DECISION NO. 65 JUNE 29, 1984 · PDF fileDECISION NO. 65 JUNE 29, ... 1953, and Head of....

DECISION NO . 65 JUNE 29, 1984 428

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Republic of the PhilippinesMinistry of Trade and Industry

PHILIPPINE PATENT OFFICF,403 Midland Building

Buendia Ext ., Makati, MM .

UNITED LAAORATOR•IF,.R, INC ., ) INTER PARTES CASE NO . 1627Petitioner ...

- versus -

JOSEPHUS L . H . VAN GELDER,LEOPOLD F . C . ROEVENS andALFONS H . M . RAEYMAEKERS,assignors to Jansse nPharmaceutica, N .V .,

PETITION FOR COMPULSORYLICENSING

Letters Patent No . 10710Issued : August 24, 197 7

) Patentees : L .H . van Gelder,et al ., assignors toJanssen Pharmaceu-

ticals N .V .) For : BENZIMIDAZOLE

CARBAMATE S

) DECISION NO .-84-65 (TM )

Respondents-Registrants .x ------------------------- x

n E C 1 8 r o M

June 29, 198 4

This pertains to a Petition for Compulsory Licensingfiled by the herein Petitioner, United Laboratories, Inc .,a domestic corporation organized and existing under thelaws of the Philippines, holding offices at 66 UnitedStreet, Mandaluyong, Metro Manila, directed against LettersPatent No . 10710 granted on August 24, 1977 for "Benzimi-dazole Carbamates", an invention of Josephus L . M . vanGelder, Leopold F . C . Roevens and Alfons H . M . Raeymaekers,who assigned the same to the herein Respondent-Assignee,Janssen Pharmaceutica N .V ., a foreign corporation organizedand existing under the laws of Belgium, with principaloffice at B-2340 Beerse (Belgium), Turnhoutsebean 30 .

The ground relied upon in the Petition for CompulsoryLicensing is : .

DECISION NO . 65 JUNE .29, 198.4 42 9

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"That the patented- invention relates tomedicine . (Sec . 34[e], Republic Act 165, asamended by P .D . No . 1263 .) "

After compliance with the publication requirement ofthe said Petition by .the he-rein Petitioner

., a Notice to

Answer was sent the Respondent and, on April 16, 1982, itsAnswer was filed through counsel denying .• speci-fically thematerial averments, in the . said Petition and alleging thefollowing affirmative defenses :

"x x

7 .' Petitioner-,has not made definitive alle-gatfons<•-on -how it intends to work the patentedproduct in the manufacture of a useful=product .

.Petitioner -should allege -clearly and definitelywhat it praposes: to . do with the-invention subjectof Letters Patent No . 10710 . Otherwise, petitio-ner,. may merely import.the subject invention andengage only in*a packaging activity which is not,in accordance with the intent and-purpose of themandatory provisions of Presidential Decree No .1263 . It should be observed further thatmere.Importation of the patented -product does notconstitute ;working' under Section 34(3) .*of thePatent Law as amended by P .D : 1263 .

8 . Assuming arguendo that petitioner's al•Le-gation• is true . tu~ •the effect that it . .'has-be-enfor many-years engaged-in the business of manufac-'turing and selling pharmaceutical products and iscapable of. making dosage formulations contakningthe compounds under Letters PatentNo . 10710',the said allegation does not in •itself. render .thepetitioner' capable of working. the patente d

• :product or of making use of-the patented .product=in the manufacture of a useful product pursuant-to Section .34(2) of.the Patent Law as amended byP .D . No . 126,3. • ' ~. ,

9 . . Respondent-patentee's licensees and/ortheir.-affiliates/subsidiaries' marketing arms areadequately equipped . .to produce and/or market'anyamount or . quan-ttty of• pharmaceutical ,products ormedicines containing the patented inve•ntion which-the Philippine ' market . :or the public . may need or

. . ,, . . .

DECISION NO . 65 :JUNE .2.9, 1984 ' 43 0

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d?mand .

The grant . of another compulsory license forproduct, manufacture, distribution or sale ofother or additional brands of medicines or pharma-ceutical preparations containing the patentedinventions, would not necessarily or of-itselfredound to the benefit of the Philippines or itseconomy or otherwise serve the purpose intendedfor in Sections 34=36 of the Patent Law, asamended .

10 . The synthesis of the active ingredientis a very complex process which yields pollutantsas by-products . * Sophisticated and expensiveequipment is necessary both for the syntheticprocess itself and for the elimination of highlytoxic side-products and quality control .

11 . The subject compounds are very insolublein almost all solvents . Consequently, it isextremely difficult to continuously obtain aproduct of the same standard quality .

12 . In view of the low solubility of theproduct, its physical appearance largely deter-mines the therapeutic efficacy . The difficultyin obtaining products of uniforms or standardquality, both physical and chemi*cal, has seriousconsequences . Thorough research and analysis ofproducts from different sources show great diffe-rences in overall quality and physical proper-ties . Variability of medicines prepared on basisof such products is completely unaccepatable andmay bring about harmful results .

13 . The grant of a compulsory license topetitioner will not promote public- safety -orpublic health ; the petition is designed only forthe enhancement of the pecuniary interests of thepetitioner .

14 . In the unlikely*event that petitioner isable to make out a case for the issuance of a com-pulsory.-license in its favor, respondentpatenteewill be entitled .to a just and equitable rate ofroyalty which will be established 'by respondent-patentee during the trial of this case .

