Eli Lilly vs. Novopharm vs. Apotex

The Drug

Nizatidine is an organic molecule of the Thiazoles class. It is an Anti-ulcer agent/Histamine H2 antagonist that treats acid-reflux disorders (GERD), peptic ulcer disease, active benign gastric ulcer and active duodenal ulcers. It has IUPAC name of dimethyl[(4-{[(2-{[(E)-1-(methylamino)-2-nitroethenyl]amino}ethyl)sulfanyl]methyl}-1,3-thiazol-2-yl)methyl]amine and a chemical formula of C12H21N5O2S2. The molecular weight is 331.457g/mol. This drug was first manufactured by Eli Lilly in 1993 and is now produced by many generic drug companies such as Novopharm, Apotex and Mylan and comes in a 75mg, 150mg and 300mg tablet.The structure of nizatidine is as follows:


Nizatidine is absorbed into the bloodstream after taken orally with peak plasma concentration from 0.5 to 3 hours after administration. Food does not affect the rate of absorption. If any of the chemicals are taken at the same time, such as alcohol, caffeine, aluminum, magnesium, vitamin D, iron, zinc and fluoride, absorption will be reduced by approximately 10%. The bioavailability of the drug is 70.9% ± 6.4. Nizatidine has a binding affinity of 35% and a 0.8 to 1.5 L/kg volume of distribution.

Nizatidine reduces the production of stomach acid by inhibiting the action of histamine on stomach cells. It does so through competitive reversible inhibition of histamine at the histamine H2-receptors. This results in a decrease of basal and nocturnal gastric secretions as well as acid response to food, caffeine and insulin.

About 90% of nizatidine is excreted in the urine within twelve hours of an oral dose and about 60% is unchanged nizatidine. The half life of the drug is 1 to 2 hours with a clearance of 40 to 60 L/h.

Overdose generally results in lacrimation, salivation, emesis and diarrhea. It is also important to avoid taking any gastric pH modifiers and H2-receptor antagonists while taking this drug.

The Conflict

Eli Lilly and Co. owned Canadian patents for the drug “nizatidine”. This patent (http://www.google.ca/patents?id=SF83AAAAEBAJ&printsec=abstract#v=onepage&q&f=false) was for the drug and the manufacturing process. Novopharm had a compulsory license with Eli Lilly from February 1993, allowing them to manufacture the drug as recorded in Eli Lilly’s original patent. Stipulations of the license included that Novopharm was unable to grant any sublicense, and if this was broken Eli Lilly could terminate the license.

Before this, a “supply agreement” was made between Novopharm and Apotex. This agreement stated that if either party had a license for a patented medicine, the unlicensed party was entitled to receive specified amounts of the medicine in question at a cost plus a four per cent royalty. In April 1993, Apotex filed a notice of compliance for the final dosage forms of nizatidine, claiming that no terms of the original patent would be invaded. Apotex also informed Novopharm and gave proof that this would be allowed based on the “supply agreement” filed with Novopharm.

Eli Lilly then brought an application to inhibit Apotex from doing so all together or at least until the patent had expired in December 1997. Due to the struggle with this issue, in July 1993, Eli Lilly tried to terminate the license made with Novopharm, claiming that Novopharm had made a sublicense with Apotex, clearly breaching the contract. Novopharm fought back claiming no such thing was done with a sublicense or transfer of rights. The Federal Court denied Eli Lilly’s claim stating that there was no sublicense granted between Novopharm and Apotex, but also stated that if Apotex sold the drug in Canada, the original patent would be infringed.

Novopharm issued a NOA July 1993 in support for a NOC and relied on the license between Eli Lilly and themselves that this would not infringe on the original patent. Eli Lilly brought this to the Federal Court requesting prohibition on this request due to the termination of the license between Eli Lilly and Novopharm. This would ensure that Novopharm could not manufacture or be in possession of the drug in any non-infringing way. Novopharms application was then turned down.

The main issue of this case is determining whether there was actually a sublicense issued between Novopharm and Apotex in the use of nizatidine. If this was done, the NOA’s requested by both Novopharm and Apotex would not be justified, and Eli Lilly’s request for Novopharm to be prohibited from manufacturing the drug would be justified. The Court is asked to determine three things:
  1. Whether the Federal Court of Appeal erred in applying its decision in Apotex #1 to the Novopharm appeal, whether as res judicata or otherwise;
  2. Whether Novopharm's NOA was not justified, regardless of whether its compulsory licence was terminated by breach, because the licence did not permit the activities which the NOA proposed;
  3. Whether the Federal Court had the jurisdiction to grant declaratory relief on a limited judicial review proceeding of this type

Regardless of how it turns out with the sublicense, Apotex has still infringed the original patent by reformulating the final dosage form of Eli Lilly’s nizatidine.

When someone receives a licence, they are considered the licensee. If this licensee grants certain rights regarding the original licence, the third party becomes the sublicensee and they have been granted a sublicense. In order for the agreement between Novopharm and Apotex to be considered a sublicense, Novopharm must have granted Apotex the rights to do something that would otherwise be forbidden by the original patent filed by Eli Lilly.

In the document between Novopharm and Apotex, no wording proposed that there was an intentional grant of sublicense. As previously stated by Novopharm, it was simply a supply arrangement. Even though the wording supports that no sublicense was granted, the agreement would have had to been used in a way to transfer Apotex the right to force Novopharm to use their license in a certain way in order to be seen as a sublicense, which was not the case. The agreement in fact forbade this from happening. Based on the lack of action to infringe the original patent, the agreement was not considered a sublicense.

In the agreement, there was never a point where Novopharm acted as Apotex’s agent when Apotex needed to obtain nizatidine. Therefore Novopharm would not be entering the contract on behalf of Apotex.

Due to the fact that the supply agreement had been properly used, the Federal Court of Appeal was not needed to decide in Apotex #1 to the Novopharm appeal.

Novopharm’s NOA was also sought to not be premature and unjustified. This is because the patent states they are “entitled to manufacture the medicine itself or through Canadian agents seven years after the date of the issue of the first NOC to Eli Lilly Canada”. The seven years were up before the date the application was heard, therefore Novopharm was granted the rights to manufacture and make the drug for its own use, sale and consumption in Canada.

Eli Lilly failed to reveal evidence that the NOA was not justified or a good reason to terminate the license with Novopharm. Due to the other findings, it was deemed not necessary for the Court to grant declaratory relief on a limited judicial review proceeding of this type, the declaratory of relief was denied.


1. DrugBank: Nizatidine (DB00585). (n.d.). DrugBank. Retrieved March 14, 2012, from http://www.drugbank.ca/drugs/DB00585

2. Eli Lilly vs. Novopharm vs. Apotex. (n.d.). Lexis Nexis. Retrieved March 3, 2012, from www.lexisnexis.com.uproxy.library.dc-uoit.ca/ca/legal/results/docview/docview.do?docLinkInd=true&risb=21_T14191915207&format=GNBFULL&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T14191915210&cisb=22_T14191915209&treeMax=true&treeWidth=0&csi=281150&docNo=6

3. Patent US4777260 - Synthesis of nizatidine intermediate - Google Patents. (n.d.). Google. Retrieved March 14, 2012, from http://www.google.ca/patents?id=SF83AAAAEBAJ&printsec=abstract#v=onepage&q&f=falsehttp://www.google.ca/patents?id=SF83AAAAEBAJ&printsec=abstract#v=onepage&q&f=false