Much ado on basics of drug policy

Cipla arm-flexing with US university underscores validity concerns on patent issues.

The legal notice that Indian pharma major Cipla says it sent George Washington University Law School raises issues that go to the heart of patent policy on drugs.

Cipla stated earlier this month that it had sent a notice to GW Law, as the Washington, DC-based university is known, for hosting a symposium in India this February where Gilead Sciences, a US pharma company, made a presentation on its HIV drug, tenofovir disoproxil fumarate, or TDF, which it sells under the brand name Viread.

Cipla demanded an apology from the university for providing Gilead a platform for its presentation. It said this was an attempt to influence the judicial process because Gilead’s appeal for a patent on Viread was pending in India.

When asked whether GWU had received Cipla’s notice, and how it would respond, Frederick M Lawrence, Dean of GW Law, would only say: “We have reviewed Cipla's concerns and were surprised to learn of their allegations against the University and its Law School. The academic symposium in question has been held annually for the last seven years, and this year included listed organisers such as the Confederation of Indian Industry and the Government of India’s Department of Industrial Policy & Promotion. As one of several organisers, GW Law provided a forum for the expression of varying viewpoints and perspectives.”

The Foster City, California-based Gilead Sciences says it’s surprised by Cipla’s move. “Although”, adds Gregg H Alton, Gilead’s executive vice-president, “Cipla has been pretty vocal on this issue, so we probably shouldn’t be.”

Gilead is waiting for a decision from India’s Intellectual Property Appellate Board on its appeal, after the Indian Patent Office rejected the company’s application for Viread in August 2009. While there’s no date set for a hearing – “end of summer or early fall” is Alton’s best guess – Gilead and Cipla have a lot riding on the decision.

“Viread is the product responsible for the success of Gilead,” says Alton. Of Gilead’s annual revenues of $7.5 billion, nearly 80 per cent comes from sales of its HIV drugs – combinations of Viread with other formulations.

India’s contribution to this is negligible at present – around $2 million a year – through royalty payments from Indian companies that have signed licensing deals with Gilead to make generic versions of TDF. Although Gilead’s patent appeal is pending, licensees like Matrix Laboratories already pay the US firm a five per cent royalty on their sales of generic TDF. But, Alton says Gilead needs to patent TDF in India, since the licensing deals are based on the expectation that the patent would be approved, and they allow Gilead to control where the licensees can sell TDF.

The patent will also create a level-playing field for Indian companies making TDF, argues Gilead, since its licensees have to pay the five royalty and Cipla does not.

The stakes for Cipla are equally high. It was already making TDF, the only Indian company to do so, before Gilead offered its licensing deals to Indian companies. Since some of the licensees began to make TDF, the price of the generic product in India has dropped sharply. Cipla was one of the parties that opposed Gilead’s attempt to patent TDF in India.

The dispute between Cipla and Gilead is viewed as a proxy for the debate on India’s patent process. “Cipla is fighting a battle that would have made sense 30 years ago, not when the Indian pharma industry is getting closer to developing new drugs and would need patent protection for its own products,” says Roger Bate, a health policy expert and Legatum Fellow at the American Enterprise Institute in Washington, DC.

Bate believes Gilead’s licensing model is a good example of profitable cooperation between developed and developing markets. He points out, however, that Gilead’s approach also makes some Western pharma companies uneasy, as it offers technology transfer and other advantages with its licensing deals, which could enable the licensees to compete more strongly in developed markets once the patent for a drug expires.

Gilead’s Alton says working with Indian pharma companies is important for his company’s future. But, with Gilead having faced three rejections for patents, he admits, “It makes us nervous about our ability to patent products in India.”