COVID-19 Patent

After Natco’s Withdrawal, Bajaj Healthcare files for Compulsory License to Manufacture Baricitinib


Eli Lilly’s Logo (image from here)

A recent report by The Print revealed that Indian drugmaker Bajaj Healthcare (‘BH’) has applied to the Patent Office for a compulsory license to manufacture Eli Lilly’s Baricitinib. At the moment, the application itself or any response from Eli Lilly to its filing is unavailable, but the report provides details of the circumstances surrounding it. Baricitinib, which is originally an arthritis drug, has more recently been used in combination with Remdesivir to treat Covid-19 patients for better results than what the latter alone provides. According to the report, BH had initially approached Eli Lilly, the licensee and marketeer of the Indian patent over Baricitinib (IN 270765), for a voluntary license, but was turned down.

It is not known which of the available compulsory license routes the application takes. Readers might recall that in May, Natco too had filed for a compulsory license for Baricitinib, seeking permission from the Government for use under Section 92 (discussed here by Swaraj) – before the application was ultimately withdrawn pursuant to a voluntary licensing agreement between Natco and Eli Lilly. The Section 92 route requires the government to decide whether a CL is necessary owing to a circumstance of national emergency, extreme urgency or a case of public non-commercial use. From a reading of the statute, it appears that an application under this section might have to be preceded by a declaration of emergency/urgency in respect of a particular patent, notified in the Official Gazette. It is unclear if in the absence of such a notification, an application will necessarily fail. I have also not found any such notification with reference to Baricitinib or any other patent. Readers who have more clarity on this, please share your insights in the comments.

On the other hand, if BH’s application is moved under Section 84, similar to Bayer’s Nexavar CL, it would have to prove one of three grounds: a) unavailability to public; b) unaffordability for public; or c) patent not worked in India.

Long road ahead for Bajaj Healthcare

BH challenges the prices at which Eli Lilly has been selling Baricitinib, marketed as Olumiant, in India. Basing its estimates on Form 27 disclosures, it places the drug’s price at INR 3,230 for a single 4 mg tablet, a standard 14-day prescription of which would amount to INR 45,220 (See Indian Government Significantly Dilutes Patent Working Disclosure Norms). BH argues that this is too expensive and beyond the affordability range for a majority of Indian households. This mirrors the arguments made by Natco in its May application. Like Natco, BH too claims that it can manufacture the drug at a much cheaper price, i.e., INR 28 per 4 mg tablet (also at INR 14 for 1mg and INR 18 for 2 mg tablets).

However, circumstances seem to have changed quite a bit since Natco made its application. Aside from the licensing agreement with Natco, Eli Lilly went on to sign more licensing deals with several Indian firms such as Cipla, Sun Pharma, and Lupin among others to manufacture the drug locally on a non-exclusive, royalty-free basis. Notably, BH had sought a license offering up to 7% of net profits as royalty but was refused as the licensor already had other licenses and negotiations in place. Moreover, Eli Lilly’s attempt to expedite the availability of Baricitinib in India seems to have already come to fruition with Natco – which had received emergency use authorisation from DCGI in April – selling its drugs online at what appear to be much more affordable prices. A 14-tablet bottle of 4 mg tablets can be found priced at INR 419, which is approximately INR 30 per 4 mg tablet. BH’s proposed price of INR 28 is only marginally lower.

With about six voluntary licenses issued to Indian drugmakers and a few more possibly in the pipeline, the availability of the drug in the Indian market is likely to shoot up. While the quantity available is not known, BH might have an uphill battle trying to prove (under Section 84(1)(a)) that the requirement of the public is not being met.

Moreover, if the other licensees sell the drug at prices similar to Natco, the affordability argument may not hold much water either. When the IPAB granted Natco a CL to manufacture Bayer’s Nexavar, the latter was selling the anti-cancer drug at a whopping INR 2,80,000 per month. The CL order mandated that the price for Natco-manufactured drugs be capped at INR 8,800 per month. The almost negligible difference between BH’s proposed prices for Baricitinib and those at which licensees like Natco’s drugs are already available pales substantially in comparison to the precedent.

The third ground under Section 84 is non-working of the patent in India. The Bayer decision had brought controversy to the question of whether the term ‘working’ denotes local manufacture or includes import as well. The Controller of Patents had initially ruled that import cannot be called ‘working’, but the IPAB left room for flexibility in interpretation. Here, however, the question is hardly relevant seeing as although imports were the only source of Baricitinib in India till now, the recent licenses during the pandemic have changed that.

Not an Easy Time for Compulsory Licenses?

About a couple of months ago, as the devastating second wave of the pandemic ravaged across the country, the time seemed ripe for a compulsory license grant with both the Supreme Court as well as the Delhi High Court having urged the central government to consider the options available under the Patents Act, 1970. Other courts saw PILs being filed asking the government to act in this regard (see here and here). Even in the international community, the greatest opponent of CLs, the United States came around with not only its USTR Special 301 Report supporting use of CLs during the pandemic, but also throwing its weight behind a limited TRIPS Waiver. [In the time since then, the European Union too has supported compulsory licenses – notwithstanding its opposition of a TRIPS Waiver.]

In spite of this, the government had shown reluctance in going ahead with a CL for Covid drugs like Remdesivir and Tocilizumab. In its affidavit to the Apex court, it had favoured collaborations through negotiations and voluntary licenses so as to not alienate the pharma community during this time of emergency.

The reasons behind the government’s disinclination towards CLs are well illustrated in Baricitinib’s case. On identification of a shortage, Eli Lilly promptly rolled out multiple licenses on seemingly favourable terms to fulfill the needs, resulting in cheaper medicines. It is difficult to imagine that the government might risk antagonizing pharma companies undertaking such voluntary efforts by granting a CL, especially if the price difference offered by BH is minimal.

A legal determination by the courts awarding a CL is only possible if the kind of emergency situations envisaged by Section 92 or the failures on part of the patentee as per Section 84 can be proven. At this stage, it is difficult to say how the Patent Office and the courts may tackle this, particularly considering the Third wave of the pandemic has been predicted to arrive in India next month. What can be said for certain is that BH’s path is not going to be easy. A compulsory license is an exceptional provision that makes inroads into a patentee’s exclusive rights. It is thus only invoked during dire circumstances. The ground-breaking Nexavar CL which brought immense relief for cancer patients led to widespread disapproval by pharma companies and the international community, with rumours of India providing secret assurance to the US of not issuing any further pharma CLs. The courts or the government are unlikely to make a similar exception if they opine that BH simply lost out on a chance of becoming one of the multiple licensees.

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