Patents are generally granted to encourage inventions and to protect the rights of the inventor. However, the Indian Patent Act serves to strike a balance between protecting the rights of the inventor and making such patented products available to people at large for the betterment of the society, which is achieved by ‘compulsory licensing’. Under the Indian Patent Act, a compulsory license herein after referred to as CL allows an entity other than the patent owner or the inventor to reproduce the patented product or process without patent holder’s consent. However the process to obtain a compulsory license is very extensive and needs to meet the conditions under section 84(1) of the Act. The following is one such case of compulsory licensing.

Facts of the case:

“SAXAGLIPTIN” is a drug prescribed for the treatment of Type II Diabetes Mellitus. The patent rights for this drug was granted to Bristol Myers Squibb Company, which was subsequently assigned to AstraZeneca AB. After the expiration of three years, which is the statutory requirement for filing a CL, Lee Pharma Ltd., a Hyderabad based pharmaceutical company, moved the first filing in June 2015 under section 84(1) of the Indian Patent Act for manufacturing and selling the compound “SAXAGLIPTIN”. But the license was not granted since a prima facie case was not made out by the applicant. The case was heard afresh after the appointment of the new controller general who gave an opportunity to Lee Pharma of being heard as per Rule 97(1) of The Patent Rules, 2003. Though the applicant made an effort to show that the conditions as stated under section 84(1) were satisfied, the controller denied granting the compulsory license, as prayed for.

Section 84(1):

Any person interested can make an application for CL on one of the three grounds specified in section 84(1) of the Act. It is the obligation of the applicant to satisfy the controller that –

  1. the reasonable requirements of the public with respect to the patented invention has not been satisfied or
  2. the patented invention is not affordable by the general public or
  3. the patented invention is not manufactured in India.

Contentions of Lee Pharma:

Lee Pharma established the fact that it had been into R&D, production, distribution, marketing, exports and imports of pharmaceutical products, formulations and intermediaries for a period of 17 years which made it to qualify as a person of interest to file the CL and proper efforts were taken by it to obtain a license from the patentee. Since the patentee failed to come to a mutual agreement with Lee Pharma an application was made to the Controller for obtaining a CL.

  • Lee Pharma argued that around 60.1 million people were suffering from type II DM and that even if one million people were prescribed Saxagliptin in one year, then the requisite number of tablets per year would be 365,000,000 but the total number of tablets imported for a year was only 823,855 which is about 0.23% of the total number of tablets for a year. Claiming that there existed 99% shortage of Saxagliptin in the Indian market, the pharmaceutical company argued that reasonable requirements of the public were not satisfied by the Respondent.
  • It was also brought out by the Applicant, Lee Pharma that around 30% of the population in India lives below poverty line and earns less than Rs. 32 and Rs. 47 per day in rural and urban areas respectively and that the cost of one tablet of the patentee’s medicine was around Rs 41 to 29 which was more than their whole day’s earning. Hence, it was the applicant’s contention that Saxagliptin is not available to the general public at a reasonably affordable price.
  • The applicant finally contends that the patentee has failed to manufacture Saxagliptin in India even after the expiry of eight years, thereby satisfying the third condition.

Observations of the Controller

The controller agreed to the fact that Lee Pharma is a “person interested” as per the definition in S. 2(1)(t) and that it had made reasonable efforts to negotiate a license with the patentee but disputed to the fact that it had satisfied the conditions set out in S. 84(1) of the Act.

  • The Controller asserted to the point that not all people who were suffering from Type II DM rely on the medicines prescribed, rather they get into changing their lifestyle or diet or focus more on physical exercises. As there were no reliable data as to how many patients were unable to procure the drug because of its non-availability, the Controller was of the view that the applicant hadn’t satisfied the first of the three conditions – S. 84(1)(a).
  • Analysing the second contention of the Applicant, Controller was of the opinion that the burden of showing that the Respondent’s pricing was unreasonable fell on the Applicant. When other drugs which were used for the treatment of Type II DM, such as Linagliptin, Sitagliptin, Vildagliptin were sold at the same price range (Rs.42 to Rs.58) as that of Saxagliptin, it was the Applicant’s burden to prove that all the drugs were being priced unreasonably which they failed to prove. Hence the second condition – S. 84(1)(b) was held not to be satisfied by the Controller.
  • It is an established rule for the patent holder to prove as to why the patented drug is not manufactured in India. Applying this rule the controller in the present case held that to manufacture a drug in India it is essential there exists a demand for that drug in the Indian market. However the burden is on the applicant to show the demand for the patented drug and the Applicant in the present case failed to prove the demand in the India market and the final condition – S. 84(1)(c) was held not to be satisfied as well.

Conclusion

Compulsory licensing remains present as an intermediate remedy for the abuse or potential abuse of patent rights. There is always an inherent tension present between patent rights and the public benefit and compulsory licensing helps in mediating the conflict. This is merely the third application for a compulsory license claimed in India; the first being one by Natco Pharma for Bayer’s cancer drug Sorafenib and the second by BDR Pharma for Bristol-Myers Squibb’s cancer drug Dasatinib (Sprycel). While the first application was granted, the second and third were rejected by the authority. In this particular case, the Controller has considered a number of factors to decide on this matter and has clearly sketched out the conditions under S. 84(1) on par with the Bayer’s judgement

With the new IPR Policy issued by the Government and the increasing pressure from outside India to display that it has a robust mechanism to protect patent rights in order to ‘Make in India’, the Controller’s rejection couldn’t have come at a better time!

This article has been authored by Jayashri Suresh, an IP Law practitioner.

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