Defending India’s patent law

Prabha Sridevan in The Hindu

No one can attack India’s well-founded Intellectual Property regime as being weak merely because a drug that is claimed to be an invention fails the test of law

India and its intellectual property (IP) laws have been the subject of sharp criticism recently. Now, there is talk of the government invoking emergency provisions with regard to Dasatinib, a cancer drug. The decibel level may go up several notches.

Let us look at our law. The sovereignty of a country includes its power to make laws. Any person who pursues commercial interests in another country must submit himself/herself to the laws of the country. No one can attack our regime as being weak only because his/her invention did not stand up to the test of our legislation. Nor can India be accused of robbing Peter to pay Paul. It sounds romantic, but it is still robbery.

The Novartis case and the Nexavar case of compulsory licence (CL) are what have impelled this attack. Innovation and invention have speeded up in myriad ways in the last few decades and our country had committed itself to the obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights. Therefore, it was necessary for India to revisit its patent law; in 2005, the Indian Patents Act was amended, Section 3(d) being one of the amendments. It was the basis of the Novartis case.

TRIPS recognises that members have the right to use/adopt measures to protect public health so long as they are consistent with TRIPS. A recent study notes: “Policy makers in developing and developed countries need to base their implementation of intellectual policy rules on these pro-public health and pro-access principles.” The Doha Declaration is an affirmation of the right to use the flexibilities in TRIPS, especially by developing and less developed countries, regarding access to medicine. The language of the Doha Declaration emphasises the importance of implementing and interpreting the TRIPS Agreement in a way that supports public health.

“The TRIPS agreement does not limit the grounds on which compulsory licences can be granted, and does not prevent patent applicants from having to demonstrate enhanced efficacy for their allegedly new and useful inventions. There are many problems affecting access to and rational use of medicines in India but the provisions within the country’s patent laws, if more extensively and properly applied, should help rather than hinder such access. India’s laws and experiences could provide a useful example for low-income and middle-income countries worldwide.”

About patentability, not price

In Novartis, the Supreme Court said that while harmonising the patent law in the country with the provisions of the TRIPS Agreement, India had attempted to balance its obligations under the international treaty and its commitment to protect and promote the public health considerations of people in the country and elsewhere. The ‘thorn in the flesh’ Section 3(d) had been challenged by Novartis before the Madras High Court earlier. But the court upheld its constitutionality and rejected the attack on the grounds of vagueness and arbitrariness. Novartis did not file an appeal against that judgment. Novartis claimed a patent for Gleevec, a cancer drug which was refused. Novartis then appealed to the Supreme Court.

The intellectual property of the inventor lies in the invention which is claimed to be novel, inventive and patentable. The patent is a creature of law by which the state bars public access to that invention for a fixed period. The economic reward from the invention is earned during this time after which it goes to the public domain. Section 3(d) is a test of patentability. With reference to Gleevec, it is enough to know that 3(d) inter alia says that in the absence of evidence of enhancement of known efficacy, the mere discovery of a new form of a new substance is not an invention deserving the grant of patent. Imatinib Mesylate was the known substance and Novartis claimed a patent for its (the substance) beta-crystalline form.

The Supreme Court asked: “Now, when all the pharmacological properties of beta crystalline form of Imatinib Mesylate are equally possessed by Imatinib in free base form or its salt, where is the question of the subject product having any enhanced efficacy over the known substance of which it is a new form?” If an invention fails the 3(d) test, it means there was no inventive step. There was no intellectual property in the alleged invention, and nothing that could be stolen. Our lawmakers meant to check any attempt at repetitive patenting or extension of the patent term on spurious grounds, and blocked attempts to keep an invention “evergreen.” If those who attack the Indian patent regime claim that a minor tweaking of chemicals is a giant step forward for an invention, then our legislators begged to differ. The Supreme Court said that it was not ruling that all incremental innovations were non-patentable and that every case would be examined. Our law says that new forms of known substances which do not have enhanced efficacy are in effect advances without real innovation. Therefore, Section 3(d) is actually a catalyst for genuine inventions.

The Supreme Court said that Novartis had attempted to get a patent for a drug which would otherwise not be permissible under our law. Filtering doubtful patents is the strength of our law and not its weakness. The Novartis judgment was not about price but about patentability.

Let us look at the compulsory licence (CL) case, i.e. Bayer vs. NATCO. The mechanism of CL is essentially about balancing patent rights with access to medicine. The words “social and economic welfare,” “public health,” “national emergency” and “public health problems/crises” used in the Act are all pointers to the CL provisions being centred around access to medicine.

