Two rulings in the space of as many days demonstrate the fine balance required of India’s legal system when it comes to the pharmaceutical sector. The first ruling on March 8 went in favour of Natco Pharma (Natco) and Alembic Pharmaceuticals (Alembic) while the second one a day later favoured Novartis over Cipla.
Beyond the immediate results, what do these cases reveal about the legal strategies being deployed by pharma companies in India?
On March 8, Justice Rajiv Sahai Endlaw of the Delhi High Court ruled that Natco and Alembic could make and export generic versions of Bayer’s kidney and liver cancer medicines, sorafenib tosylate, provided the exported consignments were not for sale but for development/ clinical studies and trials. This is a provision under Section 107A of the Patents Act, 1970. India’s version of the Bolar exemption, it allows export of patented medicines provided it is used for experimental purposes, to generate data for regulatory approvals, etc.
In Natco’s case, Bayer held that since it held a compulsory license (CL) allowing sale only within India, it could not apply under Section 107A. But Justice Endlaw ruled that ‘the grant of Compulsory Licence would not come in the way of Natco exercising its rights under Section 107A as a non-patentee.’
Bayer argued that the quantities being exported (Natco had applied for permission to export 1 kg to China for conducting development/ clinical studies and trials) were much more than that required for activities covered by Section 107A.
Further, exports were to countries which permit approval to be applied for only two years before expiry of patent and Bayer argued that once exported, Indian courts had no jurisdiction to prevent sale of their patented products in the destination country.
To deal with this contention, Justice Endlaw directed Natco and Alembic to file affidavits that during the life of the respective patent, they would not export the patented medicine for purposes other than those specified in Section 107A of the Patents Act. And if Bayer felt that the exports were used or to be used for purposes other than specified in Section 107A, it would have to specially make out that case in another suit.
A day later, a division bench in the same court, headed by Justice Badar Durrez Ahmed, dismissed Cipla’s appeal against a judgment of January 2015, which prevented it from making and marketing Novartis’ Onbrez, its patented COPD medicine indacaterol. Cipla had launched its version as Unibrez in October 2004, but Novartis filed a suit on January 9, 2015 on grounds of trademark infringement. Cipla undertook to change the brand name of the drug from Unibrez to Indaflo.
Having won the trademark infringement battle, Novartis sought to prevent Cipla from infringing on its patent and got an injunction on the manufacture, sale or manufacture of any form of indacaterol. Cipla contested this, alleging that Novartis imported the medicine and sold it in India through a marketing agreement with Lupin. Therefore Novartis did not work the patent in the country, a key requirement of patentees. However the court disagreed with this interpretation.
Cipla also sought to prove that there was a huge unmet need and it would be in public interest that the injunction be lifted so that patients in India could have an affordable version of Onbrez. The March 8 ruling dismissed Cipla’s plea and upheld Novartis’ rights as a patentee, ruling that Cipla’s estimates of the size of the patient population was disputed by Novartis and there were alternative affordable treatments available. Thus the ‘public interest’ argument was shot down.
With litigation only set to increase, legal costs will also escalate. Pharma companies will have to carefully plan their strategies. Perhaps the way forward is to collaborate and present a common front. This was a point well brought out at a recent industry meet, when one of the speakers cautioned that more than 40 quia timet injunctions had been filed by pharma companies, which allowed them to block competitors based on perceived threat of possible future threat/ injury (patent or trademark infringements in the case of the pharma industry). The speaker said it was time generic companies came together to opposed quia timet injunctions so that a common strategy could be evolved.
Even as business realities require generic and innovators to collaborate (the Novartis-Lupin collaboration for Onbrez, for example), the case for a united front goes beyond the innovator vs generic saga. When the Ministry of Health and Family Welfare (MoHFW) banned the manufacture, sale and distribution of 344 fixed dose combinations (FDCs) last year, the affected companies filed individual petitions, totalling over 450 connected petitions. Each petition varied in strategy, and entailed considerable expense to the petitioners. Legal costs could have been considerably reduced had they decided to club their petitions. Let us hope that a more mature mindset prevails the next time around.