Tender for the supply of medicine based on a patented active ingredient: a legal profile

With judgment No. 29 of January 9, 2020, the Administrative Court of the Piemonte region issued a ruling in the lawsuit brought by Bristol-Myers Squibb (BMS) against the Piemonte region purchasing body and the region (the contracting authority).

This decision is significant because the court took the opportunity to rule on the lawfulness of a tender for the supply of medicine based on an active ingredient covered by a patent. Moreover, the court provided clarification on several matters regarding tenders issued by administrative authorities for the supply of medicine to hospitals.

BMS requested that the court annul acts relating to a tender for supply to hospitals of medicine based on the active ingredient dasatinib. Dasatinib can be used to treat chronic myeloid leukemia (CML) and acute lymphoblastic leukemia (ALL). However, in its call for tender the regional purchasing body did not specify the treatment for which the medicine would be used.

BMS argued that the tender was unlawful and that the regional body had no authority to launch the tender, because dasatinib is covered by a patent held by BMS. The patent in question concerns the medicine Sprycel, which has dasatinib as its active ingredient (in its pharmaceutical form, dasatinib monohydrate) and is authorized for the treatment of CML.

BMS participated in the tender with its product Sprycel, but the offer it submitted was rejected, and the tender was instead awarded to Sandoz, which makes a generic drug based on dasatinib.

The generic drug produced by Sandoz has received marketing authorization (MA) from the Italian Medicines Agency (AIFA) for the treatment of both ALL and CML. However, the therapeutic indication for CML is covered by a patent held by BMS; therefore, in order to safeguard its intellectual property (IP) rights, BMS sought to have Sandoz remove the mention of treatment of CML from the package leaflets for its medicine and, when participating in tenders, to offer only the amount of medicine required to meet the hospitals’ needs for the treatment of ALL.

The court did not take into consideration issues concerning BMS IP rights when assessing the lawfulness of tender. To this end, the court stated that the contracting authority conducted the tender lawfully, since it based its offer on AIFA’s public databases and relied on the MA issued by AIFA for the Sandoz dasatinib generic drug. Furthermore, the court pointed out that BMS never challenged the resolution under which AIFA issued the MA for the Sandoz product.

BMS challenged the lawfulness of the tender by arguing the following:

  • The tender failed to specify the therapeutic indications for which the supply of dasatinib-based medicine would be used (treatment of ALL and/or CML); according to BMS, the contracting authority should have limited the use of dasatinib exclusively to the treatment of ALL (i.e., the therapeutic indication not covered by its patent);
  • The contracting authority assumed that the generic drug produced by Sandoz was the equivalent of Sprycel;
  • Participants in the tender could not offer appropriate prices for the supply of medicine because the tender’s subject was vague, meaning that the contracting authority merely identified the active substances in the medicine without discussing therapeutic indications and subsequent use.

The court held that the issues raised by BMS were groundless and denied the claim.

Firstly, the court stated that the contracting authority was not required to specify the therapeutic purposes of the medicine provided under the tender.

Indeed, as a rule a contracting authority may decide how to use the medicine provided upon conclusion of the tender. The court noted that: (i) the amount of the medicine required indicated in the tender is an estimate and the contracting authority is not obligated to purchase the entire amount; and (ii) hospitals and physicians are not subject to restrictions when using and prescribing medicines that are the subject of a tender.

Moreover, according to the court, the subsequent use of medicines should be considered extraneous and irrelevant to the tender. Consequently, BMS could claim infringement of its IP rights only after the tender.

Secondly, the court stated that the contracting authority was not required to check the therapeutic equivalence between Sprycel and the generic medicine produced by Sandoz, both based on dasatinib. Indeed, the authority correctly determined the therapeutic equivalence between the two medicines based on the fact that AIFA granted MA for both medicines for the same therapeutic indications.

Thirdly, the court specified that: (i) the price provided under the tender, equivalent to the maximum price paid by the National Health Service for the generic product, was reasonable; and (ii) the price could be regarded as incongruous under certain proven objective circumstances affecting several competitors. Moreover, the court stated that setting a price based on the market price of the generic drug is in line with the contracting authority’s need to contain public health costs.

In conclusion, the court provided important clarification on the conditions for a lawful public tender for the supply of medicine to hospitals, with specific regard to: (i) establishing tender subject matter; (ii) therapeutic equivalence of medicines competing in the tender; and (iii) setting a tender price properly.

Moreover, the court cleared the way for the contracting authority to conduct a tender for the supply of medicine based on the active substance dasatinib, patented for treatment of CML.

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