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DFCIGTON NO . 65 JUNE 29, 1984 43 1

15 . The grant of_* a compulsory license topetitioner will not fulfill the purpose for whichSec . 24 of the Patent Law as amended by P .D . .1263was intended . "

After the issues were joined, notices of pre-trialconference were sent to the herein parties setting forththerein the date therefor on May 13, 1982 . The respectivepre-trial briefs were submitted by the parties through coun-sels and, there being no amicable settlement agreed upon,the trial proper was scheduled . -

Petitioner presented as its lone witness MissEstel,lita N . Garcia, a resident of 64 Don Ramon Street,Talayan Village, Quezon City, and who is Group Director ofthe Pharmaceutical Research Division of the herein Petitio-ner . She testified (with her. Affidavit [Exh . "F"]) consti-tuting as her direct testimony on the following :

"] . . T ain a pharmacist by profession havingpassed the board, examination for pharmacists inJuly, 1950, and actively employed in differentcapacities ; such as Chapter Administrator'of theIlocos Sur-Abra Chapter of the PhilippineNational Red Cross from July 1950 to December1953, and Head of. Quality Control of PhilippineAmerican Drug Company, otherwise known as Botica.Boie, May 1955-July 1958 ;

2 . On July '21 ; 1958, I Joined UnitedLaboratories, Inc ., as Senior LaboratoryResearcher, and later as Manager of its Pharmaceu-tical Research and Manufacturing Development andsubsequently Group Director of PharmaceuticalResearch and Development where I was involved inthe development and manufacturing dosage formula-tiohs of pharmaceutical .products, such as diffe-rent kinds of tablets, powders for suspension,various liquid dosage' forms, suspensions,elixirs,-syrups, drops, lotioris, emulsions, paren-teral. preparations, capsules and pellets ;

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3 . United Laboratories, 'Inc . is a corpo-ration duly engaged in the manufacture and saleof 'drugs and other pharmaceutical products, withits head offices located at No . 66 United St . .,Mandaluyong, Metro Manila, consisting of severaldivisions, capable of producing more than seven

DECISION NO . 65 JUNE 29, 1984 43 2

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hundred different dosage forms of medicine underdifferent brand names ;

4 . The company is presently staffed by about3,000 employees, majority of whom are professi .o-nals, -masters in their respective professions,taken and admitted into the company after aseries of qualifying tests, and fully trained toperform their jobs in their respective,divisions.and departments ;

5 . My group, Pharmaceutical -Research andDevelopment, is one of the several groups underthe Science and Technology Division of. UnitedLaho.ratortes, Inc ., whose primary objective-is todevelop new products and processes for the manu-facture of various dosage forms and to improvethe processes associ.ated with the manufacture ofexisting drug products ;

6 . Under my group are four departments,namely, Pre-formulation Dept ., Liquids andSemiSolids Dept ., Solids Dept . and PackagingResearch and Development Dept . ;

7 . The Solids RED Department is engaged inthe development of solid dosage forms examples ofwhich are- tablets (plain, multi-layered, sugarand film coated tablets), capsules and powdersfor reconstitution . Other corollary responsibi-lities of the department are the search and deve-lopment and improvement of unit processes in phar-maceutical manufacturing, such as mixing, granu-lation, film coating, sugar coat?ng, direct com-pression and pseudo-direct compression, fluidi-zation and air suspension techniques, etc . ;

8 . . Some of the conventional processes in thepreparation of tablet are :

a) Dry or Slugging Method

The . active ingredients as wellas the excipients called for .i.n theformulation are weighed, mixed tothe point of uniformity and homoge-neity and slugged-or compressed-intoslugs either in a tablet machine ora compactor . The slugs are then

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passed through a granulator or acomminuting machine to the desiredgranule size/s . The granules aremixed with lubricants and disintegra-ting agents and. compressed todesired weight and hardness . . Theequipment used for the slugging pro-cess are balances, Stokes, Manestyand Glen mixers, V and Ribbon blen-ders, oscillating granulators, fitz-patrick comminuting machines, GescoCone blenders,_ whose capacitiesrange from a'hundr_ed kilos to onethousand kilos per cycle .

b) Net Granulatiob Method .

The ingredients in powder orgranular'•forms are dry mixed andthen wet with previously preparedbinder-granulating solut.ion, passedthrough a granulator or comminutingmachine . The wet granules .are thendried either in a stationary oven ora fluid-bed dryer . When the desiredmoisture content is reached, thegranules are passed through a commi-nuting machine, after which disinte-grators and lubricants are added andcompressed in the tablet machines .The table machines in UnitedLaboratories numbering around 20have capacities ranqing from 300,000to 4 mi. ].l i. on tablets . Per eighthours .

c) Encapsulation .

The process of preparing granu-lations for, encapsulation is verysimilar to tha-t of tablets . Incases where . . . the active ingredientsare of the correct or optimum bulkdensity, the ingredients need not begranulated . The powders (activeingredients and excipients) aremixed_ to the point-of uniformity and


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homogeneity, lubricated' and encap-sulated in Elanco, 7.ansusi and 14&Kcapsulat .i.ng machine .

9 . Liquid. preparations, such as syrups, sus-pensions, drops, elixirs, solutions are preparedusually in a combination of the steps :

1 . Bass Preparation & Sterilization &Cooling

2 . Active Ingredient Dissolutio n

3 . Incorporation of Active Ingredientsinto the base

.4 . Liquid Mixing; Homogenization

5 .- .Cl.arification or Filtration

6 . . Bottling

Among the equipment in Liquid manufacture areDecineralizers- or • deionizers, DistillationStills, Steam Jacketted Kettles, Mixing Tanks,Solvent Meters, Pumps,- Plate and Frame FilterPresses, as well as Disc Filters, Homogenizers orVicosators, Holding Tanks, etc . :

10 . Creams, Ointments and Gels *are usuallyprepared by melting the waxes and the oily phaseswith the aid of heat . The squeous phase compo-nents dissolved in water with the aid of heat .The oily and squeous phases are mixed with theaid of high shear agitation .or mechanical stir-ring . The creams and ointments may either behomogenized or milled . The gels are usuallypoured hot into the containers in the semi moltenstate . Among the equipment used are steam jacket-ted kettles, pony mixers, homogenizers or viscosa-tors, tri-roll mills, etc . ;

