By Sanjeev K Kapoor.The recent judgement of the Supreme Court of India in the case of Novartis AG v Union of India[1] has highlighted the protective provisions of Indian Patents Act, 1970, as amended by the Patents (Amendment) Act, 2005, (Patents Act) which imbibe the intent of striking a balance between incentivising genuine innovation and larger public interest of making available quality medicine at affordable prices..Briefly understanding the history of the patent regime in India, the Patents and Designs Act, 1911, provided for product patent protection and also had several provisions relating to compulsory licenses for products including pharmaceuticals. The Patents Act, 1970, however, eliminated patent protection in India for pharmaceutical products. This regime helped the Indian pharmaceutical industry in developing cost-efficient generic drugs, resulting in India being acknowledged as a low-cost producer of drugs worldwide..In order to comply with the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), India was required to amend its patent laws and re-introduce patent protection for pharmaceutical products from 1 January 2005. Thereafter, Indian generic drug manufacturers would not have been able to manufacture patented pharmaceutical products unless a voluntary or compulsory license is granted in accordance with the relevant provisions of the Patents Act. Since these changes to India’s patent law were causing apprehensions regarding India’s continued ability to supply affordable drugs, the Indian legislature had wisely used the flexibility provided under the TRIPS Agreement to strike a balance between patent rights and the right to affordable healthcare..Thus, there are various provisions incorporated in the Patents Act, which aptly utilise such flexibility provided under the TRIPS Agreement which raise the standards of patentability. As an example, under Article 27(1) of the TRIPS Agreement, patents will have to be provided for inventions which are “new, involve an inventive step and are capable of industrial application”. The TRIPS Agreement however does not define these terms. This has provided a flexibility which India has used to strike a balance between genuine innovation vis-à-vis evergreening[2]..The explanation to Section 3(d) of the Patents Act provides the important qualification that salts, esters, polymorphs, particle size, combinations and other derivatives of known substances cannot be patented unless they differ significantly in properties with regards to efficacy. In common words therefore secondary patents cannot be granted unless they therapeutically enhance the efficacy of a patented drug. Mere discovery of a new form of known substance without enhancement of its efficacy or a new property or a new use for a known substance is not patentable..Similarly, Article 31 of the TRIPS Agreement, the Doha Declaration[3] and the WTO decision of 30 August 2003[4] allow issuance of compulsory licenses in various circumstances. The Patents Act provides detailed provisions for grant of compulsory licenses..In an application for a compulsory license by Natco Pharma Limited (Natco) against Bayer Corporation (Bayer)[5] in respect Bayer’s patented drug sorafenib tosylate, marketed under the name Nexavar, the Controller General of Patents, Designs and Trademarks (Controller) held that all three grounds for the grant of a compulsory license were satisfied in this case and ordered the grant of a compulsory license to Natco..Notably, the instant case was a first of its kind in India, wherein an applicant had moved an application for grant of a compulsory license for a patented pharmaceutical product and was therefore entirely without a domestic precedent. The patentee, Bayer, is an internationally renowned manufacturer of life saving drugs including anti-cancer drugs. The drug Nexavar was used for the treatment of patients already in the advanced stages of liver and kidney cancers and the effect of the drug was such that the life of a patient could be extended by 4 to 5 years in the case of liver cancer and 6 to 8 months in case of kidney cancer. The drug had to be taken by the patient throughout his lifetime and the cost came to approximately INR 2.8 lakhs. The application in question was made by Natco, an Indian drug manufacturer, who had earlier sought a license from Bayer to manufacture a generic version of Nexavar which did not materialise. Natco had offered to sell the drug at a price of INR 8,800 per month..The facts of the application were considered by the Controller against the grounds for the grant of a compulsory license mentioned under Section 84 of the Patents Act:.(i) if the reasonable requirements of the public with respect to the patented invention is not being satisfied; or.(ii) that the patented invention is not available to the public at a reasonably affordable price; or.(iii) the patented invention is not being worked in the territory of India..So far as the first requirement was concerned, the Controller had relied on the data gathered from the World Health Organization and concluded that even as per Bayer’s own estimate, the total number of patients eligible for the consumption of the drug were around 8,842 while noting that given the state of health care infrastructure in the country, it was very likely that the actual numbers were far more. Bayer, despite having been granted a patent in the year 2008, did not import any units of the drug in the year 2008. Even in the years 2009 and 2010, a mere 340 units of support packs and 340 units of sample packs were imported. Thus, it noted that a remarkably insignificant quantum of the drug was made available by Bayer to the public in these years..With regard to the second requirement as to whether the patented product was available to