Apex court right to reject Novartis’s attempt

 threat that it would not introduce new medicines in after the verdict is hollow, says Anand Grover.

While the patients and the generic companies have rejoiced over the Supreme Court’s verdict in the Novartis case rejecting the for its drug Gleevec, Novartis itself has threatened that it will not register any new drugs and not invest “in innovation in India.”

Thankfully the Commerce Minister, Anand Sharma, has not been taken in by these threats, which are nothing but hollow.

But what is the cause of this consternation on the part of Novartis and their silent, or rather back stage supporters, the foreign pharma MNCs? The root of their discomfiture is the that was brought about in the patent law in 2005 pursuant to the TRIPS Agreement, namely of the Patent Act. Right from day one Novartis and the other foreign MNCs have been trying to get rid of it or attempting to whittle it down.

After the Patent Controllers Office in Chennai rejected Novartis Patent application on the grounds that it is not novel, not inventive and was hit by section 3(d) of the Patent Act, Novartis challenged the validity of section 3(d) in the Madras High Court on the ground that it’s vague and therefore unconstitutional. The Madras rejected its challenge holding that provisions like 3(d) are very well known in the industry and the section is not vague.

Moreover it also found that section 3 (d) was enacted as a safeguard to protect the of the citizens of India and in other developing countries. After that there has been an orchestrated chorus on the part of the pro foreign MNC section of the industry to remove it. The US India Business Council, actively supported by the US Trade Representative, has been very active and vociferous in its antipathy towards section 3(d). The opponents of 3(d) have left no stone unturned to get rid of 3(d).

The US pharma industry through their fellow travellers in academia have been active in trying to influence not only academics but also judges in India to show them how Indian law should be reframed, section 3(d) being the prime culprit. Consequently two judges of the Supreme Court had to recuse themselves from the Novartis case because one of them had attended conferences in the US promoted by such interests with an aim, among other things, to water down 3(d).

Having failed in its attempt to strike down on constitutional grounds, Novartis used its ultimate trump card, to seek reinterpretation of section 3(d) in the Supreme Court. The attempt has been rightly been rejected by the Supreme Court. So what is this section 3(d), about which Novartis and the foreign pharma MNCs are so unhappy about? To understand this we need to understand our own history about the development of the pharmaceutical industry and patent law.

After India became independent it was expected that the nascent Indian pharmaceutical industry would develop and throw of the yoke of domination of foreign pharma MNCs in India. But that did not happen. Instead the domination of the foreign pharma MNCs only increased. Ultimately, under the Prime Minister Indira Gandhi our patent law was changed. Rather than providing for protection for both product patents (which allows for absolute monopoly and monopolist exorbitant prices of medicines) and process patents (which only allow only relative monopoly, thereby allowing competition to bring generics) Indian law was changed and did not provide for product patent protection.

As a result Indian generic industry grew at a tremendous pace and started providing competition to the foreign pharma MNCs. The result of competition was to lower prices. Ultimately, it generic industry became a net exporter. In India it is the Indian generic industry which is dominant. Today it provides over 95 per cent of the safe quality and efficacious anti drugs to the developing world. But the MNC pharma companies did not take all this lying down. They initiated the TRIPS Agreement to have all intellectual property laws in the whole world like their own countries.

Like Coca Cola and Hamburgers, which are bad for health, we are supposed to have their patent laws, which are as bad for health if not worse. India and other developing countries resisted at first but all the alliances of the developing countries to resist uniform patent laws like the US, were broken by US pressure by threats to use unilateral sanctions against developing countries, viz., to increase tariffs on import from those countries into the US.

One by one these countries fell and were made to tow the US line. Ultimately India was left alone and had to succumb. Fortunately not all was lost. The developing countries were able extract certain flexibilities, including what would be the criteria to patent products and processes. India had to comply with the requirement with the TRIPS Agreement by 1 January 2005. The challenge was to use all the flexibilities in the TRIPS Agreement. Fortunately we did. But on patentability criteria we faced a peculiar problem. We had found that in the developed countries of North America, Europe and Japan patents were being granted to medicines (over 75 per cent) for just tweaking a molecule, small changes, with no beneficial advance in therapeutic effect. Thus, combining three existing drugs in one pill, or changing from tablet to a liquid form, or making a salt or crystalline form of the same active substance would get a patent in the developed word.