11 . Parenterals are prepared in the samemanner as solutions, the essential added diffe-rence being the controls and the sterilizationprocedure done to insure a final product that isfree from organisms . The solutions are prepared

DECISION NO . 65 J UN .F, 29, 1984 43 5

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usually in scrltnolnnsly clean glass lined equip-ment with sterile or sterile grade .active ingr.e-

d'ients and solvents . The solutions are filteredthru membrane filters which retain all. organism

rendering the *product sterile . These are thenfilled into ampules or vials in a clean room bypersonnel who themselves have undergone acleaning sequence and wear sterile gowns andgloves and other protective garments . The

filling . rooms are sterile, even'the air fed intothe room are filtered thru retention filters .The filled ampules or vials are then terminallysterilized if they' have not been filled asepti-

cally ;

12 . Before a dosage form is developed andready to be manufactured routinely, all thephysico-chemical properties of the drug are inves-tigated . The active ingredient undergbes a compa-tibility screen . The format is evolved in aseries of laboratory scale up and pilot batches,stability and vio-availability tested before itis brought to production for demonstration, quali-fication and validation by manufacturing and deve-lopment and-quality control researchers ;

1 3 . The-capability of United Laboratories tomake use of the patented product in the manufac-tuYe of a useful product,, in this particularcase, to manufacture its own brand of pharmaceu-tical preparation containing Renzimidazole Carba-mates, is supported by a1?. resources at itscommand, including finances, manpower, technicalpersonnel, machinery and equipments, as stated inthe attached brochure, 'Research and Developmentat United Laboratories', attached hereto andmarked as Exhibit 'G' ;

14 . United Laboratories has all the neces-sary equipment,- facilities and technical exper-tise to deal with a compound-such as Benzimi-dazole Carbamates which is 'claimed to.have lowsolubility, and the final arbiter of the qualityof the medicine produced therefrom is the Foodand Drug Administration ; and

15 . , The attached procldct Information

Catalogue, attached hereto ' and made an integral

DECISION NO . 6 5 JUNF 2 9, l984 43 6

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part hereof as Annex 'H', lists some . of theproducts and their various dosage forms which areproduced by United Laboratories ." *

Apart from the said testimonial evidence, Petitioneroffered the following documentary exhibits :

Exhibit

1 . Order to Publish Notice A

2 . Affidavit of Publication A- 1

Purpose : .Exhibits A and A-1 are presented toshow that the Patent Office hasacquired jurisdiction of the case .

3 . Copy of Patent No . 10710 B

Purpose : To prove the existence of a patentthat is subject to comnii3sory licen-sing .

4 . Articles of Incorpprationof United Laboratories, Inc .

Purpose : To prove the legal personality ofpetitioner and to show its finan-cial capacity and resources, saidcorporation having an authorizedcapital of P450,000,000 .

5 . License to Operate Pharma-ceutical Laboratory issuedby the Food and Drug Adminis-tration to United Labora-tories,. Inc,, D

6 . Certificate of Complianc eissued by the Food andDrug Administration t oUnited Laboratories, Inc . E

Purpose : Exhibits D and F are presented toprove that petitioner operates aduly accredited pharmaceuticallaboratory and has complied withthe rules and regulations of the

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DECISION. NO . . 65 JUNE 2 9 , 1984' 43 7

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Food and Drug Administration .

7 . Affidavit of Miss EstelitaGarcia to constitute herdirect testimony . ' * F

Purpose : The affidavit is to constitute thedirect testimony of Miss EstelitaGarcia in accordance with the amen-ded rules of the Patent Office .

8 . Research and Development o fUnited Laboratories, Inc. G

9. Product Information Catalogueof United Laboratories,, Inc . H

Purpose : Rxhihits G and H are presented aspart of the testimony of Miss E .Garcia to show . .. the facilities ofpetitioner and the wide variety ofpharmaceutical• products it manufac-turres .

On the part of the Respondent-Patentees/Assigne .e, thefollowing were offered as their evidence :

Exhibits Purpose

"1" To show and establish the(Letters Patent patented product covered by

No . 10710) the said Letters Patent No .10710 and thus show thedifficulties involved i n

"2" To show the complexities and(Affidavit of difficulties involved in theWillen F . M . production or manufactureof avan Bever) formu].ati.on contai.ning the

PcItentPd product and to showand establish that petitioner .does not have 'the capabilityto manufacture and produce aformulation containing thepatented product ; to show*further that the manufactureand production of -a . formu-lation containing the patented .


product in addition to similarmedicines already in themarket will not redound to theberiefit of the Philippines orits economy and will not servethe purpose for which thepatent law, as amended, wasenacted .

To show that•, the Philippine(Affidavit of market ' for drixg formulationsGustaaf van crinta .ining the patented pro- .Kesteron) duct, namely, benzimidazol e

carbamates, is more*than ade-quately served by respondentand that the addition to themarket of another similar drugformulation will not redoundto the benefit of thePhilippines or its economy .

Willem F . M . van Bever, of 6 Prine Boudewijastraat 6,2300 Turnhout, Belgium, was presented as Responderrt-Paten-tee's witness and his Affidavit (Exhibit "2") constitutedhis direct testimony as basis for crossexamination, themost relevant portions of which are quoted hereunder :

x x x

4 . Since October 1969 1 am continuouslyemployed at Janssen Pharmaceutica M .V . where Iassumed the-positions of Coordinator of the Medi-cinal. Chemistry ••Department of. Chemical. Pharmaco-logy from -December 1970, Head of the Departmentof Chemical Pharmacology from December 1970 untilNovember 1 97 3 , . Ass i.stant-DirPctor Research inDevelopment from NovPmber. 1.973 until August 1976,and since then Vice-President New Products . Inmy present position I have di.r.ect, supervisionover the department of Pharmaceutical Developmentand Pharmaceutical Quality Control . In view ofthis responsibility T am thoroughly involved inand continuously informed on any developments andproblems concerning pharmaceutical formulationsat Janssen Pharmaceutica and am particularlyaware of the problems associated with the formu-lation of benzimidazole carbamates .

