In India, copycat drug firms get off lightly compared with US

Written by Jayati Ghose | New Delhi | Updated: Jun 18 2013, 09:05am hrs
Indian drug major Sun Pharmaceutical Industries last week agreed to pay $550 million to New York-based Pfizer as part of an out-of-court settlement of the Protonix patent infringement lawsuit. Assuming the out-of-court settlement had not taken place and Sun had lost the case, it may have had to shell out three times the damages demanded by Pfizer, a provision under US laws. Pfizer had wanted Sun Pharma to pay $960 million as damages, saying it was entitled to a share of the revenue earned from the generic drug as well as compensation for sales it lost to the copycat. Sun was also asked by the court to give an account of the production and sales of the generic product.

Indian laws too have similar provisions for calculating and charging damages from generic drug makers, in the event a firm loses the patent infringement case. But there is no concept of triple damages. Also, compensation is limited to the revenues earned by the copycat drug maker and does not extend to the sales lost due to the generic eating into the branded firms market share.

If the patent holder can prove that a generic company wilfully infringed upon a valid patent, damages can be tripled under US laws. In India, damages in most cases would be limited to the gains made by the generic drug maker, said Manisha Singh, intellectual property law expert and partner at Corporate Law Group.

Take the case filed by the US-based MSD against Glenmark for launching generic versions of anti-diabetes products sold by the US company in India.A single-judge bench, in an interim order, directed the Indian drug maker to diligently maintain accounts of the manufacturing/production and sales of the infringing products and to file the same before it.

While Glenmark is confident that its products are different from MSDs patented drugs, lawyers said if it is unable to prove the facts, it would be liable to pay a penalty under Indian rules since it launched the product at-risk.

All generic products launched in India are at-risk, said Pratibha M Singh, a senior IP lawyer. In the event of litigation between the branded and generic drug firms, if the patent is upheld to be valid in court, the generic drug maker is liable to pay damages. The upside of at-risk launches is that the generic company can make big profits immediately before other firms enter the market.

Even US laws allow at-risk launch of generic versions of patented drugs. Sun Pharmas launch of Pfizers Protonix in US was an at-risk launch. "An at-risk launch is when a generic drug maker launches the generic product before resolving the outstanding patent litigation filed against it. The at-risk launch generally takes place after the expiry of the 30-month stay granted by the USFDA under the Hatch-Waxman Act the provision does not exist under the Indian laws," said Singh.

Both US and Indian rules also stipulate that the generic player can either challenge the validity of the patent or state that its product does not infringe upon the patent, in which case the innovator company can file an infringement case against the generic firm.

However, while in US the generic players has to inform the innovator company about their plans to launch copycat versions, in India it becomes the prerogative of the patent holder to get information on any generic players seeking marketing approvals.

We already have a system wherein the Central Drugs Standard Control Organisation (CDSCO) puts on its website all applications for marketing approvals. Patent holders can certainly keep a tab on this website, said DG Shah, secretary general, Indian Pharmaceutical Alliance.

Moreover, in India the innovator has to wait till the launch of the generic drug to file an infringement suit since grant of marketing approval doesnt amount to patent infringement under Indias Drugs and Cosmetics Act. Under US laws, the innovator company gets a 45-day window to sue the generic player for infringement under the Hatch-Waxman Act, after being alerted of any abbreviated new drug application filing with the USFDA.