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| A scene from Sholay, where Gabbar asks ‘Ab tera kya hoga kalia’ I can just imagine the Secretary of the DIPP asking Big Pharma the same question after issuing the CLs. |
S. 84 requires the applicant to establish that the patentee is not making available the invention at a reasonable cost. All these questions, along with the possible rate of royalty are factual issues which have to be decided by the Controller General after hearing both parties. This decision, which is a judicial decision, can then be appealed to the IPAB. However under S. 92, the decision to grant a CL is a decision by the political executive, the basis of which cannot be challenged in a court of law. More importantly, S. 92 allows the Controller General to waive the entire hearing process that is followed under S. 84 of the Patent Act on the grounds that a public health emergency requires expediency on the part of the government. The provision only states “PROVIDED that the Controller shall, as soon as may be practicable, inform the patentee of the patent relating to the application for such non-application of section 87.”
The patentee can in all probability challenge the terms and conditions of the CL after he is informed of the terms and condition of the CL.
The provision also states that “in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights.” This standard is different from the S. 90 standard, which is required to be followed in the case of S. 84 licences, which is as follows “that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors”. In the NATCO-Bayer case, under S. 84 the royalty rate was fixed at 6% of net sales. Given that the S. 92 standard appears to be lower the royalty figure could possibly fall significantly below 6%.
Of the three drugs that are targeted, the choice is hardly surprising except for the fact that I was unaware that Herceptin was protected by any patents in India.
Herceptin, which is owned by Genetech, (a subsidiary of Roche) was the subject of a massive campaign last year, which we had blogged about over here, where civil society groups had petitioned the government to adopt policies to reduce the price of this drug. Like we had mentioned earlier, Herceptin originally used to be priced at Rs. 1,10,000 per dose and a breast cancer patient ordinarily requires between 18-20 doses. That used to come to between Rs 22,00,000 – Rs. 25,00,000. The price was subsequently reduced marginally to Rs. 75,000 per dose. The total treatment cost then comes to almost Rs. 15,00,000. Like I have stated earlier on this blog, this is way beyond any medical insurance policy offered to middle class Indian families which are allegedly the target of Big Pharma. (The Indian Express is wrong when it mentions the price of Herceptin as Rs. 50,000 per dose.) More importantly, we were speculating that no Indian company had yet secured the approvals or the technology to manufacture Herceptin. There was some news in the market that Biocon was poised to enter the market this year with a bio-similar of Herceptin. Other companies like Dr. Reddy’s have demonstrated the capacity to manufacture biological. It will be interesting to see which company actually makes a move for the final CLs.
The patents for the remaining two drugs – Ixabepilone and Dastinib are owned by Bristol Myers Squibbs (BMS). Dastinib is already the subject of considerable patent litigation before the Delhi High Court, where BMS has sued a number of companies including NATCO. The Indian Express has reported the costs of these drugs at Rs. 80,000 and Rs. 15,000 per dose. It will now be possible for companies like NATCO to approach the Controller General for CLs as a matter of right.
What does this mean for Big Pharma?
A very good and informative article…..indeed ……this big pharma companies really need a wake up call so that a common man of this country can get this medicines easily…..thanks….
Kauntay Parekh
Hello,
Herceptin is protected by Indian patent IN205534 as a composition of matter which will be valid in India till May 2019.
Regards,
Jayanthi.
Dear Prashant,
It is sensational news as carried out by Abantika Ghosh. So as we see India is always first country who did the first and followed by other countries like china etc. So I am hoping some other countries also looking for the same provision in near future.
regards
Anon
Hi Jayanthi
The patent you mentioned claims a composition of anti HER-2 and its acidic variant. Herceptin’s formulation has not got both the variants. Herceptin is trastuzumab, sorbates, histidine, trehalose and wfi.
I do not think Herceptin or its formulation is protected in India.
Thanks for the wonderful blog! I could not understand the following statement in the blog: “However under S. 92, the decision to grant a CL is a decision by the political executive, the basis of which cannot be challenged in a court of law.” As per my understanding, an appeal lies to the Appellate Board from a decision of Controller under section 92; thereafter it should lie before the court of appropriate jurisdiction. Please clarify?