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5 . I have been asked to give my views in con-nection- with the request for a compulsory licenseunder Philippine Patent No . 10710 of Janssen

Pharmaceutica N .V ., filed by United Laboratories,Inc . I have read the affidavit of Miss Estelita

N. Garcia as wel.). as the other documents submit-

ted by 1-he parties to this trial .

6 . What, first of all. strikes me is that,until now, it has not become clear what use exact-

ly United Labor.a_tor i es, Inc . want to make under

the solicited compulsory license . In her affida-

vit of. May- 12, 3.982 Miss E . N . Garcia has mademention of tablets and capsules . During .thehearing of July 15, 1982 she further admitted,"asI am informed, that liquid preparations are like-ly to follow . •

7 . It all makes a substantial differencewhich forms are ultimately prepared . Each form.has its own- peculiarities and difficulties an d

requires appropriate equipment, theoretical andtechnical -insight and know-how . In my experienceit is in general not the technical equipment assuch that presents most problem in connectionwith the development and production of new drugspecialties . Most apparatus used in the .produc=tion of r1rug specialties, like those mentioned inMiss -Garcia's affidavit are- of a multi-purposenature . Tt is -rather the use of such multi-purpose equipment in largely differing and uniquecircumstances thit creates problems .

S . Tn many cases, such problems arise fromthe inherent physical • prope .r.ties of the activeingredients used in the preparation of the con-cerned pharmaceutical products . Therefore, it isalways of the utmost importance, when startingproduction of a .new pharmaceutical specialty,'tohave a complete knowledge of the drug's proper-ties:. Such knowledge has to do with, but is notconfined to, the physical, chemical and biologi-cal properties of the drug substances involved .

9 . While certain physical properties such asmelting point, and solubility in various solventscan be determined without too much•difficulty'byan appropriately . trained technical person, other


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proper.+:ies require a much more thorough multi-disciplinary and long.-lasting investigation onbas ic; of a vast amount of already acquired know-ledige and know-how relating to the s"bstanceinvolved .

3.0 . In the subject situation it is primarilythe morphology of mebenclazole and it

.s influence

on other phenomena such as dissolution, crystalli-sation, rer..rystatlisation, absorption and vio-availab;lity that require careful investigationand consideration . Mebendazole is a substancewhich is almost insoluble in most common sol-vents . It has been found that mebendazole occursin three different polymorphic forms with diffe-rent solubilities, dissolution rates and otherphysical properties . It goes without saying thatsuch. differences in physical behaviour of theactive ingredient will not be without influenceon- the properties of pharmaceutical formulationsprepared on basis thereof . As all of the formu-lations under consideration, including tablets,capsules and suspensions contain mebendazole i n.solid form, the above-mentioned considerationswill apply to all of them .

11 . Obviously, other problems will be encoun-tered . depPnd ing on the type of formulation inten-ded to he produced . As an example, one mighthave- a look at liquid formulations,, which in viewof the negligible solubility of mebendazole inthe usually employed solvents, will almost benecessity take the form of suspensions . Thereare certain criteria that all suspensions shouldmeet in order to be acceptable . The dispersedparticles should be of such a size that they donot settle rapidly in the container and, in casesedimentation occurs, the sediment should notform a hard cake . Redispersion should be easyand complete . Incomplete redispersion will una-voidably lead to unpredictable over. or under-dosing of patient, with all of its inherentdisadvantages- and dangers . A frequently encoun-tered 'problem, associated with caking of pharma-ceutical suspensions . is a dramatic under-dosingof patients taking the prescribed volume of th e.'super.natant' . . phase . Apart from its directconsequence for the patient, namely, lack of

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-efficiency, continous under-dosing may lead to .

the development of.'res.isten .r.e to otherwise effec-tive and, valuable drugs .

1.2 . Depending on the circumstances of thecase and in Part.icular on the physical behaviourof the drug substance a certain approach has tobe adopted in order to obtain acceptable suspen-

sions : In general it has to he investigatedfirst -whether the particles in suspension are tobe flocculated or kept deflocculated .

13 . In the present case, with the existenceof various polymorphs, the use of a flocculatedsystem is not *very promising and, according-toour experience, almost impossible to achieve .Hence, the sole option that remains open is theuse of a structured vehicle to keep deflocculatedparticles in suspension . 'While this principle assuch is well-known to those involved-in the deve-lopment of liquid . pharmaceutical formulations,its application in connection with suspensions ofmebendazole is greatly complicated . As a matter

of fact, severe restrictions are imposed upon theselection of solvents and additives by the factthat the transition of one polymorphic form intoanother must be prevented as far as possible .

14 . 7n the present circumstances, it appearsthat an acceptable and stable suspensions ofmebendazole can only be formulated in a thixo-tropic* systQm with a high i~i.eld value . A thixo-

tropic system is pseudo-plastic medium exerting atime-dependent non-Newtonian flow behaviour .

Such a medium is characterized by the fact .that

its viscosity is'not constant (at constant tempe-rature and composition) as required by Newton'slaw of viscous flow but depends on-the durationof shear as well as on the rate of shear . As a

result of this property, the medium has a highviscosity and high yield value at rest, preven-ting settlement of suspended particles, and a lowviscosity after being shaken for some time .

Hence, the resulting formulation combines a goodphysical stability during storage with anexcellent pourability . of the product at the time.of administration to the patient .

