Impact of patent linkage on the healthcare industry

By Dr Rachna Bharadwaj, Krishna & Saurastri Associates
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The introduction of product patents for pharmaceutical products post 2005 had a tremendous impact on India’s healthcare industry. Previously, the generics industry flourished and drugs were cheaper. The other factor impacting the healthcare industry is patent linkage, which delays the entry of generic drugs in the market. India’s Supreme Court, in a landmark judgment in December 2010, disallowed patent linkages, upholding Delhi High Court’s rejection of Bayer’s petition seeking patent linkage in India for its anticancer drug Nexaver (sorafenib tosylate).

Rachna Bharadwaj
Rachna Bharadwaj

Patent linkage is a system linking drug marketing approval to the patent status of the originator’s product, denying marketing approval to a generic version of a patented drug manufactured by a non-patentee prior to the expiration of the patent term, unless consented to by the patent owner.

Compulsory licensing and drug pricing of patented drugs could also impact access to healthcare. In a recent development the Intellectual Property Appellate Board (IPAB) passed an order on 4 March deciding on royalty to be granted by Natco to Bayer in relation to a compulsory licence. It will be interesting to see if the question of whether the IPAB overstepped its jurisdiction comes up when the case is heard in Bombay High Court.

Situation in US and EU

Some member states introduced patent linkage by a combined reading of article 28.1(a) and article 39.3 of the TRIPS (trade-related aspects of intellectual property rights) agreement. This requires a generics manufacturer to prove to the drug regulator that the drug for which it seeks market authorization is not covered by a valid patent, and prevents market approval for a drug while the original version of that drug is still under patent, unless by licence or assignment.

In the US, under what is known as the Hatch-Waxman Act (1984), the Food and Drug Administration provides marketing approval for pharmaceutical products. This act allows for speedier introduction of generic competition in exchange for limited periods of protection, increased rights for drug companies to recoup patent terms that have been shortened by clinical trials and regulatory delays, and a linkage system conditionally allowing registration of generic equivalents in the absence of patent claims.

In contrast, the European Union does not have a patent linkage system. A generics manufacturer can conduct testing and pre-registration activities during an eight-year exclusivity period and apply for marketing approval after completion of this period.

Situation in India

In India, the Drug Controller General of India (DCGI) gives marketing approval to drugs based on safety, efficacy and clinical trial data. The requirement of stating the patent status in form 44 is for the purpose of conducting bioequivalence studies. The DCGI is not required to look into patent validity.

In 2008 Bayer filed a writ petition against the DCGI and Cipla, stating that the DCGI had to consider the patent status of sorafenib tosylate before giving marketing approval to generic versions. The judgment of Delhi High Court in this case elucidates India’s position on patent linkage.

Landmark case

Bayer based its arguments on section 2 of the Drugs and Cosmetics Act, 1940, which states that the act is in addition to and not in derogation of any “law for the time being in force”, and section 48 of the Patents Act, 1970, which it interpreted as being the “law for the time being in force”. Bayer contended that these two sections, read together, allowed for patent linkage and imposed a duty on the DCGI to look into the patent issue prior to granting marketing approval to drugs. This would exceed the statutory powers of the DCGI under the Drugs and Cosmetics Act.

Cipla rejected Bayer’s claim, arguing that the DCGI’s approval to Cipla on the basis of safety and efficacy could not be interpreted as infringement of Bayer’s patented product.

Delhi High Court rejected Bayer’s arguments, holding that no patent linkage regimen could be read into the existing legal provisions. The court observed that the Drugs and Cosmetics Act was a public regulatory measure for ensuring safety and efficacy of drugs, while the Patents Act provided private monopoly rights in favour of the inventor. The controller of patents evaluates the patentability of a product or process based on novelty and inventive step, and the DCGI grants market approval of drugs on the basis of safety and efficacy.

The court further observed that by establishing or decreeing a patent linkage as desired by Bayer, the court would not only make a policy choice, avoided by the parliament, but would overstep the interpretive boundaries.

The Supreme Court upheld Delhi High Court’s judgment.

Experts believe that if patent linkage is allowed, it would affect the early entry of generic medication into the market, impacting access to drugs. In India patent linkage is now a settled issue, disallowing patent linkage.

Dr Rachna Bharadwaj is an associate at Krishna & Saurastri Associates and an advocate registered with the Bar Council of India.

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