A CL is granted subject to three conditions; one of them is about price. The reasonable requirement of the public with regard to the invention should be satisfied. The price at which it is made available should be reasonably affordable. It should be worked in India. A CL may be granted if the answer is a “no” to any of the three conditions. The interpretation of the word “working” by the Controller-General was criticised. It is incorrectly projected that the CL was granted on this score alone. Bayer failed in the other two tests. As far as working is concerned, the question is this: should the inventor manufacture the invention locally or is it sufficient to import it? The Controller held that “working” meant local manufacture to a reasonable extent. The Intellectual Property Appellate Board (IPAB) said that “working” could in some cases mean local manufacture entirely, while in others, only importation, and that it would depend on the facts and evidence of each case. “Working” is not defined in the Act. This issue will be settled by the superior courts on review. The power of review by the superior courts is sufficient to show that our law provides for safeguards.

Compulsory licence

Even in the U.S., it is believed that CL would be a beneficial addition to its patent system, would not significantly impact the incentives for innovations, and that, “a compulsory licensing provision would ensure that the American public is adequately supplied with a product. If the patentee is unable to produce enough supply to meet the demand for the product, another producer should be able to license the product to meet the demand.” This is precisely what our law says!

In all these years, there has been only one instance of the grant of compulsory licence. In fact it was refused recently for Dasatinib, the drug that is now in the news. And Section 3(d) has been invoked by our patent office only rarely. If Gleevec was refused a patent, it is only because it failed the test of Indian law. Refusal is not an act of robbery, for it means there was no invention and hence no property in the first place. There is really no case made out for there being a weakness in Indian law. The pharmaceutical industry’s anxiety behind the clamour against Indian law cannot be on account of any inherent weakness in our law, but only because other countries will follow it.

(Prabha Sridevan is a former judge, Madras High Court.)

India's activist role in breaking the pharmaceutical patent monopolies

Ritu Kumar in The Indian Express 4 March 2014

Recently, there were rumours that the United States Trade Representative (USTR) was getting ready to announce “trade enforcement actions” or sanctions against India over its intellectual property rights regime. The Obama administration has been under pressure from the US Chamber of Commerce and lobby groups, like the Pharmaceutical Research and Manufacturers of America, to take a tough stance against Indian rulings that have vetoed several multinational pharmaceutical company patents.

The lobbyists are pushing for India to be classified as a “priority foreign country”, a label associated with the worst offenders of patent law. The row blew over, but not before the USTR had filed a case at the World Trade Organisation (WTO) against India’s domestic content requirements for its solar programme.

In the last few years, the Indian government and judiciary have taken up major cases on patent protection for life-saving cancer drugs. Novartis’s drug Glivec was denied patent protection by the Supreme Court and India granted a compulsory licence to Bayer’s drug Nexavar, which treats kidney and liver cancer.

Compulsory licences are a provision in international patent norms, including the WTO’s TRIPS agreement, under which a government permits someone else to manufacture the patented product without the consent of the patent owner, usually to lower prices of life-saving drugs and increase access to them.

This is not the first time that India has taken a strong stance in the pharmaceutical patent wars. In 2001, Indian generic manufacturers played a crucial role in slashing prices of anti-retroviral (ARV) drugs used against HIV, bringing down the cost of the drugs per patient per year from around $15,000 to about $300. Today, the cost of ARV drugs is as low as $60 per patient per year. This remarkable achievement was only possible because at the time, India was not party to WTO agreements on patent protection.

Indian generic manufacturers were able to disregard patents, and ended up supplying over 80 per cent of all ARV drugs purchased in the world. India was recognised as playing a leading role in providing quality healthcare to people in developing countries.

It is evident that India’s role in the pharmaceutical patent wars has great implications for poor people’s access to healthcare, not just at home but around the world. Emerging economies like Brazil and South Africa follow the Indian model when they modify their intellectual property laws in order to bar awards to frivolous and obvious patents, and to allow pre-and post-grant challenges. For instance, Brazil’s proposed changes to its patent policy quote provisions in India’s Patents (Amendment) Act, 2005. Doctors Without Borders, meanwhile, has publicly encouraged South Africa to borrow from India when drafting its new patent policy.

