Last July, an anonymous tip-off led us to Lee Pharma’s application for a Compulsory License against AstraZeneca’s Saxagliptin patent (IN206543). In that post, Swaraj and I covered the merits of Lee’s application extensively, before concluding that it was unlikely to succeed. In August, the IPO issued a prima facie finding rejecting the application under Rule 97(1) of the Patent Rules, 2003. Lee’s counsel requested a hearing, and were granted one on 15 December 2015 along with supplementary submissions on 29 December 2015.
Subsequent to this hearing, the IPO passed an order dated 19 January 2016 in which it rejected the application for largely the same reasons as stated in its earlier prima facie notification.
Saxagliptin is just one member of a class of drugs called DPP-IV inhibitors, used to manage Type II Diabetes Mellitus. It is precisely this fact that makes Saxagliptin so interesting to us from a patent law perspective – the fact that there exist largely equivalent substitutes on the market to treat the same symptom.
The IPO agrees, as it did in August, that Lee qualifies as a “person interested” and has the capacity to supply Saxagliptin to the market if the application is granted. It also agrees, as it did in August, that Lee seems to have made a reasonable effort to negotiate a license with the patentee.
Section 84(1)(a) – Reasonable requirements of the public
The applicant argues that there are over 60 million diabetics in India today, but the Controller points out that not every diabetic is a prospective consumer – some of them would certainly have been subject to non-drug interventions (lifestyle changes, etc.) while others would have been prescribed Sitagliptin, Vildagliptin, etc. The order quotes Bayer v. Union of India to say that Lee shouldered the burden of, firstly, quantifying the requirement for Saxagliptin (as distinguished from the requirement for anti-diabetics or DPP-IV inhibitors in general), and secondly, showing that the patentee did not meet this demand.
In our earlier posts, we’ve highlighted the fulcrum of Lee’s S. 84(1)(a) case – the claim that even if just 10% of Indian diabetics were prescribed Saxagliptin, AstraZeneca’s Form 27 filings would indicate that it was grossly undersupplying the drug. The Controller’s response is as simple as it is significant: such assumptions cannot be used to argue that the reasonable requirement of the public has not been met – “authentic data/statistics” are required to make such a claim. While all the empirical data supplied by the applicant has centred around diabetics in general, the Controller holds that this would not suffice – the application necessarily required “specific data/evidence with respect to the exact number of patients requiring only SAXAGLIPTIN for the treatment of Type-II DM” to succeed.
Lee’s counsel appears to have argued that Saxagliptin was the “latest and best” DPP-IV inhibitor on the market, and had fewer side-effects than other drugs of the same class. The Controller rejects this contention, pointing out that no evidence (either in the form of medical opinion or clinical trial) was furnished to substantiate the argument.
Section 84(1)(b) – Reasonably affordable price
The Controller quotes Bayer v. Union of India to hold that it isn’t his mandate to arrive at a reasonably affordable price, and that such a price must be arrived at on the basis of evidence led by the parties. The direct upshot of this proposition is that Lee bears the burden of showing that AstraZeneca’s pricing was unreasonable. However, given that the market price of Saxagliptin is in the same range (Rs. 42 to Rs. 52) as other DPP-IV inhibitors, this would mean that Lee now had to prove that all the DPP-IV inhibitors were being priced unreasonably. This proved to be too high a threshold for Lee’s counsel to surpass, and the IPO could not record a finding that engaged S. 84(1)(b).
As an interesting aside, Lee seems to have drastically slashed the price at which it’s willing to sell the drug – in August 2015, it was willing to sell the drug at between Rs. 27 and Rs. 32/tablet; in the December hearings, Lee informed the IPO that it was willing to sell the drug at less than half that price – between Rs. 11 and Rs. 16 per tablet.
Section 84(1)(c) – Local working
The IPO’s decision on local working consists of an interpretation and application of the rule in Bayer, in which the court held that patentees who were working their patents purely through importation had to furnish adequate reasons for not manufacturing locally. Applying this rule, the Controller holds that the obligation to manufacture locally is premised upon the demand for the product in India. Since Lee could not show the demand for Saxagliptin specifically in the Indian market, it was disabled from arguing that there existed enough demand in India to justify the setting up of a manufacturing facility by AstraZeneca.
Lessons for the future
As to the broader implications of this order, the refusal of a CL on a drug such as Saxagliptin could serve as a statement of intent for investors in the pharma sector. It would appear that orders such as this one have a greater role in justifying the presence and legitimacy of Section 84 on our statute books (especially for Western commentators) than even the grant of licenses through well-reasoned decisions such as the one concerning Nexavar.