Drug Regulation

Patent "Perception": A Contemptuous Natco?


For the longest time, Cipla ranked as our leading poster child for the debate on patents and access to affordable medicines. It took on the multinational drug majors at the drop of a hat and was credited with slashing prices of HIV medications to a small fraction of their prevalent rates. Yusuf Hamied, Cipla’s maverick leader, tellingly notes in a recent interview that:
 
“We had taken the lead to provide affordable medicine for AIDS and I think the time has now come — 10 years later — when we do a similar thing for cancer. I’ve done more humanitarian work than Gates and Buffett put together.”
 
The tables began turning early this year, when another Indian generic company, Natco filed India’s first post TRIPS compulsory licensing application seeking to slash the patented prices of Bayers’ patented anti cancer drug, Nexavar. In the wake of the compulsory licensing decision, Natco catapulted to prominence as our national hero; a bold pharmaceutical company that refused to cave in to international pressure or to bed foreign partners, but insisted on pioneering the delivery of cheaper and more affordable drugs through a new “compulsory licensing” route. All good so far, particularly on the perception front.
 
It now turns out that Natco may have committed a fatal legal blunder. Three years ago, it was taken to court by leading US drug major, BMS (Bristol-Myers Squibb) who alleged that Natco had plans to make and sell generic versions of Dasatinib, an anti cancer drug sold by BMS under the brand name “Sprycel”. BMS, which had been selling Dasatinib in India since 2006, specifically alleged that Natco had filed applications to market the drug with the DCGI. Natco’s response to the court was: No, we have no intention of making or selling this drug!
 
I extract verbatim from its written statement (para 29) to the court: “It is denied that the Defendants intend to launch a generic version of Dasatinib under the name Dasanat.” 
  
In June 2012 however, Natco flooded with the market with Dasanat, prompting BMS to file another application pressing for an injunction before the Delhi High Court. BMS succeeded and the court noted in pertinent part that: “The Defandant shall be bound by their statement taken by them in their written statement, particularly in paras 26, 27 and 29.”
 
(ps: para 29 of the Natco’s written statement effectively states that it has no intention of launching a generic version of Dasatinib). 
A further injunction was granted on 22nd June 2012 with the court restraining Natco from “manufacturing and selling the product which infringes the plaintiffs patent in any manner”. Despite these two orders, Natco continued to sell Dasanat, prompting BMS to file a contempt petition before the court. Natco is yet to file its response to the contempt petition, which is slated to come before the court tomorrow. Foolhardy seems a mild term for such a reckless legal strategy!
 
The “patent” angle was dealt with only perfunctorily by most reports on this drug tussle, which appear to have focussed more on Natco gaining permission to market a generic version of Dasatinib from the Uttarakhand state authorities. Coming close on the heels of a Parliamentary committee report that severely indicted our government for making a mockery of the drug regulatory regime, these news items naturally raised issues of forum shopping and routine exploitation of regulatory loopholes by drug companies. However, for anyone with a basic understanding of India’s “federal” drug regulatory regime (where regulatory superintendence is shared by both the Centre and the State), what Natco did on the regulatory front was perfectly legal.
 
Our law permits pharma companies to shop around for the weakest state regulator and procure permission. And Natco may have picked Uttarakhand (“Land of the God’s”) for a variety of reasons, including its proximity to the spectacular Himalayas, a lush green landscape (resplendent with grass and all that) and a spiritually electrifying air that lured many a seeker in the past, including the Beatles, Bob Dylan, Cat Stevens, Timothy Leary, Allen Ginsberg and Robert Thurman, a leading Buddhist scholar in his own right, but more popular for having sired a lethal weapon that killed Bill, Uma Karuna Thurman.
 
Our law clearly states that if a company wishes to manufacture a drug in any state, it must gain state regulatory permission from that state and cannot rely on DCGI (the central regulator) permission alone. So nothing really out of the ordinary for Natco to have secured this approval from Uttarakhand’s drug regulatory authority.
 
However, the tricky issue here is one of “patents”, given that the relevant drug (Dasatinib) is under patent (Patent Number 203937 dated April 12, 2010) and an infringement suit against Natco is pending before the Delhi High court. A suit in which Natco explicitly stated that it had no intention of marketing a generic version of Dasatinib. And a suit in which two interim orders were passed, effectively prohibiting Natco from marketing any copy of Dasatinib.
 
Natco challenged the validity of BMS’ patent before the court well on several grounds including the fact that the patent is allegedly obvious, violates section 3(d), is insufficiently described, has no utility and that the patentee suppressed vital patent information from the Indian patent office, rendering the patent susceptible to revocation under section 8. I have not studied the case in detail to assess whether or not Natco is likely to succeed on this count. 
However, the merits of the case notwithstanding, Natco appears to have taken a strong beating on the perception front. It was imprudent of Natco to have averred in court that it had no intention of launching a generic version of BMS’ patented drug. Given its subsequent conduct in flooding the market with Dasanat, this effectively amounts to perjury, a serious offence. It might have simply stated in its reply to BMS that the patent was invalid (which it did in its written statement to the court) and/or that its product does not infringe the patent.
 
