Drug Regulation

Bayer vs Cipla: Attempting "Patent Linkage" In India


The writ petition filed by Bayer against the Union of India (UOI) and Cipla came up for hearing on the 17th, 18th and then the 25th of February. For those not familiar with this story, please see our previous post.

In essence, Bayer filed a writ against the UOI, praying that the DCGI (Drug Controller General of India) be restrained from granting any drug approval to Cipla’s generic version of their patented drug, Sorefanib (sold as “Nexavar”). The key ground for praying so was that any such approval would violate the patent rights of Bayer and it was incumbent on the DCGI to help Bayer with enforcing its patent rights.

For most of the three days, (17th, 18th and 25th), Justice Bhat heard Bayer’s counsel, Shantibhushan. On the 25th, the judge also heard Arun Jaitley (counsel for Cipla), Anand Grover (Counsel for Cancer Patients Aid Association) and Sandeep Sethi (Counsel for the Indian Pharmaceutical Alliance, which sought impleadment in the present proceedings).

Unfortunately, the government counsel did not bother to show up for a long time. This nonchalance on the part of the government in a matter of such serious import for patent law and public health is deeply troubling.

Shantibhushan, counsel for Bayer (and counsel who represented Novartis as well in the Novartis vs UOI case) focussed his key arguments around section 2 of the Drugs and Cosmetics Act. This section reads as below:

“Application of other laws not barred. —The provisions of this Act shall be in addition to and not in derogation of, the Dangerous Drugs Act, 1930 2 of 1930,and any other law for the time being in force.”

Shantibhushan argued that this section must be taken to mean that the DCGI cannot grant drug approval for any drug that is likely to violate an existing patent right.

This argument is highly misleading on two grounds:

i) The grant of drug regulatory approval by the DCGI cannot, by itself amount to a patent infringement

ii) The existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established before a court of law in accordance with the infringement provisions mentioned under the Patents Act, 1970. Such an assessment is beyond the statutory powers of the DCGI, which is institutionally incapable of dealing with complex issues of patent scope, validity and infringement.

Therefore, the mere grant of a drug regulatory approval, would not, ipso facto, entail a contravention of the Patents Act or any other law. Consequently, there is no violation of section 2 of the DCA. To elaborate further:

Section 48 of the Patents Act, 1970 spells out the various exclusive rights of a patentee and includes the acts of “making, using, offering for sale, selling or importing” the patented product or process as the case may be.

A mere grant of a drug regulatory approval by the DCGI to Cipla on the basis that its drug is safe and effective does not amount to an act of “making, using, offering for sale, selling or importing” the petitioners’ patented product.

Secondly, section 107A of the Patents Act, 1970 clearly exempts from patent infringement any of acts of making, using or even selling a patented invention, in so far as such acts are necessary to obtain information for the filing of a drug regulatory application before the DCGI. It is highly illogical to argue that when all acts leading upto the stage of drug approval are exempt from patent infringement, the very act of approval itself amounts to an infringement.

Section 107A (a) of the Patents Act, commonly referred to as the “Bolar” provision reads as below:

107A. Certain acts not to be considered as infringement.— For the purposes of this Act,–
(a) any act of making, constructing, using or selling a patented invention solely for uses reasonably relating to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use or sale of any product;

As evident, this section permits any drug manufacturer to experiment with any patented drug with a view to generating data that could then be submitted to a drug control authority. The aim of this section is to ensure that generic drugs are introduced into the market as soon as the patent expires or is invalidated, so that consumers may benefit from this early entry of affordably priced drugs.

If Bayer’s argument were accepted, it would hit at the very essence of the above Bolar provision that is aimed at speeding up generic entry into the market and the availability of low cost drugs to the consumer.

Secondly, Bayer’s arguments are premised on the notion that the patent is a valid one and that it is infringed. It is pertinent to note that Cipla had stated in its pleadings that it intends to challenge the validity of the Bayer’s patent.

More importantly, neither is the DCGI authorized by the DCA to make such an assessment nor does it possess the institutional competence to make such an assessment. From section 104, it is only a court of law that can make such an assessment in an infringement suit filed under the Patents Act, 1970.

Further, section 19 of the Indian Patents Act, 1970 provides limited powers to the Controller in the context of a new patent application that potentially infringes an existing patent. It is pertinent to note that in such cases, the Controller may at best only direct that a reference to the earlier patent (that has been potentially infringed) be inserted in the new applicant’s complete specification, so that it serves as “notice” to the public. It does not authorize the controller to deny the grant of the patent itself to the applicant.

It is therefore preposterous to suggest that absent a specific statutory provision authorising it to do so, an institutionally incompetent authority such as the DCGI assess the possibility of patent infringement and deny drug regulatory approval on this ground.

Section 19 is reproduced below:

19. Powers of Controller in case of potential infringement

(1) If, in consequence of the investigation required 2[under this Act] it appears to the Controller that an invention in respect of which an application for a patent has been made cannot be performed without substantial risk of infringement of a claim of any other patent, he may direct that a reference to that other patent shall be inserted in the applicant’s complete specification by way of notice to the public, unless within such time as may be prescribed—

(a) the applicant shows to the satisfaction of the Controller that there are reasonable grounds for contesting the validity of the said claim of the other patent; or
(b) the complete specification is amended to the satisfaction of the Controller.