DECISTCIN NO . 65 JUNE 29, 1984 44 2

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15 . 'rhP development oF ;.iirh .fnr.mulati.ons andtheir control require sophisticated equipment forrhpological. testing, such as for example rotatingvisconsimekQrs, etc . and a great deal of difficul-ty to acquire know-how and experience in connec-tion with the rheology of pharmaceutical prepa-rations . Such know-how and experience is equallyneeded for the large-scale production of well .-developed and approved formulations .

16 . The foregoing discussions will alreadymake it clear that the preparation of suitablepharmaceutical formulations of inebendazole is notjust a routine matter but requires a high degreeof skill and a vast amount of know-how relatingto the behaviour of the product in various media .Until pr.oof to the contrary it must be assumedthat such know-how is not possessed by a thirdparty which has not been fully involved with thedevelopment of the drug but has been in contactwith it for a short while only .

17 .. Our above-expressed suspicions as to theabilities of third parties in general to preparesuitable formulatinns of inebendazole are fullyconfirmed by analysis we carried out on mebenda .-zole-conta.ini.ng products of various origins . Inreality most of them turned out to be largelydefective and pharmaceutically unacceptable forone or more of the following reasons : physicalinstability, biological contamination, irregularor insufficient content of active ingredient,dishomogeneity of the troduct,- unacceptabledesintegration and dissolution rates of tablets,bad odor of suspensions due to bad quality ofactive ingredients . "

Another witness for Respondent-Patentee was Gustaafvan Kesteron, whose Affidavit (Exhibit "3") likewise consti-tuted as his direct -testimony and basis for cross-exami-nation, the relevant portions of which are quoted asfollows :

"1 . I am Vice-President of Trade and Licensingfor Janssen Pharmaceutica N .V . (Janssen) . Igraduated in 1.962 from the Netherlands Schoolof. Business Administration at t3reukelen andfrom 1.97n to 1972 1 attended a Post-Graduate


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co urse in Marketing Management at the

Institute for Socia]. Sciences at Lindhoven .

From 1966 to 1972 -i have been employed by the

Dutch Company Organon N .V ., OS8, NETHERLANDS .

as Assistant Area Manager for - Latin America .

In 1975 I was appointed Executive Area

Manager worldwide and in 1976 Area Director

for Africa, the Middle -East, South East Asia,

Japan and Australia . Since January 1, 1982 I

am Vice-President of Trade and Licensing . I

am a member of the Board of Directors of

Janssen-Kyowa Co ., Ltd ., TOKYO, JAPAN, and

Member of the Dutch Institute for Managers .

2) As a result of my past and present professio-

nal . responsibilities described above in•para-. graph 1, I am fully familiar with the pharma-

ce utical market -ing operations of Janssen, its

affiliated' companies and licensees in South

East Asia, including the Philippines .

3) Janssen is manufacturing,-selling and distri-

buting its -products in the Philippines in

-collaboration -with several local companies

and through a variety of.commercial channels .

One main commercial *outlet for Janssen

products is through its -sister-company

Johnson and Johnson Philippines, P . 0 . Box

490, Makati, C .C ., Makati, Philippines . . Both

.Janssen and Johnson and Johnson Philippines

belong to the American company Johnson and

JohnsorS Inc ., having its headquarters at 501

George Street, New Brunswick, N .J ., U .S .A .

Since April . 1, 1982 Janssen has set up a

separate division within Johnson and JohnsonPhilippines to coordinate the commerciali-zation of its products . At this moment the

said Janssen. division employs 50 people, buton basis of our present sales projections, we

plan to increase this number to 72 in 1985

and 95 in 1990 .

4) The f.iPld force of the Janssen divisionpresently comprises approximately 40 profes-.sional sales representative (P .S .R .), inclu-

ding managers . It is the duty of this fieldforce, which cove.rs the entire Philippines,


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to provide pharmacists, physicians, hospitalpersonnel, etc . with medical information onthe properties and uses of Janssen pharmaceu-tical products and to receive orders for thepurchase of these products . In addition, theJanssen division employs a medical director(a Philippine national physician) and a full-time professional staff of trainers for itsPSR force, and retains the services of alocal physician as a consultant . Janssen isfully able to supply the entire Philippinemarket through the services of PharmaIndustries, P . O . Box 604, Metro Manila,Philippines who have their distributioncenters located throughout the country .

5) At present mebendazole Is supplied to thePhiliPpi.ne pharmaceutical market throughJanssen's local affiliate ., Janssen Belgiumship mebFndazole bulk products to Johnson andJohnson Philippines who take care of thepacking operation . The commercialization ofthe finished product is managed by the localJanssen division while the actual distribu-tion and, partly, the receipt of-orders,, istaken care of by Pharma Industries .

6) Total sales of inebeadazole products in thePhilippines in 1982 are presently projectedat approximately •720,000 pesos . For theJanssen division, sales of mebendazoleproducts represent about 10 percent of theirtotal pharmaceutical sales in thePhi].ippines . Although continued strong salesof inebendazole products are expected infuture years, the potential Philippine markethas alrPady been substantially developed byJanssen and Johnson and Johnson . It shouldbe emphasized that the anthetmintic market isa relatively small one .

7) In view of the above-described abilities ofthe Janssen division in the Philippines, itslarge and still growing hi ghly trained PSRforce, its established marketing network andthe strong commitment . of the worldwideJanssen and Johnson and Johnson organizationto the successful conduct of business in the

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DECISION NO . 65 JT1NF 29, 1.984 44 5

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Philippines, I am* of the opinion that morethan sufficient commercial capacity is avai-lable to warrant a continuous fulfillment ata reasonable price of the demand throughoutthe entire Philippines 'in the coming yearsfor pharmaceutical products containing meben-dazole .

8) Considering -the. foregoing, the grant of acompulsory .license by the Philippine PatentOffice to United--Lahor.ator i es 'f.or the manu-facture, distribution and sale of additionalbrands of pharmaceutical preparations contai-ning .the patented 'inveh'tion, bensimidazolecarbamates, of Letters . Patent No . 8402 willnot' redound to the bPne .fit of t:hP Philippine s

of its economy .

