[Ip-health] Stage set for compulsory license decision on anti-cancer drug

Gopa Kumar kumargopakm at gmail.com
Sun Mar 11 21:27:12 PDT 2012

*Title :* TWN IP Info: Stage set for compulsory license decision on
anti-cancer drug
*Date :* 09 March 2012


TWN Info Service on Intellectual Property Issues (Mar12/02)
9 March 2012
Third World Network

*Stage set for compulsory license decision on anti-cancer drug
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

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

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

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.

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

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. +

More information about the Ip-health mailing list