Thanks for the wonderful blog!I could not understand the following statement: “However under S. 92, the decision to grant a CL is a decision by the political executive, the basis of which cannot be challenged in a court of law.” As per my understanding an appeal lies before the Appellate Board from decision of controller under section 92, and obviously thereafter should lie before the court of law. What do you mean by the term “basis” here? If one cannot challenge the “basis” in the appeal, what the patentee is left with to appeal under section 92; considering that grounds like reasonable requirements, reasonable price etc. are not considered to grant license under section 92. Can you please clarify?
Hi Anon,
Typically policy decisions by the Govt. such as whether or not there is a public emergency will not be questioned by a Court. The appeal to the IPAB can possibly be on the grounds of inadequate remuneration i.e. BMS and Roche can argue that the the royalty rates fixed by the Government are inadequate.
So although the decision to grant the CL itself cannot be challenged, the patentee’s can challenge the terms and conditions of the CL.
Prashant
Hi Prashant,
Just to bring to your notice, section 117A states that an appeal will lie to Appellate Board from any decision, order or direction of the Controller or Central Government under section 92. Wouldn’t this mean that the Act allow a challenge to Central Government’s notification too under section 92?
Aliasgar
Sorry folks, there is a serious misconstruction of Section 92 in both the post and in various comments that follow.
Section 92 DOES NOT empower the Central Government to “issue” CL’s. It empowers the Government to notify certain patents covering certain drugs as those where CL’s are available. The CL’s are still issued by the Controller (see Section 92(1)(i). Trust that this will explain why the DIPP is involved.
Secondly, on the question of challenge: there are two levels of challenge available here:
(a) an appeal before the IPAB or a Writ Petition challenging the original notification of the Government – it is open to the IPAB/Court to question the Government on whether there is a national emergency or not, and to provide the reasons/rationale and documents in support of that stand. Whether the Court or the IPAB will actually provide the necessary relief is something that would depend on the facts of the case. 19 years in the profession have taught me one thing – never pre-judge what a judicial forum can or cannot do – it can lead to unpleasant surprises; and
(b) appeal from the Controller’s order where the IPAB can rule that there is no “national emergency”. Can the IPAB do this – yes. It has the power.
The procedure under Section 92 is quite similar to the procedure under Section 84 – one simply has to read ALL of Section 92, in particular Section 92(2). The only exception is set out in Section 92(3).
To summarise – when one reads a Section, one does not stop at the preamble. Simply put, the Government cannot issue CL’s. And before I am informed that the Patent Office is an agency of the Government, please note the fact that the Act itself draws a distinction between the two.
Finally, one can challenge both the Central Government’s notification and any subsequent order of the Controller – before the IPAB and before the Courts. Though the Courts would be reluctant to interfere since the IPAB has jurisdiction under Section 117A.
Sorry for this long comment – but cannot be quiet when I see misconceptions based on misconstruction of statutory provisions and of practice – both as a litigator and a practicing patent agent.
Regards and best wishes for the New Year.
Guru Nataraj
@ Guru Nataraj,
You are saying pretty much the same thing that I stated in my post.
I’m extracting the relevant para: “Under S. 92 once the Central Government has issued a notification in the Official Gazette of India, any person interesting in manufacturing the drug, may approach the Controller General for a CL, who will then issue a licence. The advantage of going under S. 92 instead of S. 84 is that it is a much simpler, faster process and always guarantees a CL.”
2. S. 92 has much broader grounds than just public emergency. You should probably read it again. Depending on which ground the provision chooses, the resulting decision is a policy decision, which is unlikely to be interfered with by a court of law.
3. The only appeal to the IPAB can be on the terms and conditions of the CL – whether or not there was a national emergency or public non-commercial use was a decision by the DIPP which can be challenged only before a High Court. The IPAB cannot go into those grounds. even the High Court is unlikely to accept such a write petition for reasons already discussed.
4. On S. 92(2), I accept your point but it is more likely that the Controller will apply Section 92(3) – it is not too difficult to argue that the cancer cases in this country are piling up so fast that the procedure under S. 84 may be waived in favour of S. 92(2). Do you actually think a judge is going to disagree with the Central Govt. on this point?
5. I appreciate your urge to correct ‘any misconception’ but I would urge you to read my posts more carefully before doing so.
Prashant
Hi Alisagar,
Well, I was thinking about that issue earlier but the phrase used in Section 92 is ‘notification’ and S. 117A does not use the phrase ‘notification’. Also, note that all the ‘government use’ provisions under S. 100 are excluded from the ambit of the IPAB.
