Stage set for compulsory license decision on anti-cancer drug

TWN Info Service on Intellectual Property Issues (Mar12/02)
9 March 2012
Third World Network
Published in SUNS #7326 dated 9 March 2012

New Delhi, 8 Mar (K. M. Gopakumar) — The stage has been set for the decision to issue a compulsory license (CL) for Bayer’s anti-cancer medicine Sorafenib. The decision is expected on 9 March.

The oral hearing was concluded by the Controller of Patents at the Mumbai Patent Office on 28-29 February 2012.

Sorafenib is an anti-cancer medicine for the treatment of primary kidney and advanced primary liver cancer known as hepatocellular carcinoma (HCC) that cannot be removed by surgery. Sorafenib can extend the life of kidney cancer patients by 4-5 years and in liver cancer patients by 6-8 months.

Bayer obtained the marketing approval for Sorafenib in 2005 and launched its product worldwide in 2006 under the brand name Nexavar. Total sales of Sorafenib in 2009 were US$934 million. Bayer charges an exorbitant price for this life-saving medicine – the cost of Sorafenib per person per year is approximately US$66,812.

Due to the exorbitant price, the National Institute of Clinical Excellence (NICE) rejected Sorafenib for the National Health System (NHS) use in England, Wales and Northern Ireland, citing that the cost of the medicine does not justify the benefit, i. e, increasing survival in primary liver cancer by 6 months. Similarly, the Scottish Medicines Consortium, citing the same reason, refused the use within NHS Scotland. However, the incremental benefit of the medicine is considered as valuable.

Bayer obtained patent no. 215758 for Sorafenib on 3 March 2008. According to the CL applicant, Natco Pharma Ltd. in India, at least 100,000 people suffer from different types of renal cell carcinoma and hepatic cell carcinoma. Further, every year, 30,000 new patients are diagnosed with both these diseases in India and nearly 24,000 patients die every year. Natco Pharma filed the application for the issuance of CL under Section 84 (1) of Indian Patents Act on 29 July 2011.

[Section 84 (1) of the Patents Act allows any person interested to make an application after the expiration of three years from the date of grant of patent for the grant of CL on three grounds, viz. (a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied; (b) that the patented invention is not available to the public at a reasonably affordable price; (c) that the patented invention is not worked in the territory of India. However, Section 84(5) (iv) also insists that prior to CL application the applicant should make efforts to obtain a license from the patentee on reasonable terms and conditions. Six months is provided as a reasonable time period for such efforts. Natco initiated the CL process by seeking a voluntary license through a letter dated 6 December 2010 and received a refusal letter from Bayer on 27 December.]

The Controller of Patents, through an order dated 11 August 2011, stated that after “the careful consideration of the Application, I am of the view that a prima facie case, under Section 87(1) of the Patents Act 1970, has been established”. Further, the controller directed Natco to serve a copy of the CL application to Bayer to initiate CL proceedings.

[Section 87 (1) of the Patents Act states that “Where the Controller is satisfied, upon consideration of an application under Section 84, or Section 85, that a prima facie case has been made out for the making of an order he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to be interested in the patent in respect of which the application is made, and shall publish the application in the Official Journal.]

Bayer attempted to delay the proceedings by approaching the High Court in Mumbai and Delhi by challenging the Patent Controller’s order dated 11 August, which established a prima facie case on Bayer’s patent. Bayer stated that the Controller has not given Bayer an opportunity to present its views before making the order. The Mumbai High Court refused to hear the petition, citing jurisdiction and directed Bayer to approach the Delhi High Court.

[It is learned that even though Bayer approached the Delhi High Court, it subsequently withdrew the petition without pressing for an order.]

Natco, in its application, stated that Bayer is supplying the medicine through imports and failed to take adequate steps to manufacture the product in India. As a result, the drug is available only in limited quantities through pharmacies attached to a few big hospitals in four metro cities, viz. Chennai, Delhi, Kolkota and Mumbai. Further, Natco stated that Bayer is charging an exorbitant price for the medicine, making the product out of reach of most of the people who need the medicine.