" Respondent's Offer of Evide-nce was objected to b y

Petitionex but the same were all admitted by this Officefor whatever worth they may have . Thereafter, the parties

agreed to submit this case for decisiori :

The principal issue .'to be, resolved in this case iswhether, or not -Petitioner is entitled to the grant of acompulsory ].icense . .in .accordance with Section 34, Re publicAct 165, as amended by Presidential Decree No . 1263 .

For= a petition for compulsory licensing to prosper thefollowing must be complied wfth : *

1) That* at least two (2) years must have alreadyelapsed from the datp of the grant of thepatent; '. .

2) That" Petitioner- has the capability to workthe patented- pr6duct or to make use of thepatented product in the manufacture of auseful product, or to empl-o.y the patented

process.; and

'3) That any one condPtion from the ,followingmust• .l~e ' satisfied at the tithe of-filing-ofthe petition :

a) the patented- invention is not beingworked 'withiri the Philippines on acommercial 'scale, although capa'b{le'


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of being so worked, without satisfac-tory reason ;

b) the demand for the patented articlein the Philippines is not being metto an adequate extent and on reaso-nable terms ;

c) refusal of the patentee to grant alicense or licenses on reasonableterms, or the conditions attached bythe patentee to license or to thepurchase, lease or use of the paten-ted article, or the working of thepatented process or machine forproduction, or the establishment ofany new trade . or industry in thePhilippines is prevented, or thetrade. or* industry therein is undulyrestrained ;

d) the working of the invention withinthe country is. being prevented orhindered by the importation of thepatented articles ; or

e) the patented invention or articlerelates to food or medicine or manu-factured products or substanceswhich can be used as food or medi-cines, or is necessary for publichealth or public safety .

.Records show that subject Letters Patent No 10710 wasissued on August 24, 1977 for "Aensimidazole Carbamates". infavor of the inventors, Josephus L . M . van Gelder, LeopoldG . C, Roevens and Alfons H . M . Raeymaekers, but assigned toJanssen Pharmaceutica N .V . of Beerse, Belgium, a Belgiancorporation . This Petition was filed on February 1•6, 1982,or a lapse of more than five (5) years from the date of theissuance of the said patent . Clearly, it is more than two(2) years from the date of its grant and, therefore, incompliance with the first requirement of the law .

As to the requirement that one of the conditions enume-rated above must be satisfied, a reading of the patent docu-ment itself confirms the fact that-the subject matter ofthe patented invention relates to medicine or is necessary

DECISION NO . 65 .3UNE 29, 1984 4,41

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to public health and . safety . It is an anthelmintic drug

and is, therefore, useful asa med'icine . Hence, the second

condition is also met .

6n• the third requisite, that the Petitioner must b d

capable to work the patented product or make use of the

patented product in . the manufacture of a useful product,the testimony of Petitioner's lone.-witness, Fste-l ita N .

Garcia, also confirms such fact as contained in Exhibi t

to wit :

-"1 . Contrary to the statement of. Willem F .

M . *van Bever in his affidavit clated'Gctober 11,

19 82, United Laboratories, has already decided on

a tablet form. for Me.bendazole, although otherforms, such as, suspension, are not to be ruled

out ; . : "

2 . Whether in tablet form or suspensionform, United Laboratories, Inc . is fully equipped

to deal with Mebendazole,. to characterize thecompound, to, determine its physical and chemicalcharacteristics and to formulate a safe, effec-tive and stable dosage form of,Mebendazole ;

3 . With the wide range*of products beingproduced by United Laboratories, from cardio-vascular , • anti-hypertensives, anti-bio•tics,vitamins, anthelmintics, , a-nd alrpost all ki*nds ofmedicines,the technical tfiaff of United is fullytrained in all disciplines- involved in drug

pro0 ►irtion ;

4 . My staff is ' .fully equipped to develop

liquid formulations and. the so-called 'problems'cited by Van Bever are quite normal in thedevelopment of dosage forms of moat drugs and inour long years of . product development, we have

overcome all those .problems ;

-5 . There are a number of thixotropic systemsavailable to us which we can use to develop

Mebendazole ; . ' ,

6 . We also have rotating Viscometers and allinstruments needed to develop Mebendazole ;

.


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7 . The degree of skill of United's Technicalpergnnnpl is wp11-established and the Companydoes not spare any expense to update theirskills, in order to put out safe and effectiveproducts ;

8 . This affidavit is executed as rebuttal tothe testimony of Van Bever . "

Further, on cross-examination by Respondent's counselduring the hearing on August 6, 1982 (Tsn ., pp . 25-36),this witness testified ; to wit :

"A • : For, not necessarily on Mebendazole,something like an anti-biotic andyou have two candidate formulations,the study. will take, the actualstudy will take four (4) weeks .Meaning that time when they adminis-ter it and withdrawing samples . Thematter of developing the procedureto assay, that will be I cannot makean estimate .. May I just clarify vio-avai.lability studies are not alwaysnecessary,, it is not universallynecessary for all compounds . Tt .isusually necessary for all. antibio-tics and some others . There areother ways of proving efficiency oreffectivity . .

4• : In this* field, Miss Garcia, isefficacy of effectivity synonymouswith potency?

A . No, potency is determined by assay .Efficacy is determined by giving thedrug for the condition and observingor watching the effects of the drug .

4 . . Would you have potency test for thisparticular formulation? Or wouldyou conduct also potency test forthis particular formulation?

A . .. From the time that we start pre-formulation and also when we aredeveloping dcisage forms, there will

_a ,

DECISION NO . 65 :JUNE 29, 19,84 .44 9

_-_-~-----------•-- -------- ---------------------------- ----

be quantitative assays init.iallyand at the final . and in-betweenthose periods there will be stabi-lity kncl i.ceted assays .

