Novartis moves court against Roche seeking Rs 1565 crore overpaid amount in patent licensing pact

New Delhi: Accusing Roche of illegally pocketing fee from a 16-year-old patent licensing contract, Novartis has filed a lawsuit in U.S. District Court in California, later transferred to federal court, seeking to return USD 210 million (over Rs 1565 crore) in alleged overpayments.

Novartis claimed that for years it paid Roche's U.S. Genentech unit tens of millions of dollars as part of a patent licensing agreement that began in 2005. Novartis eventually discovered that it had overpaid by approximately USD 210 million due to an error.

The dispute, launched by Novartis in California state court but recently shifted to federal court, stems from a 2005 deal requiring U.S.-based Chiron Corp to make payments to Roche's U.S. Genentech unit for use of its intellectual property, reports Reuters.

In 2006, Novartis bought Chiron, a maker of biological drugs and vaccines, and continued making payments to Roche as it developed products like the inflammation drug Ilaris, with a revenue of roughly USD 900 million annually, and the psoriasis drug Cosentyx, Novartis's current top seller at around USD 4 billion annually.

"Novartis subsequently discovered that it mistakenly overpaid," Novartis lawyers wrote in a heavily redacted complaint published last Thursday in the U.S. District Court in California, as per a Reuters report.

"Genentech was aware or should have been aware that Novartis had overpaid ... to Genentech throughout the term of the Agreement," Novartis lawyers wrote, addng, "By mistake, Novartis overpaid ... to Genentech on its drug products, Ilaris and Cosentyx, to which Genentech was not entitled."

Roche has long owned lucrative patents needed by other companies to make biological drugs like monoclonal antibodies, including the so-called "Cabilly patents" that reaped billions of dollars in royalties over the years for the Swiss company before finally expiring three years ago.

Roche on Tuesday said it has a policy of not commenting on pending litigation.

Since it discovered what it alleges is an overpayment, Novartis said it has been trying to get Roche to return the money, to no avail. "Genentech has been unjustly enriched at Novartis's expense," Novartis lawyers wrote.