TMI Blog2013 (5) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Act came into force on this date, whereas LA-2006 was signed prior in time. Therefore, the agreement between the OP and the Indian pharmaceutical companies could not be examined for the agreement was entered into much prior to the enforcement of the provisions of the Act. The second agreement was between the OP and MPP i.e. LA-2011 which allowed MPP to sub-license the manufacture and sale of the drugs to Indian pharmaceutical companies. This agreement will not fall within the ambit of section 3(4) of the Act since MPP is nowhere in the production chain. The last agreement i.e. the tripartite agreement falls within the contours of section 3(4) of the Act vis-à-vis the OP and the Indian pharmaceutical companies who are placed in different stages of the production chain and therefore, appreciable adverse effect on competition needs to be examined keeping in view the factors in section 19(3) of the Act. The explanation to section 4 of the Act defines dominant position to mean a position of strength enjoyed by an enterprise in the relevant market in India which enables it to operate independent of competitive forces prevailing in the relevant market or affect its comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... largest number of people living with HIV/AIDS. 4. The treatment for HIV infection is known as Antiretroviral Therapy (ART) and is to be taken life-long. The treatment prolongs and extends the life of the person affected by 20 to 25 years and improves the quality of life. The treatment is segmented into three levels: first line, second line and third line. The first line treatment is given to a person whose CD4 count reaches about 300-350 and/ or when there are opportunistic infections. The second line treatment is given to those on whom the first line treatment does not show desired results or who have developed resistance to the first line treatment. The World Health Organisation (WHO) has set guidelines for the first line, second line and third line ARV treatment. TDF has been recommended by the WHO as the first line treatment and as replacement of another first line ARV medicine stavudine. Another first line ARV medicine is FTC. TDF is also used for second line treatment. 5. In 2006, the OP entered into non-exclusive voluntary license agreements ('LA- 2006') with about 10 companies including Medchem, Alkem, Aurbindo, Hetero, Matrix etc. for production and distribution of TDF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act: (a) Voluntary non-exclusive agreements entered into by the OP directly with Indian Pharmaceutical companies since 2006 for production and distribution of TDF and FTC medicines and their combinations. (b) Licence agreement of the OP with MPP which allowed MPP to have sub-licences with Indian pharmaceutical companies. (c) The sub-license tripartite agreement among the OP, MPP and the Indian pharmaceutical companies. (all three agreements collectively referred to as 'license agreements') 10. Referring to various clauses of the license agreements, the informant had alleged inter alia as under: (a) The license agreements limited the production and supply as they restricted the purchase and sale of API only from the OP or the OP approved licensees. (b) Restrictions on purchase of API also controlled price of API which could make production of drugs expensive and unaffordable. The license agreements also restricted new combinations of the drugs using same API, as the licenses were for fixed dosages and fixed combinations. (c) The said license agreements were among OP, MPP and Indian Pharmaceutical companies so that the OP could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian pharmaceutical companies. (m) The license agreements provided that royalty be paid and continued to be paid even though there was no patent granted on the drugs. The royalty was to be paid by Indian pharmaceutical companies to the OP and it would pay a fixed amount to MPP for tripartite agreement. The payment of royalty where there was no product patent in India on the drugs was alleged to be unreasonable. (n) The license agreements also restricted the use of drugs only for HIV and in the case of TDF for hepatitis-B also. Hence, if there was a new use of the known medicine, it could not be sold or produced by the licensee for such new use. (o) API license was bundled with the product as such a generic manufacturer would be unable to produce a TDF product under the license using API produced by entities not licensed by the OP. 11. The informant inter alia prayed that the inquiry be conducted into the non-exclusive voluntary license agreements entered into by the OP with Indian pharmaceutical companies since 2006 till date; the agreement with MPP and the tripartite agreement among the OP, MPP and Indian pharmaceutical companies for contravention of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the market was experiencing constant growth of approximately 12% over the last three years. 15. It was also informed that the following patent applications of different companies were rejected by the Indian Patent office: (a) Gilead Sciences (tenofovir - can be used as both first line and second line treatment); (b) Tibotec pharmaceuticals (darunavir - second line treatment drug) (rejected in September 2009). (c) Bristol-Myers Squibb (atazanavir bisulphate); (d) Abbott (lopinavir/ritonavir) (rejected in January 2011). 16. After considering the information available and the submissions of the counsel for the informant, application of sections 3 and 4 of the Act was examined in context of the available facts. Section 3 (1) of the Act inter alia provides that no enterprise or association of enterprise etc. can enter into an agreement in respect of production, supply, distribution etc. or provision of services, which causes or is likely to cause an appreciable adverse effect on competition in India. 17. Sub-section (4) of section 3 of the Act inter alia provides that any agreement amongst enterprises or persons at different stages or levels of produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of technical, scientific and economic development by means of production or distribution of goods or provision of services." 19. HIV treatment was beyond the reach of common man even in highly advanced countries, since the cost of annual HIV treatment was exorbitant. As HIV was spreading very fast, US President's Emergency Plan for AIDS Relief (PEPFAR) and Clinton Foundation, Bill and Melinda Gate Foundation came together. With the intervention of these organizations and due to intervention of Medicine Patent Pool, the companies having patents over the HIV treatment medicines were compelled to share their technology and to reduce the price. Cipla had taken the lead and announced in March, 2001 to cut the price of most profitable ARV drugs from $11000 per patient per year to $ 350 per patient per year. Cipla nearly toppled the original manufacturers, who had monopolized ARV drug market. With the advent of time, all other companies were forced to reduce the price and presently the cost of one day's drug per patient is hardly Rs.10-15 in India. Although the originator companies for ARV drugs had held this market, but after Cipla announced the manufacture of generic version of AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drugs. In 2006, India accounted for more than 80% of the donor funded developing countries market. In 2008, India accounted for 87% of ARV purchase volume throughout the donor funded developing countries market. The proportion of ARVs produced by Indian manufacturers is even higher within certain market niches. In 2008, India produced generic drugs accounted for 91% of paediatric ARV volume and 89% of adult NRTI (Nucleoside Reverse Transcriptase Inhibitors) and NNRTI (Non Nucleoside Reverse Transcriptase Inhibitors) purchases. 22. Although, in India about 16 lakh people are considered HIV affected but around only 5,00,000 people are taking treatment under NACO Programme, where treatment is provided free of cost. A very small portion of the patients suffering from HIV go to private practitioners. Even the private practitioners may prescribe either the generic version of ARV or the patented version of the drugs. Therefore, the market for patented drugs for HIV treatment is negligible as compared to the market for generic formulations as approved by WHO. There are 21 companies manufacturing 152 brands of ARV generic drugs in India. These pharmaceutical companies were getting intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by more than 20 companies in India. The specific end use for which ARV drugs are manufactured in India (mostly generic form) includes not only the five drugs named by the informant but also the other drugs approved by WHO and used for treating HIV/AIDS. These drugs can be interchanged or substituted with each other and can be used in different combinations for treating HIV/ AIDS. Therefore, the relevant product market in the present matter was the production/ manufacture of ARV drugs. The relevant geographic market for our consideration has to be whole of India since the conditions were homogenous throughout the country. Thus, the relevant market under section 2(r) of the Act was the production/ manufacture of ARV drugs in India. 25. The explanation to section 4 of the Act defines dominant position to mean a position of strength enjoyed by an enterprise in the relevant market in India which enables it to operate independent of competitive forces prevailing in the relevant market or affect its competitors or consumers or the relevant market in its favour. On examining the dominant position of the OP, it was seen that the OP had no legal existence in India and did not engage in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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