Natco also cited six reasons to show the failure of Bayer to satisfy the reasonable requirements of the public with respect to the patented invention.

They are: (a) refusal of request for voluntary license under reasonable terms and conditions; (b) failure to meet the demand of the patented product adequately; (c) exorbitant prices by the patentee makes the product out of reach of the common man and thus not meeting the demand for the product at reasonable terms; (d) non-working of patented invention in India; (e) limited supply of the patented products through selective sources; (f) abuse of monopoly rights by charging exorbitant prices.

Further, Natco stated that it can produce and market the medicine for US$173.93 per month per person, amounting to around US$2,086.83 per person per year. It also stated that Sorafenib would be made available free of cost to deserving and needy patients.

Bayer opposed the CL application, citing both technical and substantial issues.

In its submission to the Controller, Bayer justified the exorbitant price of Sorafenib by stating that “the innovation based products costs a price over generics but this price pays for the pipeline (i. e. future innovation) and competition. The high price of the drug covered by the Subject of Patent as compared to the generic version thereof is justified in as much as for the Opponent, it also involves the Research and Development (R&D) cost of innovators as against the Applicant who merely copies the drug covered by the Subject Patent thereby taking advantage of the R&D carried out by the opponent”.

Bayer used the orphan drug status of Sorafenib in the US and Europe to justify the high price by stating that the number of patients is small compared to the overall R&D investment. Interestingly, Bayer did not mention the tax break and other benefits attached to orphan drug status.

Bayer further stated that “replacing the innovation based products with a generic will damage India and Indian patients in the long run as the Opponent (i. e Bayer) as originator provide more than just drug products, e. g. education of practitioners on use of the product, pharmacovigilence (observing/evaluating/improving of medicines etc.).”

Bayer, being the innovator of the drug, also asserted that it has the right to determine what constitutes a “reasonably affordable price”.

Bayer also indirectly attacked Section 84 (1) (b) of the Patents Act by stating that “if a high price of the patented drug with huge investment in R&D by an originator is a good enough argument for the applicant to request for the grant of Compulsory License, it will always be applicable and will always circumvent the objective of the Patents Act, which cannot be the intention of the legislature”.

Therefore, Bayer submitted that “the approach of the learned Controller ought to keep the issue of reasonably affordable price in mind and not look for the entity offering the drug covered by the Subject patent at the lowest price”.

Interestingly, Bayer also alleged that Natco mistakenly connected the exorbitant price under Section 84(1)(a), i. e. non-satisfaction of the reasonable requirements of the public instead of Section 84(1)(b).

[Section 84(1)(b) states that an application for the grant of a CL can be made if the patented invention is not available to the public at a reasonably affordable price.]

Natco, in its additional submission, cited Section 84(1)(b) as an independent ground for granting CL. It states that “In case of India, the price of a life saving drug has to be determined keeping in view the purchasing power of the public. The IMF Report on India’s PPP shows India’s purchasing power capacity. The average per capita income is less than USD4,000 per year, i. e. less than INR 200,000 per year (INR 15,000 per month). Keeping these factors in view, the price of INR 280,000/- per bottle is simply beyond the reach of any common man”.

On the question of local working requirement in the territory of India, Bayer submitted that “local working requirements in the Patents Act are directed towards ensuring that inventions are domestically worked, i. e. supplied to the Indian market. An attempt to impose local working requirements – in the sense of local manufacturing – on patents granted in India would be beyond the scope of the Patents Act and against the intent of the legislature”.

Bayer also opposed the concept of local manufacturing and stated that it “endeavours to locally manufacture the product where possible but not at the cost of overburdening the end user”.

It also submitted that “the legislature was conscious of the fact that with the rapid growth of international trade and the tendency of large companies to centralize manufacture in a particular country and it is likely that there will be an increasing tendency for the demand for many patented products to be met solely by importation”.