With markets in the developed world becoming saturated, multinational drug companies are increasingly looking to emerging economies with large populations for sales expansion and growth. However, their model of intellectual property protection as an incentive for innovation is running into obstacles in low- and middle-income countries. Supporters of the pharmaceutical industry believe that without patent protections, there will be no breakthrough innovations and no new life-saving technologies.

They argue that the high costs of research and development for new drugs can only be compensated by patent monopolies that allow expensive drug prices. Yet, developing economies are keen on providing affordable healthcare products for their citizens. The developed world itself is beset with unsustainable rising healthcare costs and is looking for cost-effective innovation. A reassessment of patent monopolies, especially in the case of life-saving products, is essential if healthcare access is to be broadened beyond wealthy patients.

Some new models of incentivising medical research are being proposed. Since large funds are required for the development of new medical technologies, scholars have proposed the creation of attractive prizes, along the lines of the XPrize, which was instituted to encourage space exploration by giving successful teams up to $10 million in awards. The idea behind prizes is that the winning team receives a large one-time payment, but it cannot patent the solution, which ensures that the technology remains in the public domain.

Other models of funding innovation have already seen success in the marketplace, such as the public-private partnership that created a new rotavirus vaccine. This vaccine, called Rotavac, is now sold in India and other developing countries by Bharat Biotech, at profit, for about $1 per dose.

Millions of patients are suffering from many other poorly managed or untreatable diseases, such as diabetes or dengue fever. They would greatly benefit if companies were incentivised to create therapies at affordable prices that were widely accessible. India must not slow the pace of developing new therapies, nor shy away from the difficult work of making healthcare available to all. The rest of the world is watching.

Patent justice

SAKTHIVEL SELVARAJ  

The HinduThe Supreme Court’s patent denial to Novartis for its anti-cancer drug Gleevec leaves the door open for Indian pharmaceutical companies to produce their own versions of the drug.

Drug patents are designed to create profits that enable more research on diseases affecting millions. But in practice, they have often generated super profits for big pharma companies while erecting access barriers for the poor. The Novartis case spotlights much that is wrong with the system.

The rejection of the Novartis petition challenging one of the most progressive tenets of the Indian Patents Act (1970), as amended in 2005 by the Supreme Court, is a landmark verdict for the public health community and the generic drugs industry, in particular, and for global health. Under the amended Indian Patents Act, Section 3(d) allows drug companies to obtain product patents for new salts or chemical ingredients. This is intended to encourage drug companies to protect their rights and prevent these from being copied by competitors, allowing for a 20-year protection period to recoup investments. However, Section 3 (d) does not encourage frivolous patents. It is intended to encourage only breakthrough innovations and discourage new use of known chemical substances or new delivery mechanisms of existing chemical compounds.

Transnational drug companies not only possess the first mover advantage, but owing to the high-voltage brand image they create, often extend their patents well beyond the already long period of protection. Drug companies are known for ‘evergreening’ patents by filing new patents, tweaking existing molecules to show novelty. Innovation is a red-herring, often used by multinational drug companies to make super-profits at the expense of social good and well-being. Under the mailbox agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions, India received over 9,000 mailbox applications as patent filings post-2000, while a major share of those were for pharmaceutical patents. Global evidence, on the other hand, shows that roughly 275 such patents were filed and granted for blockbuster drugs during this period. In order to pre-empt Indian generics companies from producing these drugs and to keep them away from the market, the big pharma companies have flooded the patent offices with frivolous patent applications, known to be existing molecules tweaked to appear as a novel product.

The R&D myth

The night before the apex court verdict, Novartis threatened to stop investing in research and development in India, if the verdict went against it. How serious is the threat and how realistic the scenario? In India’s drug production of over Rs. 100,000 crore, Novartis’ turnover is a little over Rs. 1,000 crore, constituting around one per cent. Out of the total expenditure of over Rs. 800 crores incurred by Novartis India in 2012, a paltry Rs. 29 lakhs was for R&D, constituting roughly 0.03 per cent of its entire expenditure in India.

Can such low spending can be considered R&D investment? In fact, Novartis R&D expenditure in India for the past five years has been in a similar range. On the other hand, Novartis consistently posted a profitability ratio (Profit After Tax as percentage of Total Income) of over 15 per cent in the last five years, something to envy for other sectors.

