Dashing innovators' hopes

Govt needs to shed its current intransigence. It should stop viewing patent laws from a prism that 'only MNCs benefit from these'.

Interacting with America's top CEOs [including MNCs in pharmaceutical and agrochemical sectors] in September, 2015, Prime Minister Narendra Modi had assured "we are committed to protecting Intellectual Property Rights [IPRs] which is essential to fostering creativity". 

These MNCs spend billions of dollars on research and development to discover and develop new medicines and crop protection products and have a fundamental interest in the protection of IPRs. They had flagged Section 3[d] of Patent [Amendment] Act 2005 and provision relating to grant of compulsory licenses as major concerns.

However, from the draft of new National IPR policy, it appears that the government has no intention whatsoever of diluting any of these provisions. This may even prompt US Trade Representative [USTR] to initiate “out-of-cycle review” [a euphemism for engaging with government on IPR challenges] earlier kept in abeyance in the hope that Modi will deliver. When, Section 3[d] was incorporated in amendment to Indian Patent Act in 2005, global R&D companies had perceived this as a move to deny patents in contravention of main thrust of amended Act, that is, to provide for product patent. The USTR has been protesting against this section for over a decade and India has refused to budge. So, what is at stake and how can logjam end?

The section bars grant of patents to new forms of known substances, unless the new form results in significant enhancement in efficacy over the known substance. The applicant should demonstrate that the ‘new form’ gives substantially higher ‘efficacy’ over a previously known compound. Indian law makers justified this as a carefully crafted step to rein in tendencies to seek ‘frivolous’ patents on some minor modifications to an existing substance, or “ever-greening” as it is understood in common parlance.  

The Supreme Court in the case of Glivec (2013) – cancer treatment drug for which Swiss major Novartis AG had sought a patent - not only upheld constitutional validity of Section 3[d], but  also showed the way ‘how to read and implement’ it. So, it viewed test of efficacy to mean ‘therapeutic efficacy’ implying that ‘pharmacological/chemical properties’ only need be considered thereby virtually shutting the door to ‘incremental’ innovations such as ‘new dosage form’; ‘new delivery systems’ etc.

The value of such innovations to the patients in terms of quality and speed of treatment could be even more than what is offered by a better compound/new molecule [such innovations are very rare and far in between] per se. Yet, precedent set by the judgement would almost completely eliminate the possibility of applicant getting a patent on all such innovations. This is what worries global R&D companies and the USTR.

A perception that this will tantamount to ‘ever-greening’ is a myth. Patent protection is confined only to ‘new form’ of ‘known’ substance. The latter on completion of its patent term is already available to ‘generic’ players for manufacture and  marketing.

Moreover, any company other than inventor of ‘known’ compound [including Indian company], can come up with a ‘new form’ or a ‘new dosage’ or ‘delivery system’ and take patent cover.

The other major concern relates to grant of compulsory licence [CL] to generic Indian drug firms for much-in-demand new patented drug. A CL authorises the entity concerned to manufacture and market a patented product even without prior consent from innovator/holder of patent. Such flexibility allowed under TRIPs [trade related intellectual property rights] agreement of WTO was incorporated in Indian Patent Act [2005].

Under Section 84, a licence can be issued for “private commercial use” if it is found that the patent holder has not taken required steps to make patented product available in sufficient quantities or price charged is not ‘affordable’ to patients. Under Section 92, the patent controller can issue the licence only based on Central government notification citing circumstances of “national emergency or circumstances of extreme urgency or in case of public non-commercial use”.

The intent of flexibility provided under the TRIPs agreement was that government would use grant of CL sparingly; in fact, as a last resort. However, actions of the controller and Ministry of Health and Family Welfare in recent years show that this is being observed more in breach.

Blockbuster drugs
In 2012, using Section 84, CL was granted to Natco Pharma to make cheaper version of Bayer’s kidney and liver cancer drug sorafenib [brand name Nexavar]. This was upheld by SC in 2014. More recently, the health ministry is ever keen to grant CL for Bristol-Myers Squibb’s (BMS) chronic myeloid leukaemia drug dasatinib (branded Sprycel). It is also pursuing “government route” under Section 92 to grant licence for other `blockbuster’ drugs like Roche’s trastuzumab (Herceptin) for treatment of breast cancer.       

In both areas, we see a clear attempt to throttle the rights of patent holder. Whereas, Section 3[d] read in conjunction with SC order in Glivec case puts a virtual blockade in the way of getting patent on incremental innovations, incessant attempts to grant CL is a direct infringement on patent rights.

While the TRIPs agreement allows flexibilities to developing countries to help them make drugs affordable to patients, recourse to these cannot be pushed to a point of undermining the rights of innovator/patent holder. Ironically, Section 3[d] and frequent recourse to grant of CL seek to do precisely that. The government needs to shed its current intransigence. It should stop viewing patent laws from a prism that ‘only MNCs benefit from these’. Instead, the guiding principle should be ‘incentive for R&D and innovation’ irrespective of who benefits. With this change of mindset,  the government should consider making necessary amendments in patent rules.

This will bring sustainable benefits to the health sector in the medium to long-term.

(The writer is a Delhi-based policy analyst)
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