(2) Where, after a reference to another patent has been inserted in a complete specification in pursuance of a direction under sub-section (1)—

(a) that other patent is revoked or otherwise ceases to be in force; or
(b) the specification of that other patent is amended by the deletion of the relevant claim; or
(c) it is found, in proceedings before the court of the Controller, that the relevant claim of that other patent is invalid or is not infringed by any working of the applicant’s invention.
the Controller may, on the application of the applicant, delete the reference to that other patent.

It is pertinent to note that countries that follow a system of patent linkage have a specific statutory or other legal provision enabling such linkage. The Indian Parliament has shied away from introducing such a mechanism in India. In fact, even developed countries such as the EU have, for several policy reasons, avoided creating a patent linkage mechanism.

Europe’s competition authority (DG Competition) which began a pharmaceutical sector enquiry last year stated in its preliminary report at page 113-114 that:

“Patent linkage refers to the practice of linking the granting of MA (market authorization), the pricing and reimbursement status or any regulatory approval for a generic medicinal product, to the status of a patent (application) for the originator reference product. Under EU law, it is not allowed to link marketing authorisation to the patent status of the originator reference product…. Since the status of a patent (application) is not included in the grounds set out in the Regulation and in the Directive, it cannot be used as an argument for refusing, suspending or revoking MA.”

Conclusion

In short, the mere grant of drug regulatory approval amounts to a patent infringement is misleading and wrong in law, since:

i) The DCGI’s act of approving a drug as safe and effective cannot, ipso facto, amount to a patent infringement.

ii) Even otherwise, the existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established before a court of law in accordance with the infringement provisions mentioned under the Patents Act, 1970. Such an assessment is beyond the statutory powers of the DCGI, which is institutionally incapable of dealing with complex issues of patent scope, validity and infringement.

iii) Absence an express statutory provision, the DCGI cannot assess patent issues. Such assesment would be outside its statutory authority and would, to that extent, be unconstitutional.

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

4 comments.

  1. Anonymous

    Shamnad,

    This is the same argument that we had been having in Office, since last few weeks.

    Till such time as Cipla/ Hetero actually sell the ‘patented’ medicines, to me, the position that DCGI should be stepping in and NOT giving in approvals smacks of a clear linkage ‘attempt’.

    The [erstwhile] DCGI was more than willing to bring in Patent linkage and only shut up when he was lambasted in public.
    Now, the Del HC ‘expects’ him to not disregard patents..

    Why is this all seeming surreal only to us..
    If a patentee feels/ believes that his patent is being infringed, go ahead and file a patent infringement action.. these patent linkage tactics are clearly deceitful.

    Regards,
    Frequently Anon.

    Reply
  2. Anonymous

    Why shd the patentee be penalized for owning a patent? a patent right would become more of a liability than an asset. Dont stop generics. but find a middle ground. its not like what CIPLA did is justified, when it declared it would disregard patents.

    Reply
  3. Prashant

    Hey Shamnad,
    I’ve been plodding through the Drugs and Cosmetics Act in order to find out how marketing approvals are granted. This builds, somewhat on the third point in your conclusion:
    – Licenses to manufacture drugs for sale are granted under Part VII of the Drugs and Cosmetics Rules.
    – The license is granted only upon satisfactory proof by the applicant that adequate facilities, plant and machinery, staff, laboratory equipment exist and that qualified supervisory staff are overseeing the faciities. (Rules 71, 74 & 79) This indicates that the purpose of the license is solely to regulate the conditions under which manufacture of drugs occurs so that the chances of adulteration is minimised.

    – When an applicant is applying for “a licence to manufacture patent or proprietary medicines”, he must “furnish to the Licensing Authority evidence and data justifying that the patent or proprietary medicines:

    (i) contain the constituent ingredients in therapeutic/prophylactic quantities as determined in relation to the claims or conditions for which the medicines are recommended for use or claimed to be useful
    (ii) are safe for use in the context of the vehicles, excipients, additives and pharmaceutical aids used in the formulation and under the conditions in which the formulation for administration and use are recommended;
    (iii) are stable under the conditions of storage recommended;
    (iv) contain such ingredients and in such quantities for which there is therapeutic justification; and
    (v) have the approval, in writing, in favour of the applicant to manufacture drugs formulations falling under the purview of new drug as defined in Rule 122-E, from the Licensing Authority as defined in clause (b) of rule 21.

    I’m a little confused about the importance/relevance of this last one. New drug is defined as a drug which “has not been used in the country to any significant extent under the conditions prescribed, recommended or suggested in the labelling thereof and has not been recognized as effective and safe by the licensing authority mentioned under rule 21 for the proposed claims”

    If we disregard this last point for the moment, it seems clear that the authority of the Licensing Authority (DCGA) under the Drugs Act is limited to certifying that the applicant has sufficient facilities to manufacture “standard quality” drugs.

    Reply
  4. Shamnad Basheer

    Dear FA and Prashant,

    You’re absolutely right. Linkage cannot find any legal sustenance from either the text of the patents act or the drugs and cosmetics act. It is patently unconstitutional, as it involves a transgression of statutory bounds by the DCGA.

    Reply

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