Monday, April 21, 2008

Roche vs CIPLA: The Rhetoric of Patent Busting

Some of you may be following a recent patent controversy involving Roche, a multinational pharma company and CIPLA, a generic manufacturer from India. CIPLA brazenly defied Roche's patent over an anticancer drug, Tarceva and went ahead and introduced a generic version at 1/3rd the price. Upon being sued, it sought to invalidate the patent i.e. it claimed that the patent ought not have been granted in the first place. CIPLA's counsel, Arun Jaitley argued very persuasively in court that Roche's drug did not meet the requirements of section 3(d), a unique section introduced into India's patent regime in 2005 to prevent a phenomenon widely known as "evergreening".

Under section 3(d), derivatives of existing pharmaceutical substances would not merit patent protection, unless such derivative was more "efficacious" than the earlier existing pharma substance. Readers will recollect that this section was challenged by Novartis as being violative of TRIPS and of the Indian constitution (for those interested, SpicyIP has been tracking this dispute here).

CIPLA also stressed that since the price differential between the patented drug and the generic version sold by CIPLA was extremely high (about 3 times), "public interest" demanded that no injunction be granted in favour of Roche. In a remarkably sophisticated and well researched judgment, Justice S Ravindra Bhat of the Delhi High Court (who was recently elevated to the bench and was deciding an IP matter for the first time) ruled in favour of CIPLA.

Given that patent litigation is still in its infancy in India, and the concerns around patents and public health are substantial, this case is being watched very closely by many around the world. It is very likely to go down in the annals of patent history as an important landmark. What might be particularly interesting for readers on this list is how the judgment refers to the right to access affordable medication as a right to life under Article 21 of the Constitution (though, the judge does not elaborate on this aspect--perhaps owing to the fact that this was only an interim order).

The matter is now under appeal. Unless Roche is able to demonstrate empirically that CIPLA's lower prices for Tarceva (the lung cancer drug in issue) does not really translate to increased access to poor patients, it is difficult to see how Justice Bhat's order will be overturned in appeal. (For those interested in further details, we've been tracking the progress of this case on SpicyIP).

The Indian Express carried a short note of mine on this decision (largely as a response to this earlier piece here. I am grateful to Tarunabh for bringing this earlier piece to my attention). The Economic times also carried a piece of mine, that touched on judge made compulsory licensing norms--a wider policy implication of this judgment. Both news items are reproduced below.


Indian Express Piece: "The Rhetoric of ‘Patent Busting’

Shamnad Basheer

Posted online: Saturday, April 12, 2008 at 0028 hrs IST

"The verdict on one of the most keenly watched patent litigations was finally out last month. In a carefully nuanced and remarkably well-researched judgment, Justice S. Ravindra Bhat of the Delhi High Court refused to injunct Cipla from selling generic versions of a patented anti-cancer drug belonging to Roche. The judgment has received mixed reviews, while innovative pharmaceutical companies see this as “patent busting” of the worst order, public health activists are ecstatic at this clear preference for patients over patents.

To me at least, the judgment appears to strike the right balance between private patent rights and public health imperatives. A careful reading of the 58-page order suggests that the key factors that influenced the judge to decide way he did were: First, Cipla’s drug, Erlocib was being sold at one-third the price of Roche’s patented anti-cancer drug, Tarceva.

Second, Roche was not manufacturing the drug in India, but importing it — causing the judge to worry about the prospects of long term supplies from a multinational corporation operating within India.

Third, Cipla raised very serious doubts about the validity of the patent.

Fourth, Roche’s attorneys were ill prepared and committed a number of lapses. Illustratively, they requested an ex-parte interim injunction from the court without so much as producing a copy of the patent claims. Besides this, as the judge himself points out in his judgment — they failed to raise the issue of “irreparable hardship”, a critical component of the three step injunction test in India.

Apart from the above, an ill reasoned order from the patent office in response to a pre-grant opposition filed by Natco against Roche’s patent application influenced the court. In particular, the court found that the patent office, while granting the patent, wrongly relied on a recently overturned US test that considerably lowered the threshold for patentability. Little wonder then that Roche’s argument that the patent office decision in its favour renders the patent immune from attacks on validity did not sway the court much.

What is most unique about Justice Bhat’s judgment is that it stresses that “public interest” has to be factored in before a court decides to grant a temporary injunction or restraining order against an alleged infringer.

The crux of his judgment appears to be this: At this “interim” stage, one cannot conclusively determine whether or not Roche’s patent is valid. In the light of this uncertainty, the critical factor for consideration is “public interest” — whether or not the grant of an injunction will cause “irreparable hardship” to critically ill lung cancer patients, who may not be able to afford Roche’s monopoly prices. And if the court finally finds in favour of Roche that the patent is a valid one, then Cipla can be made to compensate Roche for all the losses up to that stage. To this extent, the court asked Cipla to maintain a clear account of moneys made from the sales of its drugs.

Given that the validity of the Roche patent is in serious challenge, does the denial of a temporary injunction to the patentee amount to patent busting? Should patent injunctions be granted as a matter of right at this stage? Has India got its policy wrong? We need look no further than the most patent friendly nation on the face of this planet — the US, where the Supreme Court held that the grant of an injunction in patent cases is not a matter of right but a discretionary remedy. And this discretion has to be exercised carefully, taking into account several factors, one of which is “public interest”.

