Compulsory Licence Application filed over AstraZeneca’s Saxagliptin

Earlier today, we received an anonymous tip-off that an application for a Compulsory License had been filed last week for the patent covering Saxagliptin. On checking, we found that it was true – a Compulsory Licence application has been filed over AstraZeneca’s diabetes management drug Saxagliptin. This marks the third Compulsory Licence application that has been filed thus far. The first one (Natco’s application for Bayer’s Nexavar) was successful, and the second (BDR’s application for BMS’s Dasatinib) was rejected. You can find the present CL application here (you’ll have to click on the PDF dated 29 June 2015). Editor’s note: For easier access, we’ve made the CL application directly downloadable here – large PDF file. 

This rather long post will try to explore the strength of the present application.

The Applicant

An entity called Lee Pharma Ltd. filed this CL application dated 25 June 2015 through their lawyers, Hassan and Singh. From their website and the application, they seem to be manufacturers of APIs, intermediates and other pharmaceutical products, established in 1997 and with offices in Hyderabad.

Saxa-what?

Regular followers of pharma patent litigation should have no trouble placing this drug – it’s a dipeptidyl peptidase-4 inhibitor of the same family as Sitagliptin and Vildagliptin, used to treat Type II Diabetes Mellitus by achieving glycemic control without accompanying weight gain. Saxagliptin is covered by Patent No. 206543, granted in 2007 to Bristol-Myers Squibb, which later assigned the patent to AstraZeneca as part of its larger diabetes market strategy.

The drug is marketed as Onglyza in stand-alone form, and Kombiglyze XR in combination with another active ingredient for enhanced diabetes management.

Lee Pharma’s claims

Lee’s 364 page CL application starts off by describing the state of the diabetes epidemic plaguing the country, emphasizing that Type II diabetes has no cure, but can only be managed through the use of drugs such as DPP-4 inhibitors. It further asserts that 77% of diabetes patients in India belong to low and middle income groups, and that over 80% of diabetes deaths occur in low and middle income countries such as India. Finally, it highlights that diabetes is beginning to affect 25-35 year-olds, severely compromising their ability to make a living. Lee asserts that there are 60 million Type II diabetics in India, all of whom can be treated by DPP-4 inhibitors.

To successfully obtain a CL under Section 84 of the Patents Act, an applicant (“any party interested”) needs to first show that they’ve made good faith efforts to negotiate a voluntary licence from the patentee for at least six months. If these negotiations do not result in the grant of a licence, there are three grounds on which a compulsory licence can be granted:

1. That the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
2. That the patented invention is not available to the public at a reasonably affordable price, or
3. That the patented invention is not worked in the territory of India.

While they would require only one ground to be satisfied, Lee claims all three are satisfied. Let’s examine Lee’s position on these grounds:

Efforts to negotiate a voluntary licence

In its application, Lee claims that it approached BMS in May 2014, following which BMS sought clarifications and other information, which it provided in November 2014. Lee claims that it has not received any further communication from BMS or its lawyers (Anand and Anand) containing any concrete response to its licensing request. However, Lee also says it received an email from AstraZeneca in June 2014, which it claims it ‘could not open’. It’s uncertain as to what this would mean for the purposes of this case, if anything. Readers may remember that in 2013, BDR saw its CL application for BMS’s Dasatinib rejected by the Controller since interalia it was unable to show sufficient efforts to voluntarily negotiate with BMS, due to the fact that BDR did not respond to BMS’ letter asking for more details on how BDR would work the patent in question. Coming back to the present case, this could possibly swing either way. On one hand, Lee could’ve asked for a clarification of the communication. On the other hand, if Lee can show that AstraZeneca did send a corrupted file, it’s possible that AstraZeneca can be viewed as not participating in good faith negotiations. To us, it seems likely that Lee Pharma’s efforts at getting a voluntary licence will be recognized.

“That the reasonable requirements of the public with respect to the patented invention have not been satisfied”

Lee points out several problems with the manner in which BMS and AstraZeneca have been doing business with the Saxagliptin patent.

