LEE PHARMA vs. ASTRAZENECA AB[26] 

​

– APPLICATION FOR COMPULSORY LICENCE REJECTED

​

In 2015, Lee Pharma, a Hyderabad based Indian pharmaceutical company, filed an application for compulsory licence under Section 84(1) of the Act, for the patent covering AstraZeneca's diabetes management drug ‘Saxagliptin’ [bearing Indian patent number 206543]. Said patent, titled “A cyclopropyl-fused pyrrolidine-based compound”, was granted to Bristol-Myers Squibb Company (BMS) and was assigned to AstraZeneca AB.

 

Lee Pharma [hereinafter referred to as the Applicant] attempted to establish that their negotiations for a voluntary licence with AstraZeneca [hereinafter referred to as the Assignee] were not rewarding as they did not receive any response from the latter within a reasonable period. The grounds alleged by Lee Pharma were that:

 

• The Patentee has failed to meet the reasonable requirements of the public,

• The patented invention is not available to the public at a reasonably affordable price, and

• The patented invention is not worked in India.

 

Person interested -

​

Based on the submissions made by the Applicant, the IPO noted that it was prima facie borne out that the Lee Pharma was a person interested and had the capacity to undertake the risk in providing the capital and working the invention, if the application for a compulsory licence were to be granted.

​

Applicant’s efforts to obtain a voluntary licence –

 

Further, with respect to the Applicant’s efforts to procure a licence, the Controller took note of the communication between the Applicant and the Assignee and observed that over a year had passed in the process of the Applicant’s attempt to obtain a licence and thus held that the Applicant has made efforts to obtain a licence from the Assignee on mutually agreeable terms.

 

The IPO took a pro-patent stand and laid down strict tests for the Applicant with respect to all allegations including but not limited to the alleged reasonable requirement of the public and unreasonable pricing of said drug. The IPO noted that the Applicant failed to demonstrate and establish concretely its allegations and thus, rejected all grounds raised by the Applicant and refused the application for Compulsory licence.

 

A brief discussion of the IPO’s observation and order in the matter follows.

 

​

Section 84(1)(a) of the Act –

 

While considering the Applicant’s assertion under Section 84(1)(a) of the Act, the Controller placed reliance on the Hon’ble Bombay High Court’s decision in the matter of Bayer Corporation vs. Union of India & Ors.[27], and noted the ruling of the Hon’ble Court that the reasonable requirement of the public has to be considered by the authorities in the context of number of patients requiring the patented drug. The Controller observed that in the present application, the Applicant has not shown what is the reasonable requirement of the public with respect to the patented drug in India in the context of number of Type-II DM patients requiring the patented drug.

​

​

Further, the Controller observed that the Applicant also failed to demonstrate the comparative requirement of the patented drug vis-à-vis other drugs which were also Dipeptidyl Peptidase-4 [DPP-4] inhibitors, which are required for the treatment of Type-II DM and are available in the Indian market so that the reasonable requirements of the public in respect of the patented drug could be arrived. Furthermore, the Controller observed and noted the failure of the Applicant to submit any authentic data/ statistics on the patent drug’s prescription by the doctors in India over the other DPP-4 inhibitors. In fact, the Controller noted that the patented drug was listed as an Essential Medicine in the Essential Medicines List of the Govt. of NCT of Delhi for the treatment of Type-II DM.

 

The Controller noted that the calculations submitted by the Applicant to assert that the reasonable requirement of the public were not met by the Assignee, were mere assumptions and conjecture and did not arise out of authentic data/ statistics and thus, such assumptions were not sufficient and could not form the basis to prove the Applicant’s assertion.

 

Additionally, while discussing the veracity and admissibility of the data submitted by the Applicant in the above regard, the Controller noted that evaluation should be done only for the patented invention on the basis of the statutory provisions of the Act and in view of the precedents, and on no other grounds. Such evaluation should not include any third party or any other product or patent.

 

Accordingly, the Controller held that a prima facie case has not been made out by the Applicant to the effect that the reasonable requirements of the public with respect to the patented invention were not satisfied and thus, no case was made out in terms of Section 84(1)(a) of the Act.

 

​

Section 84(1)(b) of the Act –

​

In Bayer Corporation vs. Union of India & Ors.[28], the Hon’ble Bombay High Court held “We are of the view that the Act itself does not bestow any powers of investigations with regard to the reasonably affordable price and therefore, the authorities do not have the where withal/personnel to carry out the above exercise. Thus, the same has to be arrived at on the basis of the evidence led by the parties before it of their respective prices…”.

 

The Controller took note of the facts as stated/ assumed by the Applicant and observed that prices of the DPP-4 inhibitors in the Indian market are at par with the price of the patented drug of the Assignee, with the only exception of one such drug having a price slightly lower than that of the patented drug. The Controller clarified in his order that the observation relating to the prices was made on the basis of the per day requirements of the medicines presented in the Applicant’s submissions.

