December 12, 2014
In a momentous decision that would have wide-ranging implication for access to medicines, the Supreme Court of India refused to entertain Bayer’s appeal to set aside the compulsory license (CL) on Sorafenib (Nexavar). The Supreme Court’s dismissal of Bayer’s Special Leave Petition against the Bombay High Court’s decision upholding of the CL concludes the legal proceedings on the first ever CL issued in India.
The grant of Compulsory license (CL) to NATCO for the anti-cancer drug – sorafenib tosylate – and the litigation ensuing around it is the first of its kind in India. Sorafenib tosylate is a crucial drug for patients living with kidney and liver cancer. Bayer was selling the product under the brand name Nexavar for Rs. 2,84,000 per patient per month which is unaffordable to most patients in India. On 9 March 2012, the Patent Controller granted a CL to Natco Pharma to market a more affordable generic version of Nexavar at around Rs. 8, 800 per person per year. Bayer unsuccessfully challenged the order before the Intellectual Property Appellate Board (IPAB) and later at the Bombay High Court.
In the order granting the CL, the Patent Controller had noted that as against the demand of 8842 patients in the year 2011, Bayer had supplied the drug to less than 200 patients after more than three years of the grant of the patent. Moreover, Nexavar was exorbitantly priced at Rs. 2,80,000 per month per patient. Bayer’s Patient Access Programme which was only initiated once the CL proceedings were initiated and still only met a fraction of the demand. Lastly, despite having manufacturing facilities in India, Bayer imported the drug from its facilities in other countries, not fulfilling the working requirement under the law. The Patent Controller granted a CL to Natco with royalty rate of 6%. In Appeal before the IPAB the license was upheld, but the royalty rate was increased to 7%. Bayer then approached the Bombay High Court by way of a writ petition alleging that the decision of the IPAB was arbitrary. The Bombay High court dismissed the writ petition upholding the order of the Patent controller and the IPAB.
Appearing for Bayer before the Supreme Court, Mr. Sudhir Chandra, Senior Advocate, submitted that the Bombay High Court in its judgment had made unsustainable findings on several questions of law and fact. He contended that, for instance, while considering whether the reasonable requirements of the public had been met by the patentee under section 84, the Bombay High Court should have taken into account CIPLA’s infringing sales.
Refusing to concur with the submission, the bench comprising Justice Ranjan Gogoi and Justice Rohintan Nariman asked Mr. Chandra to satisfy the court about how the set of facts in the present case warranted interference. The bench enquired as to how many patients in India currently required the drug, responding to which Mr. Anand Grover, Senior Advocate appearing on behalf of Natco answered that in fact more than 17000 patients currently need the drug.
On the challenge to the royalty rate determined, Justice Nariman pointedly enquired why Bayer had not made available the unaudited accounts of the research and development (R&D) expenses to develop the drug which would have been the best evidence to arrive at a reasonable rate of royalty. Mr. Chandra submitted that 98% costs accrue from failed drugs, making it impossible to provide a precise account. Unimpressed, the Bench opined that in absence of any evidence supplied by Bayer, Natco’s affidavit stating that all R&D costs have been recouped within the first year itself, can be taken into account. The Bench also noted that the Bayer failed to supply Nexavar to a significant number of cancer patients require the drug despite its patient access programme.
Concluding that there was no reason to interfere with the order of the Bombay High Court and that the question of law could be adjudicated in future CL cases, the Bench dismissed Bayer’s SLP.
The decision to dismiss the SLP has sent a wave of happiness and celebration amongst patient groups. Mr. Y.K. Sapru, Chairman of Cancer Patients Aid Association (CPAA) said, “We are extremely happy with this decision. It ensures that the cancer patients will continue to get access to this drug at an affordable price. MNC profits should not be allowed at the cost of patient lives.”
The decision is also being welcomed by treatment providers who procure affordable Indian generic medicines to increase access to treatment for their patients. Leena Menghaney, from Medecins Sans Frontieres Access Campaign observed, “We were fully confident that the compulsory license would be upheld by the Indian judiciary. This license is granted to increase access to a more affordable generic version of a medicine and we need many more such decisions in the future with new medicines being patented in India. We will continue to push for use of public health safeguards in the Indian patent law to promote an increased access for patented medicines which are being priced out of reach of patients and treatment providers.”