Bayer Fights India's Compulsory Licensing Of Cancer Drug By Claiming It Spent $2.5 Billion Developing It

from the ORLY? dept

Back in March last year, the Indian government announced that it was granting its first compulsory license, for the anti-cancer drug marketed as Nexavar, whose $70,000 per year price-tag put it out of reach of practically everyone in India. Nexavar's manufacturer, the German pharmaceutical giant Bayer, naturally appealed against that decision, and the hearing before the India Intellectual Property Appeals Board (IPAB) has now begun. Jamie Love has provided a useful report on the proceedings; here's his summary of what's at stake: The outcome of this trial, which focuses on the cancer drug Nexavar, is a matter of first impression for the IPAB, and is expected to set precedents on a wide range of issues, including the permissible grounds for granting compulsory licenses, the relationship between the India patent law and the TRIPS Agreement, and the setting of terms and conditions for the compulsory license, including the royalty rates. Clearly, then, this is a crucially important battle for both sides, and Bayer has started throwing around some huge R&D numbers in an attempt to convince the IPAB that it should be allowed to retain its monopoly in India to recoup those costs: Bayer presented a January 9, 2013 affidavit from Harold Dinter which made the claim that from 1999 to 2005 Bayer had spent "2 billion euros (approximately US$ 2.5 billion) in the identification and development of anti-cancer molecules leading to the successful approval of Nexavar in 2005." Dinter did not provide detailed support for the numbers, but said they were based upon Bayer's general R&D outlays for anti-cancer drugs, including but not limited to Nexavar, and that the estimate was supported by a new December 2012 study by Jorge Mestre-Ferrandiz, Jon Sussex and Adrian Towse, published by the Office of Health Economics (OHE). Despite its name, the OHE is not part of the government, but rather a largely industry funded private consulting firm. The study itself was paid for by AztraZeneca. Dinter and Bayer's lawyer also made extensive reference to the work of Joseph DiMasi, an academic who is also a drug company consultant. In other words, it's the usual "don't worry about the details, just take our word for it" lack of transparency that characterizes the entire pharma industry. But this $2.5 billion is insanely high, even for an industry that regularly inflates the outlay on drug development by an order of magnitude. As well as the generic implausibility of such a high figure, Love cites a number of specific reasons why it's extremely unlikely. You can read the details in his post, but here's a key section: Bayer's partner in the development of Nexavar is Onyx Pharmaceuticals. Onyx published annual estimates of its R&D spending on Nexavar.



…



Bayer paid for all research from 1994 to 1999 ($26.1 million), and this included research on several compounds in addition to the one now marketed as sorafenib/Nexavar. From 2000 onward, Bayer and Onyx split the R&D costs 50:50, and Onyx's share of the R&D costs were $134.8 million. The outlays on the entire R&D program that lead to the 2005 approval of Nexavar for Kidney cancer were $26.1 + (134.8 x 2) = $295.7 million. Of the $295.7 million, only a fraction was spent on the development of Nexavar for kidney cancer, and some of that benefited from a 50 percent tax credit under the US Orphan Drug Act.



To the put the entire $295.7 million into perspective, ignoring the tax credits, that represents a little more than one quarter of the current global sales for sorafenib/Nexavar, a product that will maintain its monopoly in most markets through 2020.



$295.7 [million] is also just 11.8 percent of the $2.5 billion estimate that Bayer wants the IPAB to accept as its R&D costs.

No wonder that Bayer was unwilling to explain how it arrived at that extraordinary figure. But it's hard to see how the pharma company expects to win this case citing numbers that are basically an insult to the intelligence of India's experts.

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Filed Under: drugs, india, ipab, lies, nexavar, patents, r&d

Companies: bayer