Q. it is your testimony then, MissGarcia, that they go along hand inhand - .this stability and potencytests . * ,. Are they conducted at thesame •time.? . This is my question .

If you are saying that when I dopotency. I .will also do stability .Usually what happens when you havedone it you will do quantitativeassay and then there is an indica-.tion., . do you have *9 5% or 100% ofthe drug or 10.5% of the drug in adosage form . And. when you saystability, you will be assaying thedrug . > And these methods for deter-.mini.ng quantity or potency and thismethod for dete.rmining . stabilitymay be two different methodsalthough they may also be thesame . Maybe different or may bethP-same .

Q . . Your potency test will take howlong, Miss Garcia ?

A . How long ?

Q . : Yes .

A . : Depending upon what method you ar e

Q .

using .. It can be a few minutes toa few hours, or it could be less .

Going back to your previous state-ment earlier, that stability test,would take more , than six (6)months, then Miss Garcia supposingyou have. decided or intended toproduce :specific formulation contai-ning Benzimida7olP Carbamates, andlet us say you have alreadyobtained your. ' 1 icPnse, it will


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still take probably year's timebefore this particular productwhich you have decided to producewill go out into the market ?

A .

Q•

: Optimistically, yes, although as Isaid you can do all these actionssimultaneously and just re-work,even if you will be, to repeat, youwill still have time to rework . Itcould be much longer than that, ifyou have problems and if you havethere will be all the people youneed, all the materials you need,or if you have other priorities .

Now, in the event that this UnitedLaboratories -- I withdraw thatquestion .

Supposing United Laboratories isproducing a particular product or amedical formulation which containsas an active ingredient a substancewith low solubility, would thismake any difference in, let us say,power and utility requirements inthe production of this particularproduct ?

A . . For a tablet, it would make nodifference in the manufacturingequipment because, anyway, you willnot dissolve it when you make thetablet . But for determining theaction of the drug, we would wantto find out . I will want to findout whether it would dissolve inthe gastro-intestinal tract . So Iwill try to subject it now to diffe-rent conditions, meaning, I willdissolve it in the simulation ofthe gastric and under differentlevels of the intestinal tract, Iwould want to know if it shoulddissolve . And if I am that interes-ted in making it dissolved, I wouldwant to make to find out what I can

I

_*•

-16

-Ir


A-

make it* dissolve . I have to .talkin a layman's language, okay? Isthat clear? . But I am practicallytelling' you what I am going to dogiven .a hypothetical situation .. . .

Q . . When. you, conduct your stabilitytest, do you conduct your stabilitytest on the active ingredient andlet us say, the excipients separate-ly also aside from when they arealreacly forming

.. part of a specific

formulation .which you have arrivedat ?

I already told' you that stabilitystarts with .the pre-formulation anddosage form, different stagesbecause you are testing something.new that you are going to puttogether . Now, in the case of pre-formulation, you will determine

the stability *of the drug by itselfunder d-iffetent stresses . And inthe case of a compound which we aregoing to

.formulate, in this case a

solid formulation, we will deter-mine the excipient that will gowith it . And then we accelerate, I.mean, we store this under differentconditions . We apply stresses andtests and assay these combinationsand synthetic mixtures at certaintime afterwards .

Q, . So, your stability test are conduc-ted on the excipients probably,that is my . csnestiori . And then

later on, all. together .

A . , It is not on the excipients becauseyou are not interested in the exci-pients . You mix the two and thenyou follow ..your_ active ingredients,the stability of your active irigre-dients, when you are selecting yourexcipients and then, when you haveselected your excipients, you now


A -----------------------------------------------------------

put them together . You have adosage form and in this particularcase a tablet, and you determinethe figure of the tablet underdifferent conditions . Again, youapply stresses of temperature, asto moisture, light and all thosethings .

Q . . fio, it is possible then, MissGarcia, that after having chosen aparticular excipient to go withthis particular active ingredient,you test them under different condi-tions, it is possible that reactioncan occur which may reduce thepotency of the active ingredient ?

A . : Well, it is possible, but then ifyou have done your pre-formulationwork right, you should not be usingsomething that is behaving thatway . Because you have alreadyscreened the compatibility andstability in the first place .

4 . . Supposing . it comes out that way,you will again choose anotherexcipient to go with the activeingredient ?

A. You can fill this page, very, veryfine print and you actually need touse at most four. Pr five, even thematter of colors for instance, ifyou want to color the preparatio n

• it may not be -- you will have alist of colors that we try with anycompound that we are doing . Wehave a list .

4 . . Your studies could also includeenvironmental control of the speci-fic formulation which you are produ-cing ?

A . : What do you mean?

DECISION NO . 65 JUN.E 29,, ; 1984. 453,

-------------------=- -------•------------------------------ . _ . ,

Well, •under' .what environment- the.producti on of this particular for.mu- .].ati o n wou3.d *be ideal? • j ; ,

. r .

,

1 ;

. Well, that is supposed to -be -elucA.-r .

dated' or . .to be shown,as early asthe pre-formulation work if it is,,sensitive.*, ,to 3Pt us say moisture or .

. light ., you will find tha.t out . Andthen when you are manufacturing 'the.

dosage form and you subject it to

stability because when you . sub7ect

a mixture - oz . a format to stabl.lity,,.

You . have stresses . of .temperature ,

stresses . of' ;' li.ght, and stresses ofmoisture". . May be you ,should comevisit `our plarit . "

From the foregoing testimonial, as well as documen-, y , . . ;' .' . • 1

tary, evidence, it appears that Petit.ioner's capab'ility.to

wo'rk on ~ the .patented product for the manfuacture of ~a use-

ful' product cannot be .doubted ., .,-Petitioner possesses the-

necessary technical staff and equipment to .proluce a widevariety of drugs such as those enumerated in Exhibit "M" .,

The .: physical. facilities. of Petitioner are vividly shown in

the. brochure,. entitled "Research ,and Development, of United

I~aboratories, Inc ." As regards financial capability, the

author~i,zed capital stock of . Patitioner corporatiion i•n ~ttie

amount of. P450,000 .00 should he 'proof enough of.,,its ample -

re.sources . . . , ~ ~. ~.