 

It is important to note that the Controller in his order specifically pointed out that the Applicant in their application for grant of compulsory licence had proposed its own selling price in a range [in the range of INR 27 – 32 per tablet] similar to that of the price of the patented drug being sold by the Assignee. Though the Applicant submitted a revised selling price [in the range of INR 11 – 16 per tablet] and the same was considered by the Controller, it was also noted that the Applicant was unable to provide any details whatsoever when asked by the Controller that ‘how many poor people in India were prescribed the patented drug but couldn’t buy it because of the affordability issue’.

 

Based on the data provided by the Applicant, the Controller observed that it was difficult for him to infer that the patented drug was the only option for patients in India and was not made available to the general public at a reasonably affordable price.

​

It is imperative to note herein that it is sufficiently clarified by the Controller via his order that the burden of proof for substantiating the assertions under Section 84(1)(b) of the Act and submitting concrete, clear and authentic evidence were on the Applicant in order to enable the Controller to determine the question of the availability and affordability of the patented drug. In the absence thereof, the Controller held that the Applicant had failed to prima facie show that the patented invention was not available to the public at a reasonably affordable price, and thus, no case was made out in terms of Section 84(1)(b) of the Act.

 

​

Section 84(1)(c) of the Act –

 

The Applicant submitted that despite the lapse of a long period of about 8 years from the date of the grant, the Assignee has not taken adequate steps to manufacture the patented drug and make full use of the invention in India to an adequate extent that is reasonably practicable. Further, the Applicant submitted that the working of the patented product in the country is hindered by the importation from abroad.

 

To this regard, the Controller once again placed reliance on the judgement of the Hon’ble Bombay High Court in Bayer Corporation vs. Union of India & Ors.[29], and noted that it is clearly borne out of the above-said judgement that, to manufacture in India is not a necessary pre-condition in all cases to establish patent’s working in India. However, it is pertinent to note that the Controller took notice of the requirement imposed on the patent holder to establish the reasons which make it impossible/ prohibitive to manufacture the patented drug in India, particularly when the patent holder has manufacturing facilities within India.

 

The Controller focused and allocated the burden on the Applicant to clearly establish/ fix the exact quantitative requirement of the patented drug in terms of number of patients requiring it or whether it is in shortage by way of authentic data, report, evidence or comparative study. In light of the Applicant’s failure to do so, the Controller held that it is difficult to conclude whether manufacturing in India is necessary or not.

 

Another important aspect of the Controller’s judgement in this regard is the inter-relationship identified and explained by the Controller between the three sub-sections/ grounds under Section 84(1) of the Act. The Controller held that, “although each ground under Section 84(1) is independently provided in the Act, the Applicant’s failure to prima facie make out any of the other two grounds has a consequential implication on this ground of manufacturing in India because whether the patented invention is required to be worked in the territory of India would be decided on the basis of its reasonable requirements at affordable price in India”. The Controller thus held that the other two grounds had not been proved by the Applicant. Further, no evidence had been produced by the Applicant that led to pointing any shortage of the patented drug in India because of its importation only. Furthermore, the Controller held that the total volume requirement vis-à-vis quantity imported and availability at reasonable price shall only justify the manufacturing as a necessary pre-condition for patent being worked in India.    

 

Accordingly, the Controller held that the Applicant had failed to establish that the patented invention is not worked in the territory of India and thus, no case was made out with respect to Section 84(1)(c) of the Act.

 

Since the Applicant was unable to concretely establish any of the grounds raised under Section 84(1) of the Act, the application for compulsory licence filed by Lee Pharma was denied by the IPO.

​

The IPO in its immaculate orders in matters of application for compulsory licences, has repeatedly and beyond any doubt clarified that an application under Section 84 of the Act is a last resort and must not be taken undue advantage of, by Applicants.

​

The IPO has consistently considered the conduct of the Applicant as relevant and has upheld the rights of the Patentees in matters where the Applicant’s efforts for obtaining a voluntary license have fallen short.

​

The above orders come as a sense of relief for Patentees and a caution notice for Applicants failing to fulfill their obligations under the relevant provisions of the Act.

​

------------------------

​

[26] C.L.A. No. 1 OF 2015

 

[27] Writ Petition no. 1323 of 2013

​

[28] Writ Petition no. 1323 of 2013

 

[29] Writ Petition no. 1323 of 2013

​

​

​

The article was originally published on Lexology on August 20, 2019, and can be accessed here.

​​

All product and company names are trademarks™ or registered® trademarks of their respective holders. The use of them does not imply any affiliation with or endorsement by them.

​