Even as we speak, Roche is asking a US court to do exactly what Cipla had requested Justice Bhat to do — not to grant an injunction on grounds of “public interest”. Effectively Roche’s claim is that, although its anaemia drug, Mircera infringes Amgen’s patented Epogen, there ought to be no injunction on grounds of “public interest” because Mircera is cheaper, requiring less frequent “dosing” and is therefore beneficial to patients. Surely what’s sauce for the goose is sauce for the gander as well!

What remains to be seen is whether future Indian judges will apply the tenets laid down in Justice Bhat’s judgment in an unbiased manner to home grown patentees such as Ranbaxy and Dr Reddy’s. In other words, if the concern is that patients are prejudiced by potentially “invalid” patents and high prices, then the concern ought to equally apply when the patent in question is held by Ranbaxy and not by an MNC.

To conclude, one is not certain at this stage if the Roche patent over Tarceva is a valid one or not. Prior to a final decision on this count, deploying adjectives such as “patent busting” or “patent breaking” to describe the Delhi High Court order smacks of ignorance. If at all anything has been “busted”, it is the notion that patents are sacrosanct monopolies that cannot be derogated from. Most patent scholars today readily agree that patents are nothing more than a statutorily granted right by the state in exchange for the useful disclosure of scientific information. As with other statutory rights, they can be derogated from, when “public interest” so demands. Sophisticated patent policy requires a careful balancing of innovation imperatives through patents against other competing and perhaps more important interests, such as the right to health. And it is this delicate balance that Justice Bhat strives for and achieves in his judgment — a judgment that will no doubt go down in the annals of history as representing a milestone in Indian patent jurisprudence."

The Economic Times Article: Patents vs Patients: Cipla’s victory and the evolution of new “Compulsory Licensing” Norms (Published on March 26, 2008)

"In a major victory for public health advocates the world over, Justice Ravinder Bhat of the Delhi High Court recently ruled that CIPLA could continue producing generic versions of Roche’s patented anticancer drug, Tarceva (Erlotinib). Ignoring Roche’s statutorily granted right and ruling unequivocally in favour of the rights of cancer patients to access cheap medications, this could be India’s most path breaking patent decision till date.

The key issue before the court was whether or not the patentee, Roche was entitled to a temporary injunction restraining CIPLA from selling its version of Erlotinib, under the brand Erlocip.

Echoing the findings in an old British case, American Cyanamid Co vs Ethicon Ltd, the court held that a temporary injunction would issue in favour of Roche, only if it proved the following:
i) That it had a prima facie case
ii) That the “balance of convenience” was in its favour
iii) That it would suffer “irreparable injury”, if CIPLA was not injuncted

On the first condition, the court held that Roche had demonstrated the existent of a prima facie case of infringement, since it held a valid patent that was infringed by CIPLA. However, the court also noted that CIPLA had raised a plausible doubt that the patent was invalid, as it was “obvious” and it did not comply with section 3(d)—a unique section introduced in India’s patent regime to weed out frivolous pharmaceutical patents. Owing to the fact that this was only an interlocutory petition, the court did not delve too deep into the merits of this contention.

The court then looked to the second factor, namely “balance of convenience”. In other words, would the non-grant of an injunction inconvenience Roche more or would its grant inconvenience CIPLA (and the patients) more? Closely related to this analysis is whether or not Roche would suffer irreparable hardship if it did not obtain the injunction.

The court held that Roche would not suffer irreparable hardship from the non grant of an injunction. If Roche’s patent was to be found to be valid at the final stage, it could easily be compensated at that stage for all the losses accruing to it from the non-grant of a temporary injunction. To this extent, the court asked CIPLA to maintain accounts of sales etc.

In supporting CIPLA and holding against Roche, the court revealed a clear preference for patients over patents. It noted in pertinent part that CIPLA’s drug was 3 times cheaper than the Roche version. From this, the court concluded that more patients would be able access the CIPLA version, Erlocib.

Importantly, the court was also very concerned with the fact that Roche was not manufacturing the drug in India. Perhaps the pre 1970 position, where India was literally at the mercy of MNC’s (which more or less controlled drug supplies) might have played out in the mind of the judge.

In what must surely be music to the ears of patients and public health activists, the court elevated the right of a patient to access cheap drugs as a fundamental right to health under Article 21 of the Constitution.

Another major implication of the courts judgment is the introduction of new compulsory licensing norms. Thus far, we’ve known of only “statutorily” created compulsory norms in Chapter VII of the Patents Act. This chapter contains a number of provisions whereby a patentee could be forced by an applicant to license his/her invention on reasonable royalty terms.

Unfortunately, most grounds for compulsory licensing under this chapter kick in only after 3 years have elapsed since the date of grant of patent. For a drug like Tarceva patented only in 2007, CIPLA would have to wait till 2010 before approaching the patent office for a license. Under the Delhi High courts ruling however, CIPLA could cleverly achieve what the statute states without waiting for the 3 year period. All it has to do is to introduce generic versions of a patented drug and then wait to be sued!!

Although this is only a temporary ruling and we still await the final decision (after trial), the logic of Justice Bhat could be transposed to a final decision on the merits. In other words, if the patented drug is priced more than the generic (which is almost always the case) and is not manufactured in India (about 90% of MNC drugs qualify under this), the patentee will not be entitled to an injunction. Rather, damages will be taken as sufficient compensation for the losses to the patentee from infringement by a generic which sells its own cheap version of the generic.

In short, the Delhi High Court has effectively created another stream of “judge made” compulsory licensing. And to this extent, India has once again shown that it will strike a different chord from the rest of the world and evolve new “patient” friendly patent norms, when the situation so demands."
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