Connecticut Law Tribune, 10-15-2012
Lisa Shuchman, Corporate Counsel
When the government of India revoked U.S. drug maker Pfizer Inc.’s local patent for its cancer drug Sutent last week, it marked yet another loss for Big Pharma in an escalating patent war between multinational pharmaceutical companies and the governments of developing nations.
The decision by the country’s patent authority-the Patent Controller of India-to reverse a 2007 decision granting patent protection on the drug, which is used to treat kidney cancer, comes on the heels of other rulings in which some of the world’s largest drug makers have seen their patents on expensive (and potentially lucrative) cancer medicines threatened.
The Indian patent office earlier this year ordered Germany’s Bayer AG to issue a “compulsory license” allowing an Indian generics company to copy its patented cancer treatment Nexavar and market it at one-thirtieth the cost. Bayer has appealed that ruling to the country’s Intellectual Property Appellate Board, but in May the board refused to stay the issuing of a compulsory license pending the appeal.
Also earlier this year, an Indian court dismissed a patent infringement suit filed by Swiss drug maker Roche Holding AG against Indian generic drugmaker Cipla Ltd., relating to its cancer drug Tarceva.
In 2010, India revoked Roche’s local patent on its anti-viral drug Valcyte, which is widely used to treat HIV-AIDS patients and to prevent infection in patients who have received an organ transplant.
In 2006, India rejected Swiss drug maker Novartis’s patent application for the drug Glivec, which is used to treat people who have a deadly form of leukemia. Novartis appealed that ruling, and the case is now before the Indian Supreme Court.
These patent fights are of growing concern to global pharmaceutical companies, which fear they will not only lose access to a burgeoning market but also that generic drug makers in India, already dubbed “the world’s pharmacy,” will supplant their business in emerging markets. The disputes also illustrate the sometimes-competing interests of intellectual property rights and access to medicine for poor people in the developing world. The drug makers say allowing generic drug makers to sell copies will discourage innovation. International aid groups warn that without the generics, inexpensive medicines to treat AIDS, cancer, and other diseases could disappear.
In the most recent case, the Indian patent office said Pfizer’s drug didn’t involve the necessary innovation as claimed in the patent and was “hence not patentable” under local law. Indian generic drug maker Cipla had challenged the patent on Sutent in 2008-a year after the drug received a patent in India. Roche lost its patent in India on the drug Valcyte on the same grounds in 2010. And the Indian patent office also rejected a patent application filed by Gilead Sciences for Viread, a drug used to treat HIV infection. Gilead is appealing that ruling.
Until 2005, India did not issue drug patents. But it began extending patent protection to pharmaceuticals in an effort to adhere to the World Trade Organization’s multilateral agreements on intellectual property.
When Novartis’s patent application for its cancer drug Glivec was rejected in 2006, the patent office based its decision on a section of India’s patent law that prohibits a newer form of a known substance from receiving a patent unless it significantly improves the medicine’s “efficacy.” This standard was adopted in an effort to prevent drug companies from “evergreening” their drugs-a practice in which a drug manufacturer makes minor changes to existing drugs and earns new patents on them, thereby extending its years of protection from generic competition.
Novartis insists Glivec meets the criteria for patentability under Indian law, and its appeal has been wending its way through the courts. India’s Supreme Court is currently hearing the case and may issue a decision by the end of the year. The outcome is likely to affect other similar cases and could alter India’s entire patent system. “It’s being closely watched by drug manufacturers and by international aid organizations,” said Aziz ur Rehman, a Geneva-based intellectual property policy advisor for Doctors Without Borders.
Novartis says the Glivec case is really about protecting intellectual property to advance the development of medicine and is not about changing access to medicine. “We strongly believe safeguarding incentives for innovation through the granting of patents leads to better medicines for patients without options,” Novartis spokeswoman Julie Masow said in a statement.
International aid organizations have a different view: “A ruling for Novartis will squeeze generic drug makers, and at the end of the day, it’s the patients who suffer,” Rehman said.
As if India’s strict patent standard isn’t enough to worry about, the issue of compulsory licensing also has many major pharmaceutical companies on edge. The March ruling giving an Indian generic drug maker permission to make and sell a copy of Bayer’s patented cancer drug Nexavar marked the first time a compulsory license of a patented drug had been granted in India. Global pharmaceutical companies are worried that this will pave the way for other such licenses to be granted throughout the developing world.
“The order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research,” Bayer spokesperson Heather Levi Guzzi said in a statement. “The limited period of marketing exclusivity made possible by patents ensures that the costs associated with the research and development of innovative medicines can be recovered.”
The Indian patent office based its decision to compel Bayer to license its drug on its findings that the German drug maker was not making the drug accessible to enough people and was not making it available at a reasonably affordable price.
Poorer countries, such as Indonesia, Thailand, and Malaysia, have compulsory license programs in place and have issued compulsory licenses on patents for public health reasons-a right they obtained through multilateral agreements among nations. But India’s recent move, which gave authorization to the Indian drug company Natco Pharma Ltd. to make and market the drug, marked the first time such a license was issued to a company rather than to a government. In the other countries, the governments took the compulsory licenses so they could distribute inexpensive generic drugs to their citizens, Rehman said. Also, the previous compulsory licenses were for drugs used to combat HIV-AIDS; the Bayer drug treats cancer.
Bayer tried to convince the court to issue a stay pending the appeal but failed. It is pursuing its appeal of the decision, but Natco in the meantime is free to make and market the drug. In exchange for the license, Natco must pay Bayer a six percent royalty on its net sales and must sell the drug for 8,800 rupees a month, about three percent of the 280,000 rupees that Bayer charges for it in India, according to the decision. Natco’s drug will be for use only in India, the decision says.
The provision allowing the issuance of compulsory licenses says such a license may be granted if an invention is not available to the public at a “reasonably affordable price.” If the Bayer decision survives appeals, other companies fear they may be forced to license their drugs as well.
Rehman believes pharmaceutical companies are blowing the issue of India’s patentability standards and the idea of compulsory licensing out of proportion, noting that the majority of patent applications in India are not rejected. And compulsory licensing is a tool that gives countries a way of ensuring their people can get affordable medicine, he added. “The pharmaceutical companies are simply highlighting a few cases because they want to discourage other countries from following India’s lead,” Rehman said.
Both sides agree the central issue surrounding all these cases is how to balance the need for innovation against public health concerns. The question they cannot agree on is how to obtain that balance.
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