The general scheme of most of these tribunals is to entertain appeals only against quasi-judicial orders of statutory authorities and not policy decisions, which are challenged only before the High Courts.
Do you know of any case where a tribunal has heard a challenge against a policy decision?
Prashant
Also Alisagar – The full phrase in S. 92 is “it may make a declaration to that effect,by notification in the Official Gazette” – this is not an order, decision or a direction right?
Prashant
@Prashant: The decision to invoke Section 92 is not per se a policy decision – it is a decision based on a finding of fact. Any decision of the Government under Section 2 is also capable of challenge before the IPAB. Quite similar to the Section 92A situation where the factum of whether or not there is a public emergency in a foreign country is open to determination even by the Controller.Secondly: Whether or not the Court/IPAB will intervene is like I said not a matter that can be prejudged. Also, the existence of a pandemic/epidemic situation again calls for a determination of fact.
Frankly – I do wish the Government would do this – may just lead to an examination by the courts of the sorry state of healthcare in India. Will the controller rely on Section 92(3)-again he jsut may – because it is the easy way out. That in itself would be open to challenge. Will the courts interfere – cant and will not say – not after years of seeing cases where there has been justified intereference despite perception in the patent profession being that there will be none.
Thank you for drawing my attention to the extract from your post. Allow me the privilege of reciprocating: “CLs under S. 92 are however completely different. In this case, the Central Government, itself can issue CLs on the grounds of a public health emergency.” – also from your post – PAragraph 3 – line 1, the government simply cannot grant a CL. If the decision to notify certain patents under Section 92 is to be construed as grant of CL, then it is per se open to challenge.
Lastly, I do agree that cancer of various types is a significant health issue in India. There is no question as to that. The reasons for the abysmal healthcare system is also one of the factors. Patents, drug pricing and mechanisms controlling drug pricing, regulatory and approval processes all require examination. Like I said, I do wish the Court would actually examine these issues – may just help in a better health care system that is also affordable.
@Aliasgar.. While it is true that a Tribunal would not generally interfere in the case of a notification – this is not an absolute rule. The proceedings of the Cauvery Water Tribunal is an example where supposed “policy” based notifications regarding sharing of water resources have been held invalid in proceedings.
Section 100 is inapplicable in this case. Section 100 allows the Government to use the invention. This is not applicable to Section 92 where the Government is allowing any interested party to use.
One point that is simply not raised, and is a matter of concern – is the DIPP qualified to determine the presence of a health emergency under Section 92(1) or a national emergency under Section 92(3). I believe not – that is a matter that can only be done by the relevant department of the Ministry of “Health” and not by the Department of “Industrial Policy and Promotion”
Guru Nataraj
According to this ET article: http://articles.economictimes.indiatimes.com/2013-01-14/news/36331897_1_compulsory-licence-indian-patent-act-patent-controller
the health ministry is involved in the process. I guess that the DIPP is only the final authority under the Allocation of Business Rules.
Prashant
@Guru Nataraj and Prashant:
Would you have any comments on the interpretation taken in our guest post on the same topic? ( http://spicyipindia.blogspot.com/2013/01/guest-post-examining-recently-announced.html )
“However, Section 92(3) states that in the circumstances of National Emergency or Extreme urgency or public non-commercial use including public health crises, relating to Acquired Immuno Deficiency Syndrome (AIDS), Human Immuno deficiency virus, tuberculosis, malaria or other epidemics, to avoid any delay in the procedure, provisions under section 87 will not apply. Since the statute mentions specific diseases and epidemics, I am not sure whether “Cancer” could be construed as being within the ambit of these diseases mentioned under section 92(3). Hence I believe that if compulsory licensing is granted for these three drugs, usual procedures of opposition for compulsory licenses will be followed and expedited approval as specified in Section 92(3) will not be applicable in this scenario.”
@Swaraj.. You said it. My last comment that I posted earlier today addressed the issue of pandemics and epidemics. Who decides that there is a pandemic or epidemic – not the DIPP who frankly are not qualified to do this. Only the Ministry of Health can do this (see notices relating to prohibition on stockpiling of Tamiflu(TM) during the Avian flu scare).
Secondly, any patent attorney or medical professional would understand that cancer is a generic term – there are multiple types of cancer. Medically, it would be erroneous to use public health provisions to invoke Section 92(3) for an anti-carcinogenic product. I agree that cancer in one situs can and does spread in most cases. However, the basic cell mutations are different and require differential treatment. Therefore, “Cancer” as such would not fall in Section 92(3).
