Patent Rights in the Pharma sector in India : The real story of the Novartis Case

There is a huge hue and cry over the recent Supreme Court judgment on patent rights in India. Predictably, three are two extremes—the social activists rejoiced the apparent victory for the common man in their fight against the avarice of the Pharma giants while the corporations railed against the judgment and its alleged negative impact on innovation and claimed that it would  adversely affect development of new drugs which would in turn only negatively impact the health of the people.

Both parties have got it wrong. The judgment has nothing to do either in favour of making available drugs at an affordable price to the common man nor does it strike against the interests of corporations and does not rule out protection for patents as is being made out by the Pharma lobby. The real situation is far different.

India had earlier protected only processes that culminate in an innovative product whose features are new. India did not protect product innovations. All that changed once India became a member of WTO and with the entry into TRIPS(Trade Related Intellectual Property Rights) and under its international obligations India introduced product patenting from 2005. But herein lies the catch—Glivec the drug in question which was first patented abroad in 1993 did not get the benefit of patent rights in India as India decided to give patent rights only for innovations after 1995. To get around this hurdle Novartis indulged in a strategy of questionable ethics; it decided to incorporate a subtle improvement in the composition and decided to apply for patent rights for this newly created drug when it was actually ‘old wine in a new package.’

Howsoever unethical this strategy may sound, it is pertinent to note that almost all major pharma companies in the West have been indulging in the strategy of ‘evergreening’ to keep alive their patent rights in perpetuity. ‘Evergreening’ is a term coined to refer to the strategies of pharma giants to continue to maintain their monopoly over patented drugs in a legal manner by resorting to this creative strategy of obtaining patent rights by simply modifying the formula or process in very small degrees and claim some improved efficiency in the end product and obtain patent rights to continue to perpetuate their hegemony on their products.  They do this, either to continue their patent rights in a country, once the original patent has run its course and is no more valid; or to prevent competition from entering by blocking their entry. These corporates create a legally enforceable barrier to new entrants who thus find it impossible to enter into competition with these drugs.

Many developed worlds countries have been partners, willingly or unwillingly, in this quest to perpetuate perpetual monopoly. Since they have been in the forefront of fighting for world-wide intellectual property rights, particularly against the developing world economies, their system lends itself in a facile manner to such dubious restrictive trade practices. These countries have followed the philosophy of extending IPR (Intellectual Property rights) to any innovation even if it is incremental, under the guise of protecting innovation; but this approach has been abused by these pharma giants by extending their dominance on their respective markets through these dubiously obtained patent rights. New entrant who have tried to break into these markets have been hit by a slew of law suits which have not merely stalled their moves, but also proved to be very costly deterrents. Thus, this threat of a law suit becomes a very daunting entry barrier and most new entrants stay away fearing the consequences. This strategy has worked well for these corporate in the US and EU markets.

It is but natural that having tasted success for years in the developed world these pharma behemoths attempted to impose the same strategy in India.  Fortunately, because of the wisdom of our Supreme Court, these attempts came a cropper. Now this landmark judgment of the Supreme Court has become a trend setter not only for other developing world nations but also for the long suffering public of the developed world. We can truly be proud of our legal system with all its flaws.

The Supreme Court was not taking cognizance of public interest much as the social activists would have us believe; nor was it ruling against the interests of the corporate sector as the pharma industry has been trying so hard to convince us. It was something more mundane and much more logical. All that the Supreme Court laid out was the principle that if a company wants to apply for a patent for an incremental innovation in an already existing product then the onus lies on the applicant to prove beyond doubt that this incremental innovation results in significant end results or benefits and not something that is only incrementally different. In other words, what the Court asked for was proof of an end product that was substantially better than the existing version. The Court had insisted on setting a high bar for deciding what innovation was and what was mere tweaking. In the process the Supreme Court had actually upheld the principle of patent rights but insisted on more robust definition of innovation. The Court reiterated that it would grant patent rights but only for variations that were significantly more efficacious but it also demanded a higher degree of proof of the same. This effectively put paid to the strategy of Novartis to bypass the non grant of patents for products prior to 1995. Even The Economist (UK) has criticized the liberal patent-granting approach of the US and the EU which is actually acting as a break on innovation and not really facilitating it. Viewed in this light the Supreme Court’s decision should be viewed more as a landmark judgment which would be the trend setter for the future.

