In a momentous development as reported by the Economic Times, Cipla has brazenly launched a cheaper generic version of Novartis’ Indacetorol (a drug used to treat chronic obstructive pulmonary disease). Cipla has further petitioned to the DIPP to revoke to revoke Novartis’ patents in public interest under S.66 of the Indian patent act.
Cipla’s allegations against Novartis in DIPP petition
It is reported that Cipla has alleged that the grant of the patent to Novartis is prejudicial to the public for two reasons- the failure to work the patent locally, and the high cost of Novartis’ version of the drug. Cipla’s generic version of the same drug at Rs. 130 per strip of 10, costs less than 1/4th the price of Novartis’ drug.
In its allegation of ‘failure to work’, Cipla points out that not only does Novartis not manufacture the drug in India after being granted the patents here in 2008-09, Novartis also imports the drug in very negligible quantities. It declared an import of 53,844 units in 2013, which Cipla argues meets the demand of less than 0.003% of the patients who need it.
Does this look like a case of Compulsory license u/s 84?
It appears as though the allegations are leaning towards a case for compulsory licensing under Section 84. According to S.84, the grounds for granting a CL are a) The reasonable requirements of the public have not been met, b) The patented invention is not available to the public and c) The patented invention is not worked in India. Moreover, since the patents to Novartis in this case had been granted in 2008-09, the minimum time of 3 years as required by S.84 has also passed.
However under the Indian patent law a potential CL applicant must first attempt to procure a voluntary license from the patentee. Statutory requirements state that the CL applicant must have negotiated with the patent holder in good faith for a period 6 months at least. As readers may recall the BDR compulsory license application was rejected at threshold by the IPO because the controller general held that BDR had not made a credible attempt to procure a voluntary license from BMS.
In this case Cipla did not make any attempt to procure a voluntary license, but went ahead with the launch of the generic version!!
Can failure to locally work and high cost be construed as being generally prejudicial to public ?
S.66 reads as, “Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked”.
Why then has Cipla moved the DIPP for revocation of patent under S.66 and not a compulsory license? As Madhulika mentioned in a 2013 post, revocation applications under S.66 have worked successfully only a couple of times in the past. The first was when a process patent had been granted to Agracetus, a U.S. based company for genetically engineered cotton cell lines. This patent was revoked around the year 1997 as the Government was of the view that it was against the public interest, considering how important cotton was to the national economy of India (and therefore should not be subject matter for patents). The second case was the Avesthagen patent application for “synergistic ayurvedic/functional food bioactive composition”. On an application by the Traditional Knowledge Digital Library, this patent was revoked by the DIPP for “generally being prejudicial to the public”. Read SpicyIP coverage of the case here and here.
What is evident is that in both these cases, the problem was regarding the patentability of the subject matter itself. The Government was of the view that to protect public interest, cotton (in the first case) and an ayurvedic composition which falls within the realm of traditional knowledge (in the second case) should not form patentable subject matter in the first place , and therefore revoked the patent. However in the present case the patent eligibility of subject matter is not being questioned.
The question however is: can high costs of a drug and failure to locally work be construed as being “prejudicial to general public?”
In the past the IPAB reasoned that since Gleevec costs Rs 120,000 per month per patient, which is too high a price for the common man and therefore should be denied a patent under Section 3(b) as being contrary to public order or morality. The Supreme Court Glivec decision, did not give any credence to the Section 3(b) argument, thankfully.
What about TRIPS?
If the DIPP is convinced with the reasoning that Novartis patents are prejudicial to general public, it may initiate further action to revoke the patent.However, the decision may not be compliant with TRIPS. Art. 27.1 of TRIPS, stipulates that patents should be available regardless of whether it is produced locally or imported, “without discrimination”. Moreover, Art. 5A (1) of the Paris Convention also says that importation of the drug shall not entail forfeiture of the patent. These provisions are reconciled with Compulsory Licensing because CL does not technically involve forfeiture of the patent. It would be difficult, however, to reconcile these provisions with revocation of the patent.
However, if one were to read the TRIPS broadly, maybe a case can be made for Cipla. Art.7 of the TRIPS says that protection of Intellectual Property rights should “contribute to the promotion of technological innovation and transfer of technology…. in a manner conducive to social and economic welfare.”Art. 8.1 allows member states to adopt necessary measures to protect public health and nutrition. Coming back to Art. 27.1, the WTO Panel has held in the Canada Patents case that it is “discrimination” only if it were without justification. Is the unaffordability of Novartis’ drug to Indian patients enough justification? Legally, one cannot be sure.
Depending on whom you speak to, India has faced a lot of criticism and a lot of praise for its strides made towards Access to Medicines in the post-TRIPS era. In this context it is quite interesting to see such a brazen move by Cipla.
(I thank Madhulika for Co-Authoring this with me)