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

Jun 18 2013, 03:35 IST
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SummaryIndian 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.

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 firm’s 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 MSD’s 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.

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