the public at a reasonably affordable price, the Controller observed that the word “reasonably affordable price” necessarily implied a price, which balanced the compelling commercial realities surrounding the patentee as also the need of the general public at large. He further reasoned that reasonably affordable prices had to be construed predominantly in relation to the public and not in context of the patentee. Since the said drug was available at a price which was held to be unaffordable by the common man, the second ground was also said to have been satisfied..As regards the third ground as to whether the patented invention had been worked in the territory of India, the Controller proceeded on the basis of the admitted fact that Bayer did not at any point in time, manufacture the said drug in India even though it had manufacturing facilities for other oncology drugs..Having held that all the grounds were satisfied (though any one alone is sufficient for the grant of a compulsory license as per Section 84 of the Patents Act) the Controller granted a compulsory licence to Natco in the matter. The matter was thereafter taken by Bayer before the Intellectual Property Appellate Board which also held against it..Another provision which had come up for interpretation before courts is Section 3(d) of the Patents Act. This section came up for consideration before the Hon’ble Supreme Court of India when it denied the grant of a patent to Novartis for their drug Glivec[6]. The Supreme Court ruled that the compound for a new version of its anti-cancer drug Glivec, for which Novartis was seeking a patent, did not qualify as an “invention”, by giving a strict interpretation to the meaning of ‘efficacy’ in view of the intent of the Patents Act. The Supreme Court made a clear distinction between “advantageous or beneficial properties” and “therapeutic efficacy” and held that only the latter satisfies the requirements of patentability in view of Section 3(d) of the Patents Act..These decisions have widespread ramifications both from the point of view of public healthcare in India, where majority of the life-saving drugs continue to remain beyond the reach of the common man, and from the view of pharmaceutical companies, which may need to devise a new strategy for patenting incremental developments to satisfy the patentability requirements in India and also reconsider their stance on drug-pricing and local manufacturing in India..Thus, it will be seen that India’s generic pharmaceutical industry and its emergence as the world’s largest supplier of affordable medicines is in large parts due to India’s public health oriented patent policy. India’s compliance with the TRIPS Agreement in 2005 was accompanied by concerns about its ability to maintain its comparative advantage in affordable healthcare. However, India has effectively and firmly allayed such concerns as while Glivec has been granted patent protection in nearly 40 countries, it failed to meet the rigorous definition of a patentable product in the Indian context. It would be noteworthy to mention here, however, that the process for manufacturing Glivec was regarded as patentable by the Intellectual Property Appellate Board, and under patent law in India, Novartis would accordingly have the exclusive right to prevent third parties from using, offering for sale, selling or importing the product directly manufactured by the patented process[7]..The Indian experience of balancing the seemingly competing interests of affordable healthcare while protecting innovation for therapeutic efficacy may find aligned concerns even in other parts of the world, including developed countries. Similar guidelines, namely Guidelines for Patentability Examination of Patent Applications Relating to Chemical and Pharmaceutical Inventions, were introduced by Argentina last year providing that there is no novelty in the selection of one or more elements already disclosed, even though they may have different or improved properties, not previously demonstrated. The Australian Government had also commissioned an expert panel to undertake a review of pharmaceutical patents. The draft report was released on 2 April 2013 suggesting higher thresholds and stricter standards for grant of patents.[8].The need for innovation cannot be over emphasised in a sector as critical as the pharmaceutical sector which is directly relatable to human health and life. Research and development relating to new drugs, therefore, is required to be adequately incentivised and inventions must be protected allowing patentees to recover huge investments made in such activities and earn reasonable returns. However, this need of the industry must be sufficiently balanced with the larger public interest of affordable healthcare, an enviable task which the Patents Act is seeking to achieve..Sanjeev K Kapoor is a Partner at the Delhi office of Khaitan & Co..[1] 2013 (5) Scale 12[2] Steps taken by a patentee to extend the patent protection covering a product by introducing minor variations into the product and obtaining patent protection for the variations[3] The Doha Declaration refers to the special Ministerial Declaration at the WTO Ministerial Conference in Doha in 2001, covering several aspects of TRIPS.[4] On 30 August, 2003, the General Council of the WTO finally adopted the Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (the August Decision), which concerned the difficulties in making effective use of compulsory licensing.[5] Natco Pharma Limited v Bayer Corporation, Compulsory Licence Application No 1 of 2011 decided on 9 March 2012[6] Novartis AG v Union of India [2013 (5) Scale 12][7] Section 48 of the Patents Act[8] http://pharmapatentsreview.govspace.gov.au/files/2013/04/Pharmaceutical-Patent-Review-Draft-Report.pdf