Regards,
Guru Nataraj
Hi Swaraj,
I had covered this issue in today’s post. Its a pity that nobody reads my posts any more –
The DIPP in its policy paper released two years ago has specifically stated that it will use S. 92 for any public health crisis and that it would include chronic diseases within this classification.
Besides, do you think any judge in his right mind is going to disagree with the DIPP that cancer is not a public health crisis when there are hundreds of thousands Indians dying from the disease every year? Have you see how activist the Indian judiciary has become of late? How difficult is it to give a provision an expansive interpretation?
Prashant
@ Anon – 6:45AM –
1. The order under S. 92 is a declaration, it is not an order – it does not have to be based on any facts – how exactly is the DIPP going to make a finding of fact for ‘public non-commercial use’ and even for the public emergency clause, there is no way a court is going to interfere with such a declaration – on what basis are they going to do so?
2. As for this business of the DIPP or Controller issuing licence, stop being difficult – I’ve clarified it later on in the post and I presume that most of our readers have the brains to figure out the difference. If you think I’m doing a lousy job, go start your own blog and you can do a better job.
Prashant
Hi Prashant,
While it’s tempting to throw in a similarly dramatic opening line, I don’t think it serves any purpose here. (Also, unfortunately, I can’t think of a one)
I had not really read your new post before commenting. I did quickly skim over the beginning of it when you posted it and didn’t notice the paragraphs on 92. If in case it matters to you whether I read your posts or not, I can assure you that I have vested interests in the prices of these medicines, one in particular, and I appreciate the regular coverage you’re doing on them. Unfortunately, this does not buy me time to read them all as soon as you write them.
Looking over it now though, I don’t see how it answers my question. I see two opposing view points – one by DIPP and one by IPA. Both expected view points.
I had asked you what you think of the interpretation. My intention was to understand what you saw wrong with that interpretation. Also, having zero experience litigating in India, I’m not presuming to know or even guess what a judge may or may not agree with. Surely you would not deny a non-litigator some explanation?
Please read the above given the notion that ‘cancer’ is not a single disease and should not be treated as one. I believe there are about 12-13 common types of cancer in India. Each requiring different treatments. Are all of these read into this expansive definition you mention?
What about rare types of cancer? How are they treated?
Or common types, which have an easier method of erradication. Eg cervical cancer, which is common enough in India, can be relatively easily prevented. Is it necessary for a CL for its treatment? Or would Indian healthcare be better served by focusing by other means which do not ‘annoy’ big pharma?
Hi Prashant,
I think there is a reason why the phrase ‘Controller or Central Government’ has been mentioned in section 117A. If you see all sections listed in 117A you will notice that section 66 and 92 both deal with involvement of Central Government. The language used in both these section is “…declaration to that effect, by notification in the Official Gazette”. Hence I beg to defer on the point that declarations under these sections cannot be considered as an order, decision or direction. In fact, if we go by your arguments, than an appeal cannot lie to IPAB from Government’s declaration under section 66, which is not the case.
Secondly, the scope of section 100 differs from section 92. Under section 100, the government can use inventions for its own purpose which I assume will involve use of government machinery and/or health care programs incase of the above mentioned three drugs. I my opinion, this has little potential to affect the open market price of these drugs. The dictating factor for grant of compulsory license, from the news report, seems to be the price of these drugs, which can only be brought down by open market competition and not by Government’s own use.
Lastly, the drugs in question treat cancer which is not infectious or can be regarded as an epidemic disease. I do understand that India has a large number of cancer patients but I am trying to understand how can this be termed as a case of National Emergency or extreme urgency. May be clarification from the DIPP at the time of issuance of notification may help.
Aliasgar Dholkawala
Hi Swaraj,
You thought that was a dramatic opening line? 😉 Trust me I could do better.
The DIPP policy paper uses the word ‘chronic diseases’ which covers all kinds of cancer and other diseases which are not typically communicable diseases. In other words the DIPP is interpreting the provision to cover each and every disease in the world.
Will the courts accept such an interpretation – I don’t see any reason for them to reject such an interpretation. There is nothing is S. 92(3) which forbids such an interpretation. The diseases mentioned in the provision are only for an illustration and as such do not restrict the court from including other diseases within the provision. In other words S. 92(3) is not exhaustive and an activist Indian judiciary will be more than willing to stretch the provision to its limits.
