If Novartis wins, prices of drugs could sky-rocket

The case before SC has implications for all medicines and availability of their cheap variants

While China was becoming the world’s shop floor, India took its place as the world’s pharmacy, and in recent decades has been the largest provider of cheap, lifesaving medicines in poor countries across the globe.

But most of that medicine has been generic copies of brand-name drugs protected by patents in Europe and the United States. Now a big Swiss drug company, Novartis, may be one legal step away from upending the Indian supply chain by forcing the Indian government to recognise a patent for a cancer treatment heralded as a breakthrough for people with a deadly form of leukemia.

The case, involving the drug Gleevec, is before the Supreme Court, which is preparing to hear final arguments this month. It represents a high-stakes showdown between defenders of intellectual property rights, who say the generic knockoffs stifle innovation by drugmakers, and Indian drug companies and international aid groups, who warn that a ruling in favour of Novartis could dry up the global supply of inexpensive medicines to treat AIDS, cancer and other diseases.

The case has attracted international attention. AIDS activists and others protested recently outside Novartis’ annual shareholders meeting in Basel,Switzerland, and also at Novartis offices in New York, Washington and Cambridge, Mass., demanding that the company drop the case. “There will be nothing left to defend if we lose,” said Leena Menghaney, a manager based in New Delhi for Doctors Without Borders, which advocates for generic drugs. “People are definitely on edge about this case.”

The Indian government denied the patent for Gleevec, as it has for many other drugs made by many western drugmakers. Novartis sued, and the case has been winding through the Indian legal system for six years. The government is under some pressure from its trading partners, including the US, to relent in the dispute.

The Obama administration and the Pharmaceutical Research and Manufacturers of America, the drug industry’s main lobbying group, object to the section in the Indian patent law at issue in the case. And perhaps fearful that the section might be adopted elsewhere, Washington wants the nations negotiating a new Pacific Rim trade agreement, the Trans-Pacific Partnership, to agree to grant patents in situations similar to that involving Gleevec, according to a leaked text of the government’s position.

Approved by the US Food and Drug Administration in 2001 after a rapid review, Gleevec can cost $70,000 a year in the US, though the company says it has programmes through which patients in poor countries can get it for a hefty discount or, in some cases, free. Indian generic versions cost about $2,500 a year. The drug, which is sold outside the US by Novartis as Glivec and known generically as imatinib mesylate, has turned deadly chronic myelogenous leukemia into a manageable chronic disease for many patients. It is also used to treat a form of gastrointestinal cancer.

India is the world’s third-largest drug producer by volume and exports about $10 billion worth of generic medicines every year, more than any other country, primarily selling to other fast-growing developing countries that are expected to become significant new markets for big drug companies. Doctors Without Borders says that 80 per cent of the generic AIDS drugs it supplies to an estimated 170,000 people in Africa and elsewhere are made in India.

India’s conflict

India’s conflict with western drug companies over patents dates to 1970, when the country stopped granting drug patents. India resumed granting drug patents in 2005 as part of a World Trade Organisation agreement on patents, but medicines created before 1995 did not qualify. And that is where the disagreement arises over Gleevec.

The case before the Supreme Court involves a section in India’s patent law that prohibits a newer form of a known substance from receiving a patent unless it significantly improves the medicine’s ‘efficacy,’ or effectiveness. The standard was aimed at preventing a practice known as evergreening, in which a pharmaceutical company makes minor changes to existing drugs and earns new patents, thereby providing many more years of protection from generic competition.

“The implications of the case go to all medicines,” said Brook K Baker, a professor of law at Northeastern University in Boston and a policy analyst for the Health Global Access Project, which works to improve access to HIV drugs. “The question is, do you get one patent monopoly for the basic ingredient or do you keep tweaking it to get more patents?”

Gilead Sciences, for instance, is appealing India’s rejection of a patent application for its drug Viread, or tenofovir disoproxil fumarate, which is used to treat HIV infection. And Roche is fighting several court cases to uphold its patent on the anti-cancer drug Tarceva, or erlotinib, that Indian drugmakers argue does not meet the effectiveness standard.

Courts have allowed generic versions of that drug to be sold in India while the case is being litigated. India’s patent law does not define ‘efficacy’ or say how it should be measured. Novartis is arguing that the term should encompass modifications that might make a drug safer or easier to use, not just more effective in treating a disease. It says more than 40 other countries have granted a patent on Gleevec.

Novartis maintains that the current version of Gleevec is 30 per cent easier for the body to absorb than an older chemical that it developed but never marketed as a drug. The older compound was patented in the US, Europe and elsewhere in the early 1990s, but not in India because India did not allow patents on drugs at that time.

Paul Herrling, chairman of the Novartis Institute for Tropical Diseases in Singapore, said this was not a case of evergreening because the initial compound was never marketed or intended for market. He said that when drug companies discovered a compound that fits some specifications in a test tube or animal study, they patented it to protect themselves from copycats.

But that initial compound is often not suitable for use as a drug because it might not be absorbed into the bloodstream well enough, or it might be chemically unstable, or unsafe. So, modifications are made until a suitable form is found, and that new form is then also patented. The US and European Union often grant patents for chemical modifications of existing drugs.

Northeastern University’s Baker said a victory for Novartis would not shut off the production of generic Gleevec or of other existing generics, but could impede the ability of Indian manufacturers to develop generic versions of future drugs. Pharmaceutical companies “want India shut down as a place that can make early versions of generic medicines that can compete with them,” he said.

Novartis executives argue that a victory for it will not have the far-reaching consequences that its opponents claim because there are other legal ways for generic and subsidised brand-name drugs to reach the poor. Herrling said Novartis was not dropping the case because, “We wanted to have clarity about what kind of innovation is and is not patentable in India.” He also contended that the outcome of the case would have little or no financial impact on Novartis because India accounts for a minuscule proportion of Gleevec’s sales, which were $4.7 billion last year.

Shamnad Basheer, a law professor who has filed a friend-of-the-court brief suggesting ways the effectiveness standard could be clarified, said both sides of the case have valid points. It would be impractical for drug companies to seek patents only after they have conducted years of clinical trials that could provide definitive proof that updated drugs work better than their older versions. At the same time, he said, Indian lawmakers are rightly concerned about evergreening and an efficacy standard that can protect patients and the country’s generic-drug industry.

“It is important that the court take on the matter,” Basheer, a professor at the West Bengal National University of Juridical Sciences in Kolkata, said, “and interpret the law in a way that balances the need for innovation against public health concerns.”