First, they cite Form 27 filings to assert that the drug is not manufactured in India even eight years after the patent was granted, and that the entire supply of the drug is imported and marketed by BMS and AstraZeneca from Ireland and the US. Further, the Form 27 filing specifies that 823,855 units of Saxagliptin were imported in 2013 – 700,078 units of Onglyza from Ireland at a value of Rs 541,778, and 123,777 units of Kombiglyze from USA at a value of Rs 112,851. Lee assumes that “units” here refers to individual tablets, based on the cost valuation of the imported quantities, and comes to two conclusions:

1. Each tablet was imported at a cost of less than a rupee.
2. The quantity imported per year is sufficient to satisfy a mere 0.23% of the market demand.

Lee also points to data from an online resource that shows that after import into India, Saxagliptin is being exported in large quantities to countries such as the UK, Slovenia, Mauritius and the US. The claim Lee makes is that the amount of Saxagliptin that finds its way to the Indian market is further throttled due to these exports.

However, they have arrived at this 0.23% number in a very interesting manner. They state that there are around 60 million diabetes type II patients, and that ‘even if’ only 1 million out of the 60 million were to be prescribed Saxagliptin, 823,855 units falls far short of the required amount. Significantly though, they have not described why Saxagliptin is ‘required’ for this 1 million.

The most compelling argument against issuing the CL on this ground stems from the fact that Saxagliptin is just one of at least four available DPP-4 inhibitors on the market, with Sitagliptin, Vildagliptin and Linagliptin being the others. Thus, even if Lee’s claim is true and AstraZeneca and BMS have been throttling access to Saxagliptin on the Indian market, this doesn’t necessarily translate to making treatment unaccessible for Type II diabetes patients, since they can simply choose from the variety of alternatives. There seem to be no clinical studies comparing the gliptins against each other (?), but it appears that they are all of near-equivalent (medscape paywall link) efficacy in achieving glycemic control. Thus, patients unable to access Saxagliptin on the market could simply opt for one of the three alternatives. This is further accentuated by the fact that generic alternatives are available or being developed for Sitagliptin and Vildagliptin. Glenmark, for example, sells a generic version of Sitagliptin under the name Zita for around Rs. 28 for a 100mg tablet. Not only is this cheaper than the Saxagliptin on the market today (priced at around Rs. 40/tablet), it’s also cheaper than the price at which Lee intends to sell its generic product (Rs. 30/tablet). In such a situation, with several alternatives, it’s very difficult to buy into a claim that there is insufficient patient access to DPP-4 inhibitors; and sufficient evidence has not been furnished to show that there is a patient population that can only take Saxagliptin, and not the alternatives. It seems likely that for Lee to succeed on this ground, they would need to start by showing that together, all the DPP-4 inhibitors are still not fulfilling the reasonable requirements of the public – and they have not ventured into this territory in their application.

A related interesting question here is whether the requirements of the public must necessarily be satisfied by the product covered by the patent if equivalent inventions covered by other patents are available on the market. Thus, is it necessary for AstraZeneca to show that Saxagliptin could be accessed by any diabetic in India, or is this obligation mitigated by the presence of equivalent alternatives covered by other patents such as Sitagliptin and Vildagliptin?

“That the patented invention is not available to the public at a reasonably affordable price”

Lee points out that the drug is sold on the market at around Rs. 41-45 per tablet although it seems to cost BMS and AstraZeneca less than a rupee to import. Lee argues that this is clear evidence of the patentee abusing its monopoly in the market.

Lee claims that it has the capability to manufacture a million tablets a day, and proposes to sell the drug at around Rs. 30 per tablet for all variants. This is around Rs.10-15/tablet cheaper than the current market price.