Big Pharma argues that if global R&D of innovator companies were to be considered, transnational drug corporations spend over US $ one billion to come up with a new drug. This includes cost of R&D incurred on failed drugs as well, as pharmaceutical companies take, on an average, roughly 12-13 years to get patents on new drugs. The magic one billion dollar figure is a gross overestimate. Even by conservative calculations, this figure would be one-fifth or one-fourth of the billion dollar estimate. But Big Pharma is quick to recoup its R&D spending from blockbuster drugs. Take the case of Gleevec (Imatinib Mesylate), sold in the US. Novartis raked in a total turnover of US $ 1.69 billion from the US alone in 2012 from the drug. The global turnover on Gleevec is anybody’s guess. It is also widely known that the cost of manufacturing drugs is only a fraction of the turnover.

Novartis currently sells Glivec (Gleevec) for Rs. 4,115 per tablet, while Resonance, an Indian generic drug company dispenses it at Rs. 30 per tablet. The annual cost of treatment per patient on Glivec would be in the range of Rs. 15 lakhs while Indian generic companies are offering it at Rs. 10,000. If Novartis were to get its patent on Glivec, Indian generic companies would have to stop their production, and therefore an unaffordable scenario would have prevailed for the common man in not only India but in other developing countries. Thankfully, the court ruled in favour of Section 3 (d) of the Patent Act.

Novartis claims that 95 per cent of cancer patients in India were provided the medicine free. This is patent untruth. Retail market sales in India for Glivec, sold by Indian generics producers are currently worth Rs. 20 crores. Novartis sells Glivec directly to patients and not through the usual retail chain, a system that is designed to make people believe that they offer the drug free.

After seven years of battle, the Supreme Court verdict seals this issue, facilitating Patent Controllers to strictly enforce Section 3 (d), thereby pre-empting pharmaceutical companies that seek to evergreen products. However, there are several other safeguards that are enshrined in the patent law that must be utilised to make life-saving and essential drugs affordable. And one such key safeguard is invoking compulsory licensing for blockbuster drugs, if the original manufacturer fails to sell it affordable rates.

Last year, India invoked the provision to license generic player Natco to produce Nexavar, after Bayer, the innovator failed to make it affordable. Such policy measures are critical, in order to improve access to life-saving medicines, as households in India are known to pay nearly 70 per cent of their health care spending on medicines.

(Dr. Sakthivel Selvaraj is Senior Health Economist, Public Health Foundation of India, New Delhi.)

Also read

Company profits depend on the 'welfare payments' they get from society

Novartis loses landmark patent case in India

Why Novartis case will help innovation

 

ACHAL PRABHALA

SUDHIR KRISHNASWAMY 

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The Supreme Court judgment on Glivec is a blow for a patent regime with a higher threshold of inventiveness

On April 1, 2013, the Supreme Court upheld the Intellectual Property Appellate Board’s decision to deny patent protection to Novartis’s application covering a beta crystalline form of imatinib —the medicine Novartis brands as Glivec, and which is very effective against the form of cancer known as chronic myeloid leukaemia (CML). The judgment marked a crucial conclusion to a saga that has been several decades in the making. The story could start in 1972, if you like, when the Indian Patents Act of 1970 — grounded in the findings of the Bakshi Tek Chand and Ayyangar Committee Reports — came into force, enabling the explosive growth of the Indian generics industry into the world’s largest exporter of bulk medicines. Or, it could start in 2005, when India amended its patent law to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), a trade rule at the World Trade Organisation (WTO) that established a new global regime of intellectual property.

Key lesson

No matter where we start, the saga has come to a close, and the key lesson seeping through is that good sense won. Firstly, the Supreme Court decision was not about the patentability of the imatinib compound as such: that patent, having been instituted in 1993, is excluded from the purview of the Indian patent system, which is only obligated to consider patents filed in 1995 or after. The case the Supreme Court heard was whether Novartis’ beta crystalline form of imatinib was worthy of patent protection: its judgment was that this modification by Novartis did not satisfy the standard of inventiveness required under Indian patent law. Secondly, Indian patent law is as yet unchallenged at the WTO; Novartis’s earlier challenge to the constitutionality and TRIPs compatibility of Indian patent law was rebuffed by the Madras High Court in 2007 and no appeal was pursued. Thirdly, the Supreme Court judgment effectively recast Indian patent law as being nuanced and original in its meshing of domestic political economy concerns with the integrated global economy it participates in.

