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Mumbai: The country’s competition regulator may examine details of patent settlements being negotiated between foreign branded medicine companies and local generic drug makers as these agreements may restrict the access of cheaper drugs to the sick.

The cases which the Competition Commission of India (CCI) is likely to review include the patent deal between Swiss drug maker F Hoffmann-La Roche Ltd and Cipla Ltd on lung cancer drug erlotinib, and the one between US-drug multinational Merck Sharp and Dohme Corp. (MSD) and India’s Glenmark Pharmaceuticals Ltd on a new diabetes drug called sitagliptin.

The antitrust agency will also investigate the market impact of ex parte injunctions secured by Swiss drug firm Novartis AG and MSD against a dozen local drug makers, blocking them from launching copies of diabetes drugs vildagliptin and sitagliptin, according to two people familiar with the development who declined to be named.

CCI’s decision to review these settlements follows increased regulatory scrutiny of patent settlements between brand owners and generic companies in Western countries. Antitrust laws in those markets are stringent and heavy penalties are being imposed on violators.

To prevent generic drug makers from getting regulatory approval for copies, branded medicine companies often pay generic firms to keep their medicines off the market. Drug companies can generate billions of dollars as long as a drug is under patent protection. Sales of those products fall sharply as soon as generic drug makers introduce copies of the drug. While the settlements may benefit the drug companies involved, patients suffer as access to cheaper medicine is restricted.

In the latest instance of punitive action against drug makers that had entered such agreements, the antitrust arm of the European Commission in July fined French drug maker Les Laboratories Servier and five generic companies including the European subsidiaries of Lupin Ltd and Unichem Laboratories Ltd a total of €425 million, alleging that a patent settlement among them delayed the launch of a copy of hypertension drug perindopril.

There are more companies resorting to patent mediation in India now, although the trend is new to the country, Mint reported on 29 July.

Patent settlements are not illegal. Courts can ask the parties involved to reach a mutual settlement instead of getting stifled in a prolonged judicial process.

The mediation between Cipla and Roche was actually prompted by a decision of the Delhi high court, which has been hearing the patent infringement case filed by Roche after Cipla launched a cheaper copy of the former’s patented cancer drug Tarceva (erlotinib) in the domestic market in 2008. The MSD-Glenmark talks to settle the patent infringement matter on diabetes drugs Januvia and Janumet (sitagliptin brands of MSD) were initiated by the US firm. Glenmark launched generic versions of these brands in India in 2013.

These companies have been fighting their respective patent infringement cases in the Indian courts. An out-of-court settlement could give both sides some respite from the prolonged judicial process involved in patent litigation. It may also impair access to affordable medicines, say legal and industry experts.

“They need to be examined on a case-to-case basis and the terms of the settlement need to be made public. This is because the factors such as an unusually high payout to the generic drug maker in question to stay away from the market may tip the scales in favour of a funding of anti-competitive behaviour," said Shamnad Basheer, a patent law expert and former intellectual property chair at the National University of Juridical Sciences, Kolkata.

Such settlements should also be subject to competition law scrutiny, he added.

“The settlements between patent holders and generic companies generally involves mutually beneficial terms leaving the market and the consumer at a disadvantage," said a partner with a patent law firm in Mumbai.

In this context, CCI’s intervention is important and should ensure that patient access to critical drugs is not compromised, said this consultant, who didn’t want to be identified.

The other critical issue involved in the patent settlements between the companies is the continued lack of clarity on the validity of patents, which were under dispute.

“Given that our patent jurisprudence is only developing now, it is critical that courts adjudicate these cases and outline clear legal propositions on patent validity and infringement," said Basheer.

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