By Sanjeev K Kapoor.The recent judgement of the Supreme Court of India in the case of Novartis AG v Union of India[1] has highlighted the protective provisions of Indian Patents Act, 1970, as amended by the Patents (Amendment) Act, 2005, (Patents Act) which imbibe the intent of striking a balance between incentivising genuine innovation and larger public interest of making available quality medicine at affordable prices..Briefly understanding the history of the patent regime in India, the Patents and Designs Act, 1911, provided for product patent protection and also had several provisions relating to compulsory licenses for products including pharmaceuticals. The Patents Act, 1970, however, eliminated patent protection in India for pharmaceutical products. This regime helped the Indian pharmaceutical industry in developing cost-efficient generic drugs, resulting in India being acknowledged as a low-cost producer of drugs worldwide..In order to comply with the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), India was required to amend its patent laws and re-introduce patent protection for pharmaceutical products from 1 January 2005. Thereafter, Indian generic drug manufacturers would not have been able to manufacture patented pharmaceutical products unless a voluntary or compulsory license is granted in accordance with the relevant provisions of the Patents Act. Since these changes to India’s patent law were causing apprehensions regarding India’s continued ability to supply affordable drugs, the Indian legislature had wisely used the flexibility provided under the TRIPS Agreement to strike a balance between patent rights and the right to affordable healthcare..Thus, there are various provisions incorporated in the Patents Act, which aptly utilise such flexibility provided under the TRIPS Agreement which raise the standards of patentability. As an example, under Article 27(1) of the TRIPS Agreement, patents will have to be provided for inventions which are “new, involve an inventive step and are capable of industrial application”. The TRIPS Agreement however does not define these terms. This has provided a flexibility which India has used to strike a balance between genuine innovation vis-à-vis evergreening[2]..The explanation to Section 3(d) of the Patents Act provides the important qualification that salts, esters, polymorphs, particle size, combinations and other derivatives of known substances cannot be patented unless they differ significantly in properties with regards to efficacy. In common words therefore secondary patents cannot be granted unless they therapeutically enhance the efficacy of a patented drug. Mere discovery of a new form of known substance without enhancement of its efficacy or a new property or a new use for a known substance is not patentable..Similarly, Article 31 of the TRIPS Agreement, the Doha Declaration[3] and the WTO decision of 30 August 2003[4] allow issuance of compulsory licenses in various circumstances. The Patents Act provides detailed provisions for grant of compulsory licenses..In an application for a compulsory license by Natco Pharma Limited (Natco) against Bayer Corporation (Bayer)[5] in respect Bayer’s patented drug sorafenib tosylate, marketed under the name Nexavar, the Controller General of Patents, Designs and Trademarks (Controller) held that all three grounds for the grant of a compulsory license were satisfied in this case and ordered the grant of a compulsory license to Natco..Notably, the instant case was a first of its kind in India, wherein an applicant had moved an application for grant of a compulsory license for a patented pharmaceutical product and was therefore entirely without a domestic precedent. The patentee, Bayer, is an internationally renowned manufacturer of life saving drugs including anti-cancer drugs. The drug Nexavar was used for the treatment of patients already in the advanced stages of liver and kidney cancers and the effect of the drug was such that the life of a patient could be extended by 4 to 5 years in the case of liver cancer and 6 to 8 months in case of kidney cancer. The drug had to be taken by the patient throughout his lifetime and the cost came to approximately INR 2.8 lakhs. The application in question was made by Natco, an Indian drug manufacturer, who had earlier sought a license from Bayer to manufacture a generic version of Nexavar which did not materialise. Natco had offered to sell the drug at a price of INR 8,800 per month..The facts of the application were considered by the Controller against the grounds for the grant of a compulsory license mentioned under Section 84 of the Patents Act:.(i) if the reasonable requirements of the public with respect to the patented invention is not being satisfied; or.(ii) that the patented invention is not available to the public at a reasonably affordable price; or.(iii) the patented invention is not being worked in the territory of India..So far as the first requirement was concerned, the Controller had relied on the data gathered from the World Health Organization and concluded that even as per Bayer’s own estimate, the total number of patients eligible for the consumption of the drug were around 8,842 while noting that given the state of health care infrastructure in the country, it was very likely that the actual numbers were far more. Bayer, despite having been granted a patent in the year 2008, did not import any units of the drug in the year 2008. Even in the years 2009 and 2010, a mere 340 units of support packs and 340 units of sample packs were imported. Thus, it noted that a remarkably insignificant quantum of the drug was made available by Bayer to the public in these years..With regard to the second requirement as to whether the patented product was available to