The Competition Commission of India (CCI), in an order dated March 5, 2013 has dismissed, at the threshold stage, a complaint filed by a public health (HIV) activist against Gilead Inc. alleging that the company was engaged in anti-competitive activities with respect to licensing of its technologies relating to anti-HIV drugs. The activist was represented by Advocates Ms. Savita Singh, Ms. Veena Johari and Ms. Kajal Bhardwaj. The order can be accessed over here.
Complaints before the CCI usually go through a two-stage process. The complaint is first scrutinized by the CCI and if a prima facie case is made out the complaint is referred to the Director General for investigation and notice is then issued to the opposite side. After completion of the D-G’s investigation, both parties present oral arguments before the CCI which then disposes the case on merits. In the present case, the CCI did not even find it necessary to refer the case to the DG or issue notice to Gilead and has instead directly rejected the case.
The three main agreements that were the subject of the proceedings, are as follows:
“a. Voluntary non-exclusive agreements entered into by the OP [Gilead] 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’)” (para 9 of the order)
The first agreement was the famous licence which Gilead had issued to 11 Indian pharmaceutical companies for the manufacture of Tenofovir (TDF) on the assumption that it was going to get a patent for the drug in India. That never happened since the patent office rejected Gilead’s patent application and from what I understand an appeal is pending before the IPAB.
The second agreement was the licence between Gilead and the Medicine Patent Pool (MPP), a new venture backed by UNITAID, which aims at pooling together of resources for a more efficient program to tackle HIV/AIDs. Swaraj had blogged about it over here.
The third agreement was the licence between MPP and Indian pharmaceutical companies, which Swaraj had blogged about over here.
The activist raised several objections against all three licensing agreements which can be read in para 10 of the order. The gist of the challenge was that the licensing agreements would allegedly restrict the supply of AIDs drugs which would make the drugs expensive in India. According to the activists, such agreements were thus in violation of Section 3(1) of the Competition Act which prohibits any persons from entering into production agreements which cause an “appreciable adverse” effect on competition in India. It was also alleged that Section 3(4) would be violated. This provision forbids certain agreements in the “productions chains in different markets” if such agreement causes a likely “appreciable adverse” effect on competition in India.
After hearing the public health activists, the CCI, in an unusual step, convened a meeting with the National AIDS Control Organization (NACO) and the National Institute of Pharmaceutical Research (NIPER).
After being briefed on the state of HIV treatment in India, the CCI rejected the arguments made by the activist community mainly on the rather reasonable ground that the Indian market had diverse competition amongst generic pharmaceutical companies. In pertinent part it points out that there were over 21 different generic drug manufacturers in just the HIV/ARV space and that combined they produced atleast 150 different brands.
Most importantly, the CCI pointed out that Gilead’s drugs constituted only a small portion of the market since several generic manufacturers in India were manufacturing the drugs in question without taking any licences from Gilead. Even for the companies taking licences the CCI pointed out that such licences contributed to a technology transfer which would help the companies in question.
I have not seen the complaint filed by the activists but going by the CCI’s order, I’m having a difficult time understanding why exactly they even filed this case.
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