"As td the . concern of Respondent that defectiveproducts may be manufactured, this should be laid to restby the' quality control 'procedures of Petiti-oner . The

testimony of Miss Garcia demonstrates the capability of

Petitioner . in,, overcoming the us,ual problems,involved in

drug manufacturing, and, .accord ing to ~er :

"My staff is fully equipped to deveTopedliquid formulations and the .so-called 'problems' .

cited 'by Van Bever..~are quite .normal in the deve-

lopment of dosagt.forms of most drugs and ,in ourlong years of product developinent•, we have over-

come . all those 'problems .." _(Exh . .'I", par . 4 )

Furthermore, no pharcinaceuti,calproduct will be sold'to thepublic without final approval .--by the Bureau of Food andDrugs, the agency tasked under Republic Act No . 3720,


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otherwise known as the "Food, Drug and Cosmetic Act", to"ensure pure and safe supply of food, drug and cosmetic inthe country" .

NOW, THEREFORF., by virtue of the powers vested in thisOffice by Republic Act No . 165, as amended by PresidentialDecree No . 1263, there is-hereby issued a LICENSEE in favorof the *herein Petitioner under Letters Patent No . 10710issued on August 24, 1977, subject to the following termsand conditions :

1 . Petitioner is hereby granted a non-exclusive andnon-transferable license to manufacture, use and sell inthe Philippines, in its own brands of pharmaceuticalproducts -containing Respondent's patented substances whichare disclosed.and claimed in Letters Patent No . 10710 ;

2 . The license granted herein shall be for theremaining life of said Letters Patent No . 10710 unless thislicense is terminated in the manner hereinafter providedand that no right or license is hereby granted to thePetitioner under any other patent of the Respondent otherthan the one recited herein ; . .

3 : That by virtue of this license, Petitioner shallpay the Respondent a royalty on all licensed productscontaining the patented substance made and sold by thePetitioner in the amount of equivalent to TWO AND ONE-HALF(2 .5%) PFRCENT of the net sales in Philippine currency .The term "net sale" means the gross billed for the productpertaining to Letters Patent No . 10710, less :

a) Transportation charges or allowances, if any,included in such amount ;

b) Trade, quantity or cash discounts and.broker's or agent's or distributor's commis-sions, if any, allowed or paid ;

c) Credits or allowances, if any, given or-madeon account, with reflection or return of theproduct previously delivered ; and

d) Any tax, excise or government charge includedin such amount, or measured by the produc-tion, sale, transportation, use or deliveryof the products .

* If

,. . .DECISION NO. 65 JUNE 29, 1984 455

I

I

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•In case Peti.tioner'a product containing the .herei nsubject patented substance shall. contain one or more activeingredients admixed therewith ; said product hereafter iden-tified as admixed product, the royalty to be paid shall bedetermined in accordance with the following formula :

Net-Sales on Value of Patented

ROYALTY .= Admixed Product x 0 .025 x Substance(Value of patented + Value of Other

Substance Active Ingredients )

4 . The royalties shall be computed-after the end ofeach. calendar quarter for all goods containing the patentedsubstance herein involved, made and sold during the prece-ding quarter and to be paid by the Petitioner at its placeof business on or before the thirtieth day of the monthfollowing the end of each calendar quarter . Payments ofsuch royalties should be made to Respondent's authorizedrepresentative in the Philippines ;

5 . The Petitioner shall keep records in sufficientdetail to enable the Respondent to determine the royaltiespayable and, shal] fu .r_+ :

.her permit its books and records to

be examined from time to time 'at Petitioner's premisesduring office hours ., to- the extent necessary to verify thereports provided . hereinabove,' such .examination to.be madeat the expense of the Respondent's certified public accoun-'tarit•' appointed by the • Respondent and acceptable to thePetitioner ;

6 . The Petitioner shall adopt and use its own trade-maiks or labels on all its products containing the patentedsubstance herein involved ;

7 . The Petitioner shall comply with the laws on drugsand medicine requiring previous clinical tests-and approvalof proper government authorities before selling to thepublic its own products manufactured under the license ;

8 . The Respondent shall have the right to terminatethe license granted to Petitioner by giving the latterthirty (3 0 ) days notice i.n•wri.ting to that effect; in theevent that Petitioner defaults in the payment of royaltyprovided herein., or if the-Petitioner shall . default in theperformance of other covenants or conditions of this agree-ment-which are to be performed by the Petitioner :


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a)- Petitioner shall have the right, provided itis not in default in payment of royalties orother obligations under this agreement, toterminate the 'license granted to it, givingthe Respondent thirty (30) days notice inwriting to that effect ;

b) Any termination of. this license as providedfor above shall not in any way operate todeny Respondent its right or remedies., eitherat law or equity, or relieve Petitioner ofthe payment of royalties or satisfaction ofother obligations incurred prior to theeffective date of such termination ; and

c) Notice of termination of, this license shallbe filed with the Philippine Patent Office .

9 . In case of dispute as to the enforcement of theprovisions of this license, the matter shall be submittedfor arbitr.ation before the Director of Patents or to anyranking official of the Philippine Patent Office to whomsuch arbitration proceedings may be duly delegated by him ;

10 . This license shall inure to the benefit of eachof the parties herein,. to the subsidiaries and assigns ofthe Respondent . and to the successors and assigns of thePetitioner ; and

11 . This license shall take effect immediately .

80 ORDERED .

Makati, Metro Manila, Philippines, this 29th day ofJune, 1984 .

(SGD .) LUIS M. DUKA, JR .. Assistant to the Director

'IV

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