reiterated the company’s position, “We strongly disagree with the conclusions of the Patent Controller of India and have appealed his order on May 4th 2012 with the Intellectual Property Appellate Board.” “We will rigorously continue to defend our intellectual property rights which are a prerequisite for bringing innovative medicines to patients,” Pradhan said. “The challenges faced by the Indian healthcare system have little or nothing to do with patents on pharmaceutical products as all products on India’s essential drug list are not patented. Rather, the order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research.” Bayer stresses that to facilitate access for patients to innovative treatments, it has had a Patient Access Programme in place since the launch of Nexavar in India in 2008. Bayer says that this programme, last expanded in April 2012, reduces the price for the monthly treatment with Nexavar for qualified persons to about a tenth of the regular pharmacy price (Rs 280,000 or $5,128) for the complete duration of treatment. However, the number of patients benefitting from Bayer’s Patient Assistance Programme in India is not known. On 18 May, the Intellectual Property Appellate Board (IPAB) in Chennai fixed 21 August 2012 for hearing the petition of Bayer against the compulsory licence granted to Natco for manufacturing the patent protected anti-cancer drug, Nexavar. Bayer-Cipla In another blow to Bayer AG this month, Cipla Ltd, the Mumbai-headquartered generic drug maker, led by the legendary Dr Yusuf Hamied, also decided to slash the price of its generic version of Sorafenib by nearly 76 per cent. Cipla is offering the drug at Rs.6,840 ($125) for 120 tablets, even cheaper than Natco. Cipla has also announced that it will be reducing the prices of its other cancer drugs. Hamied said he is reducing prices on humanitarian grounds. Health advocates and cancer patients are happy that the fight between the big brand-name pharmaceutical producers and local generic drug makers is making cancer drugs cheaper. The vast majority of Indians don’t have any form of health insurance and out of pocket payments continue to be among the highest in the world. Cancer has also become one of the ten leading causes of death in India today. It is estimated that there are nearly 2 – 2.5 million cancer cases at any given point in time in the country. “The provision of compulsory licensing, which is given in the WTO TRIPS [World Trade Organization Trade-Related Intellectual Property Rights] agreement is included in Indian legislation as well, but that provision had never been applied in practice. As a precedent, this is a great achievement for India’s public health,” Nata Menabde, WHO representative to India told Forbes (India) magazine recently. Some intellectual property analysts, however, strike a cautionary note. “The Govt. needs to carefully consider the tradeoffs between making vital medicines available at a reasonable cost and important IP issues …” blogged Molika Gupta of the Indian Institute of Patent and Trademark Attorney, a Delhi-based agency which conducts training programmes and research in the area of intellectual property. The United States Trade Representative has placed India, along with a number of other countries, on the Priority Watch List in its latest report. Bayer says it has not consented to let Cipla launch generic Sorafenib, that Nexavar patent is valid until 2020 and has taken Cipla to court. The next hearing is set for 14 August 2012. Meanwhile, in its 37-page appeal to the Intellectual Property Appellate Board, Bayer has “demanded the withdrawal of the country’s first compulsory license given to Natco Pharma, arguing that a three-fourths reduction in the price of the anti-cancer drug by another Indian firm has made the permit redundant and its patent itself is vulnerable to being revoked,” the Economic Times, India’s leading business newspaper, reported on 19 May. Bayer says CIPLA’s new price “will render Natco’s price unreasonable and defeat the purpose of compulsory licensing,” according to the newspaper. Pratibha Singh, Cipla’s lawyer, told Intellectual Property Watch: “The suit for infringement of patent qua Sorafenib as filed by Bayer against Cipla [CS(OS) No. 523/2010] is pending adjudication before the Delhi High Court. A counterclaim challenging the validity of Bayer’s patent has been filed by Cipla in the suit. The suit is at the stage of trial and the cross examination of Bayer’s witnesses is to take place.” In 2010, India’s top judicial authority had dismissed Bayer’s attempt to block the Indian drug regulator from allowing Cipla to launch a low-cost version of its patented cancer medicine. “The matter, which went up to the Supreme Court was pertaining to the issue of presence of ‘patent linkage’ in India. However, in light of the fact that a suit for patent infringement had been instituted by Bayer against Cipla, the same was dismissed,” Singh told Intellectual Property Watch. “What is important, though,” Singh said, “is the fact that the finding of the single judge and the division bench of the Delhi High Court qua the concept of patent linkage not being prevalent in India was not disturbed.” Will access and affordability disputes around patented medicines become more frequent or will India’s generics industry force Big Pharma to make cancer drugs more affordable? Will there be more compulsory licences being issued? It is hard to say at this stage. Brazil, Canada, Thailand, Australia and Korea have issued CLs in the past. Patralekha Chatterjee may be reached at firstname.lastname@example.org."India’s Generics-Big Pharma Battle Drops Drug Prices, Raises Legal Debate" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.