Recently there was a landmark decision by the Indian Supreme Court on the issue of whether Novartis International AG, Swiss multinational pharmaceutical company, could patent their cancer treatment drug Gleevec. After a litigation suit that lasted for seven years, the Supreme Court ruled in favour of the Indian Patent Office and denied the right for Novartis to patent their drug.
Novartis had filed a patent for imatinib, which is the chemical name for Gleevec, in India in 1998, after India had agreed to abide by worldwide intellectual property standards under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement). One of the key changes made by India as a result of this agreement was an amendment to its patent laws; prior to the TRIPS Agreement, products could not be patented in India but after the agreement was made, products could be patented if they followed certain restrictions. These changes were effective from 2005, which meant Novartis’ patent application was in limbo until then. In the meantime, Novartis has applied for Exclusive Marketing Rights (EMR) for Gleevec as per provisions under the TRIPS agreement. Novartis sold Gleevec at USD 2666 per patient per month, whereas generic companies were selling their versions at USD 177 to 266 per patient per month.
On the 1st of April 2013, the Supreme Court ruled that Novartis had sought to patent a modification of a known drug, and they had not shown sufficient evidence that there was a significant difference between Gleevec and the raw form of imatinib. This was sufficient cause for a rejection of the patent application. What is interesting is even if Novartis had won its case, it would not have been able to prevent the sale of generic versions of Gleevec. They could however compel the manufacturing companies to pay a reasonable royalty, as per a “grandfather clause” included in India’s patent law.
Similar cases
There have been other similar cases of pharmaceuticals having their patent applications rejected or overturned by court rulings in India. In 2012, India’s patent appeals office rejected Bayer AG’s request that local drug manufacturer Natco Pharma Ltd. Be prevented from producing a generic version of Bayer’s kidney and liver cancer drug Nexavar. Bayer’s version of the drug sells for about USD 5,600 for a one month dose, whereas Natco’s version sells for only USD 175 a month. The reason given for the rejection was Natco would make the drug available to the public at a reasonably affordable price. Natco however was required to pay 7 per cent in royalties on nett sales to Bayer.
Roche Holding AG also suffered a similar instance when two of their patents for the cancer drug Herceptin were rejected in India. Kolkata Patent Office denied Roche’s patent, saying that it wasn’t properly submitted, allowing for Mylan and Biocon, two drug manufacturers in India to produce generic versions. There was some reprieve for Roche however, when it successfully managed to get a court ruling preventing Mylan and Biocon from selling their generic variants on the grounds that the drug makers could not have carried out adequate clinical trials.
On July 27, India’s Intellectual Property Appellate Board revoked GlaxoSmithKline’s (GSK) patent application for the cancer drug Tykerb. The reason given was the drug was not shown to provide sufficient “enhanced therapeutic efficacy” if compared to the original compound named lapatinib, which is also patented.
How does this affect India?
The decade of 2010-2020 was declared to be India’s “Decade of Innovation”; innovation promotion would be aggressively carried out via research and development, creating and sustaining high-quality jobs, and implementing a good intellectual property (IP) system. Recent policy, regulatory, and legal decisions unfortunately have deteriorated IP rights in the country. According to a report released in 2012 by the Global Intellectual Property Center, India ranked last, behind Brazil, China, and Russia, in almost all areas studied. India’s ranking was last out of 11 benchmarked countries, with a total score of only 6.24 out of a possible 25.3. It was also the only country that was not a signatory to international IP treaties such as the Patent Law Treaty or the World Intellectual Property Organization (WIPO) Internet Treaties.
As mentioned before, India agreed to abide by the regulations set by the TRIPS Agreement. Initially, there was much reform and implementation of the important aspects of the agreement. A number of policy, regulatory, and legal decisions however have undone much of the initial progress. Examples would be the legal cases mentioned in the previous sections. This has significantly impacted several IP-based industries such as consumer goods, pharmaceuticals, and the ICT industry. It has even affected the revenue gained from taxation, because there is an increased amount of piracy and counterfeiting.
In terms of Foreign Direct Investment (FDI), India has seen a marked increase from less than USD 45 million in 1970, to more than USD 31 billion in 2011. This however, is still significantly less than the FDI of the other BRIC members, namely Brazil, Russia, and China. Although it must be said that there is no one reason to explain this, a main contributing factor is the strength of national IP policies and rights. With the afore-mentioned about turns made by the Indian legal system in regards to IPs, it is possible that this is a significant player in the low FDI numbers.
A study done by Pugatch and Chu in 2011 showed that when a country had high levels of pharmaceutical IP rights protection, it also experienced higher levels of biomedical industry-based FDI. India however, had one of the lowest scores among the countries that were ranked on the Pharmaceutical IP Index. This is surprising as India should be an attractive place for clinical trials; a vast number of highly trained researchers, relatively low cost of operations, and a large potential market are all appealing factors for pharmaceutical companies.
The reasons behind the changes
India is home to over 1.2 billion people. Unfortunately, many of the people live below the World Bank’s international poverty line of USD 1.25 per day. This means they would be unable to afford costly treatments for many diseases. As mentioned before, Bayer AG’s anticancer drug Nexavar would cost approximately USD 5,600 per month, which is definitely out of the reach of a very large number of people. Thus, the Indian government sought to find ways to overcome this problem. One manner was to develop their pharmaceutical industry.
The pharmaceutical industry in India is the third largest in the world, in terms of volume. It is estimated that this industry will grow at a compound annual growth rate (CAGR) of 14-17 % in between 2012-16, with an expected market value of USD48.5 billion by 2020. Some of the steps taken by the government to enable this were to remove composition patents from food and drugs, and shorten process patents to a period of five to seven years. Of course this was undesirable to the multinational “big pharma” companies, but it created a world-class pharmaceutical industry in India, where pharmaceutical companies would reverse-engineer new processes for manufacturing drugs at low costs. This meant several things; new businesses, new job opportunities, and most importantly, a larger access to healthcare that was previously unavailable to the lower income classes.
Public health activists and aid groups have commended India’s generic drug industry and patent-related legal developments; life-saving drugs are finally coming within reach for millions of people, to treat diseases such as cancer, malaria and HIV. A spokesperson from Médecins Sans Frontières said she hopes that “India will continue to use all the means at its disposal—including compulsory licenses—to address patent barriers and bring down high prices through generic competition on the medicines that are vital to many in India and the developing world.”