The Constitutional Court has allowed compulsory licensing in cases of drug shortages and excessively high prices

On March 12, the Constitutional Court of the Russian Federation announced Ruling No. 13-P following hearings on complaints filed by Vertex Pharmaceuticals Incorporated (USA) and the drug’s distributor, Sanofi Russia JSC. Vertex manufactures the expensive cystic fibrosis treatment Trikafta. In Russia, more than 4,500 people have been diagnosed with this condition.

The court ordered the companies to grant a compulsory license to Medical Research Company (MIK) LLC to sell a more affordable analogue of the drug in Russia.

Legal experts are divided in their opinions: some believe the ruling will open the door to new lawsuits concerning the circulation of patented products, while others do not consider the decision to be precedent-setting.

Several years ago, an Argentine company developed the generic drug Trilexa. Its distributor, MIK LLC, approached Vertex to conclude a licensing agreement in order to organize supplies to Russia. After failing to obtain consent, the company filed a lawsuit seeking the grant of a compulsory license. In support of its claim, MIK cited concerns about the possible partial or complete cessation of supplies of the American drug and the resulting market shortage, as well as its extremely high cost.

The court of first instance rejected MIK’s claim. However, the Court of Appeal overturned that decision and ordered that the license be granted to the applicant. This position was later upheld by the Intellectual Property Rights Court and the Supreme Court of the Russian Federation.

The Constitutional Court noted that “to maintain a balance between private and public interests, it is permissible to limit the rights of patent holders by granting a compulsory license through the courts if the interested party provides evidence that the patent holder has failed to use or has insufficiently used the invention within the prescribed time limits without valid reasons.” At the same time, the court emphasized that compulsory licensing is an exceptional measure and is not intended for widespread application.

Comment by patent attorney Sergey Zuykov:

Patent attorney and managing partner of Zuykov and Partners, Sergey Zuykov, notes that the Constitutional Court’s ruling is a final judicial act and cannot be appealed. Moreover, the conclusions and reasoning set out in the ruling effectively become binding legal norms that must be followed by government authorities and courts. From the moment the ruling was announced, all courts and authorities are obliged to apply its conclusions.

“Courts were waiting for this ruling in some cases concerning compulsory licenses and refrained from issuing decisions. In fact, no one knew what verdict the Constitutional Court would deliver. There was a possibility that it might declare the Civil Code provisions on compulsory licensing unconstitutional, which would have made the granting of such licenses impossible. As of today, any manufacturer - both in the pharmaceutical industry and in other industrial sectors - may request the grant of a compulsory license,” Mr. Zuykov notes.

According to him, more than 50 lawsuits seeking compulsory licenses have been filed in Russia over the past three years; most of them have already been considered and granted. “The key nuance of this ruling is that a compulsory license may be granted not only in the pharmaceutical sector but also in any other field of industry. Russia is already the only country in the world where more than 50 lawsuits for compulsory licenses have been filed and adjudicated. I am confident that many countries will want to study the judicial practice that has developed in Russia regarding compulsory licensing,” says the managing partner of Zuykov and Partners.

Source: Kommersant