Granting of a Patent for limited period of time protects the interests of both the inventor and the society. For the term of Patent, the inventor can enjoy the fruits of his labour and invention. Once the Patent term expires, the general public can use the available information and knowledge to produce the patented invention for the larger good of the society.
Expiring medicine Patents can boost pharmaceutical business and e-commerce as the generic pharmaceutical companies can provide affordable drugs in large quantity. However, policy decisions may prevent this from happening. For instance, recently the United States Food and Drug Administration (U.S. FDA) issued an Import Alert 66-40 titled Detention Without Physical Examination Of Drugs From Firms Which Have Not Met Drug GMPs (PDF). This alert deals with detention without physical examination of drugs from firms which have not met drug good manufacturing practices (GMPs). Many Indian pharmaceutical companies have been listed on this alert and import from them has been banned. In fact, Lupin is recalling 9,210 bottles of Suprax drugs for failure to pass purity test.
There are many more pharmaceutical companies in India that have failed to pass the standards prescribed by U.S. As a result they cannot export their drugs to U.S. even though the drugs are desperately needed in U.S. As per media reports, a gap in U.S. patent law has kept cheap copies of Novartis AG’s heart drug Diovan off the market for 18 months, costing U.S. consumers and insurers as much as $900 million in potential savings.
While the Diovan patent expired in September 2012, the only company allowed to sell copies, Ranbaxy Laboratories Ltd., hasn’t been able to manufacture and market them after four factories it runs in India failed U.S. inspections. The approval process for generic drugs has two steps. While Ranbaxy gained exclusive, legal rights to sell the Diovan copies for six months by being first to apply, they failed to nail down clearance from regulators reviewing the company’s ability to safely and properly make the drug. That’s where the trouble arises: The law doesn’t say what happens if no final approval is given.
Diovan was for several years the best-selling product for Basel, Switzerland-based Novartis, with global sales peaking at $6.05 billion in 2010. Ranbaxy, of Gurgaon, India, first asked for permission to copy the Novartis product in 2007. Ranbaxy failed to win FDA approval to sell the generic of Diovan as a monotherapy, while retaining the right to the six-month exclusivity. Since the clock never started on Ranbaxy’s six-month exclusivity, other copies are blocked.
Ranbaxy planned to manufacture Diovan in its Mohali, Punjab plant. The FDA, though, banned exports to the U.S. from that plant in September 2013. Three other plants have also been banned from selling their products in the U.S. On April 7, Sun Pharmaceutical Industries Ltd. said it had agreed to acquire Ranbaxy from Japan’s Daiichi Sankyo Co. for $3.2 billion ($4 billion including debt). Meanwhile, one rival tried to take away Ranbaxy’s privilege. In October 2012, Mylan Laboratories challenged Ranbaxy’s exclusivity right by suing the FDA on the grounds that the company was unable to obtain approval within the required 30 days after submitting its application.
However, the U.S. District Court in Washington denied the challenge saying Mylan failed to show it suffered “irreparable harm” from Ranbaxy’s right to exclusivity. Mylan didn’t appeal the decision and no other drugmaker has since challenged Ranbaxy’s exclusivity right.