India: IPAB Says NO To Bayer’s Stay Petition On CL Order

Last Updated: 24 September 2012
Article by Kamakhya Srivastava

On March 9, 2012, the Indian generic pharmaceutical industry got a shot in the arm when Indian Patent Office, by invoking the compulsory license (CL) provisions of the Patents Act, allowed NATCO PHARMA LTD, an Indian generic drug manufacturer to manufacture and sell generic version of the blockbuster cancer drug Sorafenib Tosylate (sold as Nexavar) patented by the German health care giant, BAYER CORP. The Patent Controller held that the sales of the drug, exorbitantly priced at about Rs. 2,80,000 for a month's treatment, constitutes a fraction of the requirement of the public and therefore, logically deducting, the drug was not bought by the public due to only one reason i.e. its price was not reasonably affordable to them. While granting the CL to Natco, the Patent Controller imposed certain conditions. This included that the price of the drug shall not exceed Rs. 8,880 for a month's treatment, and that 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. Predictably, Bayer appealed against the order before Intellectual Property Appellate Board (IPAB).

Meanwhile, CIPAL Ltd, the Mumbai-headquartered generic drug maker slashed the price of its generic version of Sorafenib Tosylate to offer the drug at Rs. 6840 for a month's treatment (cheaper than Natco). According to information, Bayer said CIPLA's new price "will render Natco's price unreasonable and defeat the purpose of compulsory licensing."

Both the parties, as observed by the two-member bench of IPAB, Justice Prabha Sridevan, and DPS Parmar, Technical Member (Patents), Bayer and Natco advance their arguments as if they were arguing the appeal itself, however the Board concerned itself only with the stay petition and therefore the Board dealt with them only on a prima facie consideration. The main weapon in Bayer's armour was reliance on CIPLA's to meet both the affordability and the reasonable requirement test. However Bayer's contention that CIPLA adequately supplying the drug at a reasonably affordable price (lower price than fixed by the Compulsory License order for Natco) does not warrant grant of compulsory license as public interest is not being jeopardized, did not find favour with the Board. It viewed the argument as taking shelter under CIPLA's sales.

It is pertinent to note here that CIPLA is already facing an infringement action by Bayer, which is pending adjudication before Delhi High Court. The Board in pertinent part thus observed –

..........Though the appellant is fighting CIPLA tooth and nail before the Hon'ble Delhi High Court, it took great pains to urge before us that CIPLA's presence was a legal presence. The presence of CIPLA is subject to the outcome of the suit where the appellant alleges that CIPLA is infringing its invention. It is true that the Hon'ble Delhi High Court refused to grant injunction, but the issue of infringement by CIPLA will be decided at the end of trial. Further, CIPLA is not bound by any condition that is prescribed for NATCO by the Controller General under section 90 of the Patents Act. Tomorrow, CIPLA may withdraw its product, Soranib for commercial reasons of its own. It is for the appellant/patentee to show that it has fulfilled the obligation under the grant of patent and therefore, its right should be protected.

Dismissing the stay petition, the Board, being mindful of the right of access to affordable medicine, held the view that to grant stay at this juncture would jeopardize the interests of the public who need the drug at the later stage of the disease.

With this preliminary view of IPAB, it is not difficult to foresee the fate of Bayer's appeal against the Compulsory License order, however it will be interesting to see in what way IPAB speaks it out.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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