Even more imprudent was Natco’s insistence on continuing sales, despite the injunction. As with many of us, courts and judges come blessed with egos and don’t take too kindly to contempt. Highly unfortunate that a company that played a terrific hand a couple of months ago and won international acclaim by pioneering the use of compulsory licensing is now at the receiving end; with the court likely to perceive it as a contemptuous corporation that took it for a ride. As many litigating lawyers will readily attest: “Aaja meri gaadi mein bait jha” is not a particularly popular line with our judges.
 
ps: For those interested in tracking this patent infringement suit (Suit No: CS (OS) 2279 of 2009), details are available on the Delhi High Court website, though the latest orders are yet to be uploaded.
 
pps: image from here.
Shamnad Basheer

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.

13 comments.

  1. AvatarSwaroopa Chavan

    Hi,
    I think its time to go for a patent linkage system which has proper safeguards and statutory provisions. It will not only save the money but time and energy spent on litigation.

    tks..

    Reply
  2. AvatarAnonymous

    Shamnad:

    Can you please post a copy of the injunction order? Delhi Judis does not have the same. Injunction orders in the earlier Symed case also are not available on Delhi Judis.

    Since the orders themselves are not ‘confidential’ nor are they pleadings of respective parties, I am sure that neither party would have a legal objection to you posting them here.

    Regards,
    Freq. Anon.

    Reply
  3. AvatarShamnad Basheer

    Why Swaroopa? Our regulators have a tough enough job doing their main job. Have you seen the Parliamentary committee report indicting them for failing to safeguard public health. Having them police patents as well is a sure recipe for disaster,,,

    Reply
  4. AvatarAnonymous

    Dear Shamnad:

    Many thanks for taking time out to inform that you would put the orders up, in next few days.

    I had some more queries:
    a) This order is dated 22/June – so it seems that it was issued by the Delhi High Court during the vacation days (correct me on vacation dates). But the news media is only picking it up today, after you blogged about it yesterday. Any reason for this month long radio silence by both parties that you could fathom?

    b) Was this order an ‘ex-parte’ order or did Natco actually attend the hearing?

    Regards,
    Freq. Anon.

    Reply
  5. AvatarAnonymous

    I can understand the ‘wrong’ that Natco did by not following the court order, though the statement referred to in paras 27 and 29 were to be honored only if the patents in question were found to be ‘valid and enforceable’.

    In case the patents are held invalid, or a license is issued by the court acknowledging that the patents are valid but public interest is not served, the submitted paras do not stand.

    Anony1

    Reply
  6. Avatarrajeev

    Dr Basheer
    The perjury on part of NATCO is well understood. But your article is indicative a much deeper malaise which needs to be appreciated.
    While the courts are fully competent and perhaps under the sovereign duty to protect the sanctity of judicial process , what about our regulatory authorities. On what basis the UTTRAKHAND gave permission to market/manufacture a drug under judicial preview. Is there any criterion or check on the basis of such permission is granted.
    The job of the regulatory authorities is not reactive but involves pro-active responsibilities. What is the meaning of weakest regulatory authority. This very sentence symbolizes the anarchism prevalent in granting permissions. Extraneous considerations are all dominant. The very fact that NATCO was afforded an opportunity to intentionally engage in unscrupulous activity with state help is a much worrying proposition than judicial misadventures.
    R.K.jain
    patent agent

    Reply
  7. AvatarShamnad Basheer

    Dear FA:

    All the relevant orders are now available on the SpicyIP website. i’ve linked to them in the latest post on the issue. As yo can see from them, none of the restraining orders are ex parte—since the litigation effectively commenced in 2009 whereas these orders were passed only in 2012.

    Reply
  8. AvatarShamnad Basheer

    Dear Anon:

    You state: “I can understand the ‘wrong’ that Natco did by not following the court order, though the statement referred to in paras 27 and 29 were to be honored only if the patents in question were found to be ‘valid and enforceable’. “

    Where are you getting this from. Natco avoided an interim injunction (in a quia timet action) by swearing on oath that it had no intention to make or launch the drug….the “patent” issue is irrelevant to this assertion made on oath. Had it stated that it had no intention of infringing BMS’ patent, it would have been off the hook. Tragic mistake, but if we believe in the rule of the law and the sanctity of our judiciary, then notwithstanding our sympathy for an Indian generic that promotes access to medicines, we must also call on it to not take courts of a ride or engage with falsehoods and bad faith, when it could have easily avoided this.

    Reply
  9. AvatarShamnad Basheer

    Dear Mr Jain,

    You raise important points. I have not examined the Uttarkhand papers to evaluate whether or not the drug regulatory permission was within the contours of the law. But we have to assume that it was, unless shown otherwise. More light on the regulatory framework will shed light on the rigor of our regulatory landscape and how we might be able to ramp it up in future.

    Reply
  10. AvatarAnonymous

    Dear Shamnad:

    Thanks a ton for putting the Natco/ Injunction papers up.

    Can you please also ask your team colelagues to put the Symed injunction orders up – both the injunctions against Symed (from the European company) as well the injunction Symed later got against Indian companies (in another patent)?

    Regards,
    Freq. Anon.

    Reply

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