However, Bayer did not produce any document to show the legislative intent. To support its argument, Bayer mentioned that “the intent of the legislature is clear from the fact that the phrase ‘… manufacture in India’ was deleted from Section 84 (7)(a)(ii) of the Patents Act during the amendment to the Patents Act in 2002, thus negating the requirements of local manufacture in order to make it consistent with Article 27(1) of the TRIPS Agreement”.

Bayer justified its inability to ensure access to Sorafenib at an affordable price by stating that the estimated number of patients eligible for the treatment is fewer than that mentioned in the CL application and also that alternative treatments are available.

According to Bayer, the total number of people who require Sorafenib treatment for HCC annually in India from the total HCC patient pool of 20,144 is around 2,180 that fall under Child Pugh A category and a selective portion of Child Pugh B category of 2,658 patients. Similarly, out of 8,010 kidney cancer patients, around 4,004 patients are at the stage IV of cancer that requires Sorafenib treatment annually. Hence, the total number of patients requiring Sorafenib treatment in India as per Bayer submission is approximately 8,000.

Natco, in its additional written submission, terms this calculation as arbitrary and further states that “Without prejudice to this fact, assuming that the total patient base in case of liver and kidney cancer is only 8,000, even then the number of imported bottles of Sorafenib in 2009 was only 166 bottles.”

Bayer also sought dismissal of the CL application on mere technical grounds such as the evidence produced by Natco is not admissible under the Indian Evidence Act because Natco submitted computer printouts not in accordance with Section 65B of the Act. Bayer also attempted to discredit the credibility of Natco by terming Natco as a habitual infringer of patent by citing four patent infringement suits pending against Natco in the High Court of Delhi filed by Schering Plough, Bayer, Bristol Myers Squibb and F. Hoffmann-la-Roche.

Bayer also cited its patient assistance programme (PAP), a philanthropic programme to increase the availability of Sorafenib to patients. Even though the programme was launched in 2008, the coverage is very low. PAP covered 40, 44 and 42 patients in 2009, 2010 and 2011 October respectively.

However, the additional written submission of Natco pointed out that “Even under the PAP, the patient has to pay Rs. 2.5 lakhs (USD4,949) upfront for 2-4 months regardless of whether he survives or not”.

Natco further stated that, “the PAP program has covered only 40 patients out of the entire patient base of 8,000, which is not more than 1%, and demonstrates that the PAP program is ineffective”.

However, during the February oral hearing, Bayer tried to delay the process by requesting a 12-month adjournment of the hearing under Section 86 of the Patents Act to enable the patentee to work the invention in India to the fullest extent.

It is also learned that Bayer sought adjournment on the basis of a proposal to provide Sorafenib to deserving patients at Rs 30,000 (US$650) per month. It is also learned that Bayer objected to Natco’s price mentioned in the CL application by stating that the price mentioned in the application did not take into account the royalty payment. According to Bayer, the price should be fixed only after the fixation of the royalty.

[Section 86 provides powers to the Controller to adjourn the applications of CL in certain cases especially when the Controller is satisfied that the time which has elapsed since the sealing of the patent has for any reason been insufficient to enable the invention to be worked on a commercial scale to an adequate extent or enable the invention to be so worked to the fullest extent that is reasonably practicable.]

In anticipation of the CL decision, a media campaign against the use of CL has been started using a public relations agency. The article states that “Compulsory licensing was included in the TRIPS agreement of the World Trade Organization to make sure that in times of urgent epidemic, essential drugs are not in short supply. The argument made by the generic companies, that these provisions can be put into place for drugs that are perceived as expensive and inaccessible is not what the provision intended to accomplish.”

Further, it alleges that “Patent laws have been misused in several countries, a stark example is that of Thailand where compulsory licenses were allowed for AIDS drugs that do not come under the gambit of price control laws in that country”.

It also warns that “implementation of these provisions can hurt investor sentiment in the research based pharmaceutical sector in India and therefore curtail innovation in the long run (globally the cost of discovering a new drug averages almost $1.2 billion and takes between 10-12 years before a new drug can be brought to market from the research stage)”.

Intellectual property experts observe that the article misrepresents the TRIPS Agreement and the actions of the Thai government. +