The test is not whether the cancer is rare or whether there is an easier method of eradication but whether or not the Govt. thinks it poses enough of an issue to be classified as an urgent public health issue, a decision which is not open to judicial scrutiny.
Are there other methods which do not annoy Big Pharma – I guess there are but this I don’t think is about patients, this is about the generic drug industry making a quick buck and they can never do that without upsetting Big Pharma.
Cheers,
Prashant
Hi Aliasgar,
1. Why are you so certain that declarations by the Government under S. 66 can be challenged before the IPAB? Are you aware of some judgment where this has happened? I don’t think they can be challenged before the IPAB.
2. Why do you think that the phrase ‘declaration’ is used in S. 66 and S. 92? There must be some difference between ‘declaration’ and ‘order’, ‘decision’ or ‘direction’.
3. About the diseases in question being considered as a ‘National Emergency’, I think the hundreds of thousands Indians suffering from breast cancer, blood cancer etc. will convincingly argue that the fact that they are dying constitutes a national emergency. Will a High Court hold otherwise? Let’s see how it plays out.
Prashant
Hi Prashant,
The fact that section 66 is included in sub-section 2 of section 117A, I interpret that revocation of a patent under section 66 can be appealed before the IPAB.
I am puzzled as to why the word ‘declaration’ has been used in these sections and more so because section 66 does not refer to the involvement of the Controller. Thus the question, to what an appeal lies under section 66 then? The obvious answer, decision of the Central Government to notify a patent for revocation.
Unfortunately, I am not aware of any case law to support my interpretation. If I do, will surely let you know.
Aliasgar
India Express article says “Department of Pharmaceuticals has started the process of issuing compulsory licences”.
How can the Department of Pharmaceuticals issue a compulsory licence? The Patent Office only can issue a compulsory licences.
@aliasgar. just a few points.
a. You are correct that a “declaration” whether under Section 66 or under Section 92 by the Central Government can be challenged before the IPAB.
a1. This is a statutory right. The fact that Section 117A uses the term “order”/”decision”/”direction” does not exclude this right of challenge.
a2. There are sufficient decisions of various High Courts and the Supreme Court that emphasise that a term in a statute must be given a meaning derived from the context of the statute (one of my friends had done an assignment on this in law school and it made for fascinating reading on why one word can have so many different meanings in law – for example the word “and” can be given a dijunctive meaning as well)
b. A “declaration” inder Sec 66 or 92 is not a “policy” decision – these are decisions taken by the Central Government on specific patents – not policy issues.
b1. if my memory of admin and constitutional law serves me right, the State does not have the authority to declare a policy in respect of a specific right of a specific person.
b2. the fact that there has been no such challenge in the past does not abrogate the right to challenge provided for in a statute.
b3. Much as there is a policy statement contained in the language of Section 66 and 92, there is also a policy statement contained in Section 117A.
c. The only time that Section 66 has been used as far as I know was way back in 1994 when I was less than two years in the profession – when Agracetus Inc.’s cotton seed technology patent was cancelled by the Central Government. Frankly, this was not challenged – not because there was no right of challenge but because factually, the time between the grant of patent being cancelled and the end of patent term end simply did not justify the costs of challenge. Quite simply, the litigation time costs in the 1990’s and the fact that the maximum patent term was 14 years from date of filing, and the fact that patents were usually granted closer to 6 to 9 years after filing did not justify spending money – unless the returns were bound to significantly higher.
d. The term used in Section 66 and 92 – “declaration” – is because the action of the Central Government is by notification, and implies an unilateral AND ADMINISTRATIVE action. It would be erroneous to equate this term with “policy”. The fundamental policy of healthcare and public interest is already embodied in Section 66 and 92 – an administrative action taken to implement this policy in respect of specific patents would relate back not to a class of patents/technology field but to specific statutory rights granted to specific entities, and would still be open to challenge.
e. Finally, there are any number of instances where administrative action taken by notification in the official gazette are challenged by way of appeal or writ petition and are upheld or struck down by the relevant authorities.
As ever a pleasure to read your comments.
Warm regards,
Guru Nataraj
After government issues CL, how much time (months/years) it will take to get the cheaper version of herceptin to be out in the market ?
Thank you for a fantastic article. Has the issue of whether Herceptin has a valid patent in India been cleared up?
Also, do you know if there are numbers (current cost and proposed cost) for other medications mentioned in this article?