In absolute terms, Lee says that AstraZeneca’s drug costs around Rs. 1,500 for a month’s supply. While it’s well outside the reach of many patients, it’s still not as exorbitantly priced as, say, Nexavar was. Further, this pricing strategy is comparable to other DPP-4 inhibitors such as Januvia (Sitagliptin), which retails at around Rs. 45 per tablet. The price differential isn’t as compelling, either – Lee proposes to (at best) save the patient around Rs. 10 – Rs 15/tablet for Saxagliptin. However, on the other hand, the sheer number of diabetes patients makes this, collectively, a significant difference. Even at their lower estimates of 1 million patients, that’s a difference of Rs 1,50,00,000 per day. It’s an open question as to whether these ‘scale’ questions with regard to price will come into play, or whether the price for an individual is what will be looked at. If we are to venture a guess, legally speaking it would be the latter. However, as a policy measure which looks into social welfare maximation, it would be the former.

That the patented invention is not worked in the territory of India

As mentioned above, Lee Pharma has indicated that despite 8 years having passed since the patent was granted, Form 27s indicate that AstraZeneca/BMS have not manufactured the drug in India and only import units from other countries including Ireland and USA. Would this mean that the patent is not being worked? Or is the importation sufficient to show ‘working’ of the patent?

In Bayer v. Natco, Justice Prabha Sridevan (IPAB) stated that ‘working’ is a flexible term, and could include mere imports as well, depending on circumstances such as the technology in issue, and whether the invention could be feasibly manufactured in India, etc. In our current CL application, it would be difficult for us to comment on the feasibility of such manufacturing, beyond a generic statement that India does have a large generic pharmaceutical industry and to the lay person at least, there doesn’t seem to be any reason why this could not be manufactured in India.

While we’re on the subject, it’s useful to contrast Lee’s claims against the facts in Bayer v. Natco. In its CL application, Natco was able to demonstrate that Bayer’s Nexavar was only accessible to a mere 2% of Indian patients (see decision and Shamnad’s post, both linked above). Here, that number appears much more damning – it stands at 0.23% of the Indian market for Saxagliptin – if they can show that they (as opposed to their alternatives/competitors) in fact do have a specific demand for 1 million patients. Most importantly, Lee’s claim that Saxagliptin is being exported to other countries from India strengthens its case immensely. Then, there’s the matter of price. A compelling factor that the Nexavar CL arguably hinged on was Bayer’s pricing policy – at Rs. 2.8 lakh for a month, Bayer was effectively putting the drug outside the reach of an overwhelming majority of patients. Further, the Nexavar CL featured a huge price differential – the price of Natco’s generic alternative was a mere Rs. 8,800 for a month’s supply. In the case of Saxagliptin, however, neither of these seem to apply.

Of course, none of this is to say that the legal standard for CLs to issue is necessarily pegged at the high level of unaffordability and unavailability demonstrated in Bayer v. Natco – the threshold should (and most likely does) fall well below that. This is merely illustrative of the lack of any “bright line” legal standard in determining whether a CL is warranted in any given case.

Conclusion

Lee Pharma’s application seems to be predicated on a number of factors. If they’re able to cross the preliminary hurdle and establish that they attempted voluntary licensing negotiations in good faith, then, presumably a major factor in whether they succeed or not will rest on their ability to show that demand exists in the market for Saxagliptin, distinct from the demand for other DPP-4 inhibitors, and that AstraZeneca has either throttled supply or priced the drug above this demand. If they cannot prove this, then Lee’s failure to account for cheaper generic products (eg. Glenmark’s Sitagliptin) that seem to be substitutable for Saxagliptin may also prove to be too high a barrier to cross. Though – it’s interesting to note that while S.84 states that the “patented invention” is not available at a reasonably affordable price, it does not appear to account for a situation like the present one, where a separate patented invention (any of the 3 alternatives) is available at a more affordable price than the patented invention in question. It’ll be interesting to see how this case turns out. Please do send in your comments and thoughts, and we’ll keep you posted on any updates we have on the case.

I’d like to thank our anonymous commenter for alerting us to this development, and also thank Anna Thomas for using her Google-fu on the Patent Office website to locate the application.
(This post was co-authored by Swaraj)