The outcome of this nuance and originality? Imatinib will continue to be 

available to patients in India from multiple suppliers at a price 10 times less than the current cost of Glivec; approximately 27,000 cancer patients in the country who pay for their imatinib will continue to have access to the medicine in the public and private sectors at the lowest cost possible; and should Novartis ever suspend its charitable programme, all 15,000 of the cancer patients who currently receive imatinib free from Novartis will have similarly equitable access to the medicine.

Hackneyed narrative

Despite substantial progress in the popular understanding of the place of patents in a developing country like India, a hackneyed narrative has emerged, especially in the pink press, warning us that this judgment will have a negative impact on innovation in the long run. As it happens, one of the most useful outcomes of the Supreme Court judgment is a renewed focus on what innovation is — and how it should be rewarded. Behind the headlines foretelling various levels of doom — the death of innovation in the country and the end of research for diseases which matter to us — is the popular idea that patents are a proxy for innovation. After all, patents are widely understood as short-term monopolies enshrined in the law and provided as incentive to inventors on the evaluation of publicly disclosed innovation. It would seem as if patents are synonymous with innovation. Except, this is not quite the case.

Minor variations

In the last three decades, the global gold rush for patents has been dominated by filings for minor and mostly inconsequential innovations — at the expense of breakthrough innovation. In large part, this is because weak standards in the patent laws of developed countries (led by the U.S. and Europe) have explicitly encouraged this shift. The whittled-down, lobbied-out, stretched-beyond-recognition patent regime that is characteristic of these countries — and other less-developed countries where they influence the polity — is unfortunately the ‘norm’ to which India now finds itself an ‘outlier.’ But the outlier is a solution: the norm is the problem. A British Medical Journal report from 2012 succinctly summarises the global research situation for new medicines: “This is the real innovation crisis: pharmaceutical research and development turns out mostly minor variations on existing drugs, and most new drugs are not superior on clinical measures.”

If the patent regimes of developed countries are dominated by minor patents, many or most of which have no demonstrable innovation to show, why are they so avidly pursued by global pharmaceutical companies? A Public Library of Science study from 2012 points to the answer: secondary patents extend the patent life (and thereby, the monopoly pricing) of pharmaceutical products long beyond their designated life span, adding, on average, between six and seven years to the patent life of the original compound. Any patent regime which incentivises secondary patents with weak laws will only serve to extend commercial monopolies at low levels of innovation — and will no longer provide the incentive for genuine innovation. The genius of the Supreme Court judgment on Novartis’s patent application lies in restoring the connection between patents and innovation by upholding and legitimising a regime with a higher threshold of inventiveness.

Will Indian patent law change the way the global pharmaceutical industry innovates? No; not immediately, at least. Could it positively affect pharmaceutical innovation in the long run? Absolutely. In the present day, India comprises 1.3 per cent of the global pharmaceutical market by value. That figure, in itself, is why changes to Indian patent law will not help global pharmaceutical giants break free from the incentive model they are prisoners of. At most, they might have to learn how to compete in a crowded market for some of their less original products. The symbolic opportunity presented by the Supreme Court’s backing of Indian patent law, however, is a real threat — and pharma CEOs in New York, London and Basel get it. In the long run, as more countries understand the Indian model, appreciate its legitimacy, and reflect on its benefits to both public health and innovation, they might want the same. And if that happens, when that happens, we may begin to see real, positive change in the way pharmaceutical innovation works.

Empowered scenario

The Indian Patents Act of 1970 was a game changer. From the perspective of 43 years of experience, we can safely say that it shook up the pharmaceutical industry and altered it irreversibly. The new, empowered scenario was most vividly illustrated during the peak of the HIV/AIDS treatment crisis in the first decade of the 21st century, when countries like Brazil, Thailand, South Africa and, of course, India, took health security into their own hands and legitimately moulded their domestic patent systems to respond to the crises within. The Indian Patents Amendment Act of 2005, which gave us the law we have today — a law which was ratified last week — has the potential to change the game once again. This time, however, the change might come more slowly; the hell the Indian government was dragged through has not been lost on anyone. The lengthy trials, the frequent challenges, the full-scale vilification, and every other scare tactic thrown our way by a public-relations juggernaut (along with the implicit support of many developed country governments) was not for nothing. And the Supreme Court judgment is all the more important as a result, for it shows a new way may be hard and tiresome, but is ultimately possible.

(Achal Prabhala works on access to medicines; Sudhir Krishnaswamy is on the faculty of Azim Premji University, and is the Dr. B.R. Ambedkar Visiting Professor of Indian Constitutional Law at Columbia Law School)