the public at a reasonably affordable price, the Controller observed that the word “reasonably affordable price” necessarily implied a price, which balanced the compelling commercial realities surrounding the patentee as also the need of the general public at large. He further reasoned that reasonably affordable prices had to be construed predominantly in relation to the public and not in context of the patentee. Since the said drug was available at a price which was held to be unaffordable by the common man, the second ground was also said to have been satisfied..As regards the third ground as to whether the patented invention had been worked in the territory of India, the Controller proceeded on the basis of the admitted fact that Bayer did not at any point in time, manufacture the said drug in India even though it had manufacturing facilities for other oncology drugs..Having held that all the grounds were satisfied (though any one alone is sufficient for the grant of a compulsory license as per Section 84 of the Patents Act) the Controller granted a compulsory licence to Natco in the matter. The matter was thereafter taken by Bayer before the Intellectual Property Appellate Board which also held against it..Another provision which had come up for interpretation before courts is Section 3(d) of the Patents Act. This section came up for consideration before the Hon’ble Supreme Court of India when it denied the grant of a patent to Novartis for their drug Glivec[6]. The Supreme Court ruled that the compound for a new version of its anti-cancer drug Glivec, for which Novartis was seeking a patent, did not qualify as an “invention”, by giving a strict interpretation to the meaning of ‘efficacy’ in view of the intent of the Patents Act. The Supreme Court made a clear distinction between “advantageous or beneficial properties” and “therapeutic efficacy” and held that only the latter satisfies the requirements of patentability in view of Section 3(d) of the Patents Act..These decisions have widespread ramifications both from the point of view of public healthcare in India, where majority of the life-saving drugs continue to remain beyond the reach of the common man, and from the view of pharmaceutical companies, which may need to devise a new strategy for patenting incremental developments to satisfy the patentability requirements in India and also reconsider their stance on drug-pricing and local manufacturing in India..Thus, it will be seen that India’s generic pharmaceutical industry and its emergence as the world’s largest supplier of affordable medicines is in large parts due to India’s public health oriented patent policy. India’s compliance with the TRIPS Agreement in 2005 was accompanied by concerns about its ability to maintain its comparative advantage in affordable healthcare. However, India has effectively and firmly allayed such concerns as while Glivec has been granted patent protection in nearly 40 countries, it failed to meet the rigorous definition of a patentable product in the Indian context. It would be noteworthy to mention here, however, that the process for manufacturing Glivec was regarded as patentable by the Intellectual Property Appellate Board, and under patent law in India, Novartis would accordingly have the exclusive right to prevent third parties from using, offering for sale, selling or importing the product directly manufactured by the patented process[7]..The Indian experience of balancing the seemingly competing interests of affordable healthcare while protecting innovation for therapeutic efficacy may find aligned concerns even in other parts of the world, including developed countries. Similar guidelines, namely Guidelines for Patentability Examination of Patent Applications Relating to Chemical and Pharmaceutical Inventions, were introduced by Argentina last year providing that there is no novelty in the selection of one or more elements already disclosed, even though they may have different or improved properties, not previously demonstrated. The Australian Government had also commissioned an expert panel to undertake a review of pharmaceutical patents. The draft report was released on 2 April 2013 suggesting higher thresholds and stricter standards for grant of patents.[8].The need for innovation cannot be over emphasised in a sector as critical as the pharmaceutical sector which is directly relatable to human health and life. Research and development relating to new drugs, therefore, is required to be adequately incentivised and inventions must be protected allowing patentees to recover huge investments made in such activities and earn reasonable returns. However, this need of the industry must be sufficiently balanced with the larger public interest of affordable healthcare, an enviable task which the Patents Act is seeking to achieve..Sanjeev K Kapoor is a Partner at the Delhi office of Khaitan & Co..[1] 2013 (5) Scale 12[2] Steps taken by a patentee to extend the patent protection covering a product by introducing minor variations into the product and obtaining patent protection for the variations[3] The Doha Declaration refers to the special Ministerial Declaration at the WTO Ministerial Conference in Doha in 2001, covering several aspects of TRIPS.[4] On 30 August, 2003, the General Council of the WTO finally adopted the Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (the August Decision), which concerned the difficulties in making effective use of compulsory licensing.[5] Natco Pharma Limited v Bayer Corporation, Compulsory Licence Application No 1 of 2011 decided on 9 March 2012[6] Novartis AG v Union of India [2013 (5) Scale 12][7] Section 48 of the Patents Act[8] http://pharmapatentsreview.govspace.gov.au/files/2013/04/Pharmaceutical-Patent-Review-Draft-Report.pdf