Trastuzumab Litigation: A Development from the Supreme Court Concerning Reliance (Setback or Inconsequential?)

On 17th December, a three-judge bench of Supreme Court of India in Genentech Inc. & Ors. v. Drug Controller General of India & Ors., set-aside the interim order of the Division Bench of the Delhi High Court dated 18.09.2019 and restored the earlier order of the single judge dated 25.04.2016. This relates to the biosimilar dispute concerning the drug ‘Trastuzumab’, between Genentech and Roche on the one hand, and Reliance, Mylan and Biocon on the other. The litigation saga has been previously covered on this blog on several occasions (see here, here, here and here). This specific order on the Supreme Court only concerns Reliance.

The interim order set aside by the Supreme Court had directed that Reliance be placed on parity with Mylan and Biocon as far as interim orders are concerned. At the single judge stage, Biocon, Mylan and Reliance, were allowed to sell their respective biosimilar drugs subject to certain conditions (vide separate orders dated 25.04.2016). In the appeal filed by Biocon and Mylan, the Division Bench of the High Court permitted them to sell their biosimilar drugs without complying with the additional directions imposed by the Single Judge. This was by way of an order dated 28.04.2016 (as later clarified vide order dated 03.03.2017). However, it seems that Reliance’s appeal against the Single Judge order and the corresponding Genentech’s appeal qua Reliance, were not heard/disposed off on 28.04.2016; in fact, it is only on 28.07.2016 that the Division Bench observes that Reliance’s appeal raises identical issues as the others and directed them to be listed together (though I’m sure if that happened immediately because I see a lot of daily orders on different dates). Thus, at that point in time, similar interim relief was not granted to Reliance. Subsequently, the Division Bench took up Reliance’s appeal and their application for stay, and disposed off the stay application on 18.09.2019, effectively putting Reliance in the same position as Mylan and Biocon. It is this order that has been set-aside by the Supreme Court.

The nature of the suit filed by Genentech/Roche has always been questioned, but the Supreme Court summarized that this suit was for “extended passing off and to prevent the defendants from using the plaintiffs’ data and improper reference to its drug ‘Trastuzumab’”. Therefore, the fact that the patent right on the drug had already expired, which has been an issue raised by the Defendants and has been often raised on this blog, was held irrelevant by the Supreme Court, effectively setting aside the observation of the Division Bench that prima facie considered this to be an issue to be tried.

(N.B.: I think the other point concerning whether DCGI approvals can be questioned in a civil suit, which is also part of the suit initiated here, has been missed in this summarization by the Supreme Court. However, one way to look at the matter is to state that the suit involved joinder of different causes of action against different defendants, but the relief sought is in respect of or arising out of a same act/transaction or series of acts/transactions, which may involve common questions of fact or law. I am not commenting on whether this is possible and whether this would permit a statutory body performing statutory functions to be questioned in a suit)

On a reading of the Supreme Court’s dated 17.12.2019, it appears that the court has placed emphasis on the following two critical factors in coming to this conclusion:

• The failure of the Division Bench to account for the order dated 8.03.2019 issued by the Supreme Court, inter alia, between the same parties, which directed that the appeals and application by both sides, be heard and disposed off at the same time:
• The position prevailing since the last three and a half years (basically since the Single Judge’s order) has been upset by the division bench without considering the balance of convenience.

On the first consideration above, the Supreme Court rejected the contention of Reliance that Genentech’s application was effectively addressed by the Division Bench because the submissions of Genentech were recorded and dealt with. The Supreme Court, however, disagreed since the division bench had specifically noted (@Para 51) that it was only considering the stay application of Reliance. The Supreme Court also took note of the fact that there was a common order passed on 16.07.2019 by the Division Bench on all the appeals concerning this dispute except Reliance’s appeal; in contrast, there is a separate order of the same date in Reliance’s appeal where orders were reserved. The Supreme Court concluded that all of this only meant that the division bench had failed to consider Genentech’s application.

I will be the first to admit that it was confusing to fully understand what occurred at the Division Bench level. I am not exactly sure how and why not all the appeals were consolidated, or heard separately; perhaps, I am missing something. Nevertheless, I ask myself this question – is this not something that needs to be seen by looking at the substance of the matter? I keep wondering the converse – if, by chance, the impugned order of the Division Bench mentioned Genentech’s Appeal No. and Application No. without changing anything else in the order, would the Supreme Court still have reached the same conclusion? I seriously doubt it. I think it would have been prudent to have considered this from a more substantive perspective at the second appeal stage at the Supreme Court level. Therefore, if Genentech’s contentions were truly addressed in the order, then I am not sure the issue goes to the root of the matter. Of course, the question remains whether the contentions in Genentech’s appeal/stay application was properly addressed. Honestly, I don’t want to comment on this in a detailed manner without knowing more. However, @Para 26, the Supreme Court itself notes that the Division Bench had considered and rejected the submissions of Genentech and thus, it would be futile to remand the matter back to the Division Bench. Well….if this is true, does this not indicate that the Division Bench had indeed effectively considered Genentech’s application as well?

The other point observed by Supreme Court, concerns “balance of convenience”. As most would know, the settled position is that appeal courts should be circumspect in interfering interim orders and “balance of convenience” would play a big role.  A perusal of the Division Bench order does not even mention the word “balance of convenience”. This is just technical – what matters is whether the Division Bench had substantively considered “balance of convenience” even if did not mention it. When I read through the Division Bench order again, @Para 57, the Division Bench noted: (i) the fact that Reliance has admittedly been in the market and selling its biosimilar for over 3 years and (ii) that even the Single Judge did not completely injunct Reliance from manufacturing and selling – it was only a matter of what conditions were to be imposed. The Division Bench also prima facie found @Para 56 that the condition on Reliance (but not on Mylan or Biocon) was contrary to law (Rule 96 of D&C Rules, 1945). On whether the approval to Reliance was illegal (and connected issues), the Division Bench holds that these issues required trial. Once again, I ask myself – would not an interim direction that would put the Defendant in violation of the law be relevant in the matrix of “balance of convenience”? Ultimately, even the Supreme Court, by restoring the Single Judge order has allowed Reliance to sell, just subject to conditions more stringent that applicable to Biocon and Mylan. If, therefore, throughout the fight is on the conditions to be imposed, would it not have been prudent for the Court to have considered whether Reliance is being asked to comply with a condition contrary to law? Strangely, I could not see a finding on this point in the Supreme Court orders.

In the ultimate analysis, all this may not be of much consequence because (i) Reliance has been allowed to sell, (ii) the suit has been expedited and more importantly, (iii) there is a specific direction that Reliance should be allowed to participate in any tenders, “without any impediment”. Even if there is any alleged violation of Rule 96 of the D&C Rules, 1996, given the Court orders, it is doubtful if Reliance would be hauled up by the authority.