Saxagliptin CL Round 1: Controller shoots down Lee Pharma

As we’d reported a couple of days ago, the Controller of Patents has issued a prima facie finding on Lee Pharma’s Compulsory License application to manufacture saxagliptin, AstraZeneca’s patented anti-diabetic drug. The order [PDF], dated 12 August 2015, has just been uploaded to the IPO website.

The Controller’s prima facie findings seem to be almost perfectly aligned with our assessment of Lee Pharma’s application. While he agrees that Lee is an interested party and has made bona fide attempts to negotiate a voluntary license, he finds that Lee has failed to demonstrate a prima facie case under any of the provisions in S. 84(1) of the Patents Act.

S. 84(1)(a)

The Controller has noted the presence of equally efficacious DPP-4 inhibitors that can be substituted for Saxagliptin in treating Type II Diabetes Mellitus, and found that it was impossible for Lee to make assumptions about the demand for Saxagliptin without accounting for these substitutes.

S. 84(1)(b)

Here, the Controller’s reasoning has been guided by Bayer v. Union of India. There, the price differential was between Rs. 2,84,000 and Rs. 8,800 (between Bayer’s and Cipla’s sorafenib products) for a month of therapy. In the case of saxagliptin, the margin is much narrower – Lee is offering to sell it at about Rs. 9/tablet (on average) cheaper than AstraZeneca currently does. Since Lee’s pricing is only marginally cheaper than AstraZeneca’s, the Controller has been unable to find that the patented product is not available at an affordable price.

S. 84(1)(c)

Here, again, the Controller cites Bayer to find that local working does not entail local manufacturing in all cases. He’s held that the patentee is only obligated to furnish reasons that make it prohibitive to manufacture the product locally, and that even this requirement holds particularly in those situations where the patentee possesses manufacturing capabilities in India. He’s also held that in the absence of any data concerning AstraZeneca’s local manufacturing capability provided by Lee, he cannot accept that a prima facie case under this provision has been made out.

Despite the fact that it’s based on the same logic we’ve used on the blog, the notice throws up several interesting questions. How must prospective CL applicants take into account substitutable patented products when arguing their case under S. 84(1)(a)? In the absence of a “bright line” rule governing affordable access, and given that not every generic manufacturer can hope to market drugs at a fraction of the patentee’s price (as was the case in Bayer), how much cheaper than the patented product must the applicant sell the drug to avail of S. 84(1)(b)?

Finally, it appears that AstraZeneca does have a manufacturing presence in India, at its Bangalore facility. It would be interesting to see if Lee brings up this fact if and when the application moves to the hearing stage. For now, it’s important to reiterate what we’ve been saying over the last couple of days – this notice is strictly prima facie, and doesn’t feature the kind of nuanced and lengthy reasoning that one would expect from a final resolution of the application on merits. With Lee having lost the first round, we can only wait till the 12th of September to assess the progress of the case.