One of the result has been that inventions of genuinely new drugs has been coming down. In fact in the US, the debate is now centred around whether the patent system is actually delivering at all or not. When Parliament had to amend the patent law in 2005 it was aware of grave consequences of complying with the TRIPS agreement and changing the Indian law granting product patents on medicines. It was also acutely aware of the millions of people living with HIV across the world who relied on Indian generic medicines that resulted in the reduction of the price of first line HIV medicines from $10,439 per person per year to less than $100 per person per year.

It was also aware that in the advanced countries of the west new forms of existing drugs, without any advance in therapeutic benefits were granted patents. Thus new molecule would receive a 20-year patent, followed thereafter by a new patent for a salt form of that medicine followed by a yet another patent on another version of that same drug. Most people assume that there is one patent for one medicine. The European Commission Competition Authority found 1,300 patents and patent applications on one medicine alone! This is known as ever-greening.

It is in this context that section 3(d) was thrashed out by Parliament. Cutting across party lines they recognized the danger the drugs India became signatory to the TRIPS agreement on 1st January 1995. The TRIPS Agreement and need to have a public health safeguard. Section 3(d) was thus born – a provision that prohibits patents on new forms of known medicines unless they result in significantly enhanced over the known medicine.

Parliament thus finalised a crucial provision to act as a public health safeguard against the unabated patenting of known medicines by drug makers in the West. This law is fully TRIPS compliant. If it were not India would be taken to the Dispute Settlement Mechanism, as we had been earlier, and forced to change the law. For the last 8 years no country has thought that section 3(d) is not TRIPS compliant.

This is what the Supreme Court had to interpret in the Novartis case. As mentioned earlier, Novartis now trained their guns to slice of 3(d) bit by bit. Novartis argued that the efficacy standard under section 3(d) efficacy should be interpreted to include physico-chemical properties of the new form of the old medicine.

It argued that the beta crystalline form of imatinib mesylate had better flow properties, better thermodynamic stability and lower hygroscopicity and better processiblity and that this should be considered an improvement in efficacy. Novartis also argued that increased bio-availability would lead to better efficacy.

The Supreme Court rejected Novartis’s contentions, holding that in the case of medicines, efficacy means “therapeutic efficacy”, that this standard must be interpreted “strictly and narrowly” and that physico-chemical properties, while they may be beneficial to some patients, do not meet this standard.

It also laid out a strict standard of proof for patent applicants, requiring that they prove any claimed increase in therapeutic efficacy based on research data and that “bald assertions” would not suffice to meet the requirements of the law. This whether bio-availbility of a medicine leads to better efficacy cannot be assumed. It has to be demonstrated, which Novartis had failed to do. The lives of millions cannot be held ransom to the profits of a few. Section 3(d) strikes the right balance between innovation and access.

Section 3(d) leaves “the door open for true and genuine inventions but, at the same time, to check any attempt at repetitive patenting or extension of the patent term on spurious grounds,” the Supreme Court said. The attempt of Novartis to whittle down 3(d) has failed. India’s patent law is now among the strictest in the world. The Supreme Court decision should encourage other developing countries to follow suit as the Philippines, Argentina and Zanzibar have already done.

If these fundamental changes to the runaway patent system of the West can be effected, we may truly have an intellectual property system that works for everyone and not just for the firms. Novartis’s assertions that the ruling will affect investment or future innovations have been belied time and again, including at the World Health Organisation, which has found that intellectual property does not result in the kind of innovation in medicines required by us as a developing country.

Novartis’ threat that it would not introduce new medicines in India after the verdict is hollow. They know fully well that Indian companies will step into their shoes and be able to produce medicines at one tenth of their costs. But it further adds strength to the assertion of health groups that India must jealously guard its generic manufacturing capacity in the face of such threats from multinationals if they do not have their way.

The right to life and health is sacrosanct. Every Indian should be proud of the Supreme Court’s clear and unflinching judgment recognising the intent of the Indian Parliament in this regard. This decision benefits not just millions in India, but across the developing world. It is a proud day for all of us.

Anand Grover is senior advocate and director, – who represented the Patients Aid Association at the Supreme Court

The article appeared in the rediffmail on 3 April 2013.

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