Patent rights under the above Act are available for products and processes for a period of 20 years. The conditions that the applicant must satisfy are:

1.       The invention must be new

2.       Involve inventive step, and

3.       Capable of industrial production.

The above are in line with India’s obligation under the TRIPS agreement. The patent rights are available for both products and processes. Certain exceptions have been permitted for not granting patents, such as :

a)      To protect public order or morality

b)      To protect human, animal or plant life or health or

c)       < !--[endif]-->To avoid serious prejudice to the environment.

The system of patent rights owes its origin to the Universal Declaration of Human Rights, UN (1947).       

Article 27(1):
 Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits

Everyone has the right to the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author.

It is under the above clauses that Intellectual Property Rights have been legitimized world-wide and India , as a member of the UN, is obliged to provide IPR under its laws.

The Supreme Court ruling made headlines world-wide for various reasons; it was mostly a favourable coverage.  It was the lead story in ‘The New York times’ and also featured prominently in ‘The Washington Post’. In fact the NYT headlines screamed, “Low-cost drugs in poor nations get a boost in Indian court.” Even the UK’s The Guardian headlines read, “Novartis patent ruling a victory in battle for affordable medicines.” It had supported the ruling. However the financial papers, in particular The Wall Street Journal was sympathetic towards the Pharma industry.

Even in the developed world the judgment found support from academics, media, physicians and politicians most of whom opined that this was a fair verdict and that it held important portents not only for the developing world but also, hopefully, for the long suffering public of the developed world who have been forced to bear the brunt of the predatory pricing of the pharma giants with their strong lobbies.

The Supreme Court ruling has found a surprising supporter in the form of the creator of Glivec himself— Brian Druker. Druker welcomed the ruLing only adding a caveat that the pricing should not be reduced to such an extent that it inhibits future investment in research. But he reserved most of his criticism for the pharma giants for their predatory pricing, including Glivec. Predictably, the ruling received its greatest support from ‘Doctors without Borders.’ The greatest validation of the judgment was the positive response in the US media where the popular sentiment was in its favour; this despite the fact that the pharma industry is known for its powerful lobby in the US. This perhaps reflects the anger of the people against such monopolistic pharma companies who have been reaping huge profits at the expense of the social Medicare system.

We, as Indians, can now justifiably be proud of our legal system and its strict impartiality; despite all the known ills of our legal system – the long pending cases, the interminably long time taken to conclude a case, et al. But the fact is that our Supreme Court gave an impartial ruling, not being swayed by the considerations of the people at large but instead laid out valid principles for innovation—that to qualify for innovation it must result in a significantly better product not mere incremental improvements. The Supreme Court has raised the bar for innovation and that cannot be a bad thing in itself. It merely means that pharma companies need to be genuinely innovative to obtain patents and such ‘evergreeing’ techniques will not get the cloak of legal sanctity in India. For a change, we, in the developing world, have laid out the principles for patenting on the basis of innovation and even developed countries would do well to emulate this principle.

 I hope that in the future this case will be the one that will spell out innovation across the world and not just in India.

Father of Glivec hails ruling by Chidanand Rajghatta, Times of India, April 3,2013

World Media debate Novartis verdict, Times of India April 3,2013

SC rules for Cheap cancer drug, Times of India April 2,2013

New Patent Law came in 2005, Times of India April 2,2013

West should learn from India’s high patent standards, Swaminathan S.Ankleshwaria Aiyar, Times of India April 7,2013

Right Prescription, Times of India April 3,2013

Myths about India’s patent Rules, Times of India April 3,2013

Intellectual Property Rights by Dr. Shah, Allahabad Publishers