By Kevin E. Noonan —

The latest skirmish in the struggle between innovator pharmaceutical companies (mostly in the Western world) and developing world populations is being played out in India.  The outcome will depend on how the Delhi High Court interprets provisions of Indian patent law enacted to implement India’s compliance with provisions of the international Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement on intellectual property.

Roche is the Western innovator pharmaceutical company, Cipla is the Indian generic drug company (the largest) and the drug is erlotinib (trade name, Tarceva), a drug used to treat lung cancer.  Roche has an Indian patent on the drug, obtained under patent laws revised in 1995 upon India’s accession to the TRIPS agreement.  Cipla has ignored the patent and is producing and selling erlotinib (under the name Erlocip) in India, the first time this kind of blatant infringement has happened.  Roche has asked the High Court for an injunction to prevent Cipla from continuing to sell its infringing form of the drug.

Countervailing Indian patent law are the economic realities:  Roche’s drug costs $125/tablet (about $45,000 US per year), while Cipla’s drug costs much less ($42/tablet).  Cipla’s position is that Roche’s patent is invalid; the application was originally filed in 1995, and while patents filed in 1995 or later were deemed to be valid by operation of Indian law in 2005, Cipla contends that only Indian patents filed in 1996 or later are valid because there was a one-year grace period to implement TRIPS, according to Yusuf K. Hamied (at right), Cipla’s chairman.

Tarceva is also under attack by another Indian generic drug manufacturer, Natco Pharma, which is seeking a compulsory license under Indian patent law to produce its generic version of the drug.  Natco’s application is for permission to export 30,000 tablets of the drug to Nepal; for the privilege Natco is willing to pay Roche a 5% royalty.  However, such a compulsory license, while permissible under Indian law, cannot be granted until three years after the innovator is granted an Indian patent (and thus should not be available until July 2010).

This is not the first time Natco has challenged a Western drug company with an Indian patent on a pharmaceutical product:  Natco was the company that challenged Novartis over its Gleevec patent, and won.

The issue, of course, is cost, and the political pressure on governments in developing countries like India make it unlikely that such governments will be able to resist pressure from their own citizens in favor of multinational drug companies like Roche.  In view of modifications to the TRIPS agreement, most notably the Doha declaration, such governments can effectively eat their cake and have it too, since Doha and other TRIPS provisions have created "loopholes" in intellectual property protection for medical emergencies and life-saving drugs (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries").  While initially confined to anti-AIDS drugs, the scope of how these provisions are being applied has been expanded to include other drugs by countries like Thailand, who last year included Plavix® as one of the drugs granted a compulsory license by its government to (foreign) generic manufacturers.

Drug prices being the key motivator for governments in the developing world to grant such compulsory licenses, it would seem prudent for companies to lower their own prices and thus blunt if not forestall the generic companies’ justifications for government action.  While this has happened sporadically in the past, there has been no coordinated effort by Western drug companies to develop a strategy around drug pricing in the developing world to address the compulsory licensing issue.  Actions such as the ones contemplated in India and elsewhere make it apparent that such a coordinated strategy is necessary if innovator drug companies are not to be left with none of the advantages that the TRIPS agreement was intended to have for their industry.

For information regarding this and other related topics, please see:

• "Novartis to Supply Cancer Drug to Thai Patients," February 5, 2008
• "Neocolonialism in the Current Global Drug Pricing Regime?" August 19, 2007
• "More on the Global Drug Patenting Crisis," August 14, 2007
• "EU Trade Commissioner Sends Warning Letter to Thailand," August 13, 2007
• "Trying to Find a Solution to the Global Drug Pricing Crisis," July 16, 2007
• "Pharma Sanity Lacks Global Reach," July 13, 2007
• "Brasil Prevails in Dispute with Abbott over AIDS Drug Pricing," July 9, 2007
• "Africa (Still) Depending on the Kindness of Strangers in Anti-AIDS Drug Pricing," May 29, 2007
• "U.S. Trade Policy Becoming Less Pharma-Friendly," May 18, 2007
• "The "Unfairness" of World Intellectual Property Protection According to The New Yorker," May 17, 2007
• "Worldwide Drug Pricing Regime in Chaos," May 9, 2007
• "Not Getting It about Patented Drug Prices at The Wall Street Journal," May 6, 2007
• "A Modest Proposal Regarding Drug Pricing in Developing Countries," May 2, 2007
• "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries," May 1, 2007
• "Abbott Agrees to Offer AIDS Drug at Reduced Price," April 12, 2007
• "No New Abbott Medicines for Thailand," March 14, 2007
• "More Compulsory Licensing in Thailand," February 1, 2007