Akshay Khandelwal
Abstract
Patents provide the Patent owner with the legal means to prevent others from making, using, or selling the new invention for a limited period of time, subject to a number of exceptions. Patents do not constitute marketing authorizations. The TRIPS Agreement stipulates that it must be possible for all inventions to be protected by a patent for 20 years, whether for a product (such as medicine) or a process (a method of producing an ingredient for a medicine).
TRIPS (The Agreement on Trade Related Aspect of Intellectual Property Rights) attempt the arduous task of balancing private and public rights. On one hand, it protects the interest of the pharmaceutical companies that invest heavily in R & D of Drugs and, on the other; it allows nations that belong to the WTO to promote public health in their respective countries. However, patents on pharmaceutical products have adversely affected industrially developing and least developed countries, hampering their ability to formulate appropriate public health policies that would enable their ailing citizen to access medicines. For instance Pharmaceutical patents have raised the cost of life saving drugs, effectively putting them out of the reach of the majority of the World’s population.
The Article will analyze the effect on availability of medicines to the public due to the pharmaceutical patent system in the light of Indian Patent Act, 1970 and TRIPS agreement. The Author will identify the difficulties which the common people are facing and the unlawful gains which the patent holders are making, due to this patenting system.
“The idea of a better ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death.”
Indira Gandhi at the World Health Assembly in 1982
INTRODUCTION:
The patent system is social policy tool that aims to stimulate innovation. Internationally, patent protection is governed by the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. TRIPS do not establish a uniform international law, but sets out minimum standards of patent protection that must be met by all WTO members. Developed countries have already implemented the agreement, and other countries such as India are implementing it now, in 2005. Least-developed countries are not obliged to do so until 2016.
Medicines are expensive when they are protected by patents. The patent holder has a monopoly on the drug for a minimum of 20 years, and uses that period to maximize profit. But as soon as generic competition is possible, prices of medicines plummet: for instance, after the Brazilian government began producing generic AIDS drugs in 2000, prices dropped by 82%.
Protection of public health was one of India’s major concerns when the TRIPS Agreement was being negotiated. The Patents Act, 1970 did not provide for product patents for inventions relating to medicines. The duration of protection of process patents for medicines was also limited to a maximum of seven years. This conscious policy choice adopted in India’s Patent Act yielded positive results over a period of three decades in building a good industrial infrastructure for manufacturing generic medicines, while also to keeping the price of essential drugs at a relatively low level. During the final stages of negotiations that resulted in the TRIPS Agreement, India attempted to ensure that TRIPS provisions would not substantially affect the public health needs of the large sections of the population that are below the poverty line. Subsequently, India made conscious efforts to incorporate the flexibilities available in TRIPS and the Doha Declaration when India amended the Patents Act in 1999, 2002 and 2005.
The reasons for the lack of access to essential medicines are manifold, but in many cases the high prices of drugs are a barrier to needed treatments. Prohibitive drug prices are often the result of strong intellectual property protection. Governments in developing countries that attempt to bring the price of medicines down have come under pressure from industrialized countries and the multinational pharmaceutical industry. The World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) sets out the minimum standards for the protection of intellectual property, including patents for pharmaceuticals. While TRIPS does offer safeguards to remedy negative effects of patent protection or patent abuse, in practice it is unclear whether and how countries can make use of these safeguards when patents increasingly present barriers to medicine access.
The lack of protection for product patents in pharmaceuticals and agrochemicals had a significant impact on the Indian pharmaceutical industry and resulted in the development of considerable expertise in reverse engineering of drugs that are patentable as products throughout the industrialized world but unprotectable in India. As a result of this, the Indian pharmaceutical industry grew rapidly by developing cheaper versions of a number of drugs patented for the domestic market and eventually moved aggressively into the international market with generic drugs once the international patents expired. In addition, the Patents Act provides a number of safeguards to prevent abuse of patent rights and provide better access to drugs. The Indian Patents (Amendment) Act, 2005 introduced product Patents in India and marked the beginning of a new patent regime aimed at protecting the Intellectual property rights of patent holders. The Act was in fulfillment of India’s Commitment to World Trade Organization (WTO) on matters relating to Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).
Background:
Sick people in India and around the world depend on the willingness of Indian producers to carry out the research to develop and manufacture affordable generic versions of second-line AIDS drugs and other new medicines. India has a long history of fighting for protection of public health over intellectual property: it led developing countries’ resistance to the TRIPS Agreement during the Uruguay Round of WTO negotiations, and also played a key role during the 2001 WTO ministerial conference in Doha, which resulted in the adoption of the Doha Declaration on TRIPS and Public Health. Unlike other developing countries, it has also waited as long as was permitted by TRIPS before introducing patents on pharmaceutical products. In the new post-2005 TRIPS context, it is crucial that India continue to develop policies that promote access to medicines, not just out of responsibility to its own people, but as a lifeline to patients in other developing countries.
At the time of independence in 1947, India’s pharmaceutical market was dominated by Western MNCs that controlled between 80 and 90 percent of the market primarily through importation. Approximately 99 percent of all pharmaceutical products under patent in India at the time were held by foreign companies and domestic Indian drug prices were among the highest in the world. The Indian pharmaceutical market remained import-dependent through the 1960s until the government initiated policies stressing self-reliance through local production. At that time, 8 of India’s top 10 pharmaceutical firms, based on sales, were subsidiaries of MNCs. To facilitate an independent supply of pharmaceutical products in the domestic market, the government of India founded 5 state-owned pharmaceutical companies. Today, India is the world’s fifth largest producer of bulk drugs.
Government policy culminated in various actions including: the abolition of product patents on food, chemicals, and drugs; the institution of process patents; the limitation of multinational equity share in India pharmaceutical companies, and the imposition of price controls on certain formulations and bulk drugs. Subsequently, most foreign pharmaceutical manufacturers abandoned the Indian market due to the absence of legal mechanisms to protect their patented products. Accordingly, the share of the domestic Indian market held by foreign drug manufacturers declined to less than 20 percent in 2005. As the MNCs abandoned the Indian market, local firms rushed in to fill the void, and by 1990, India was self-sufficient in the production of formulations and nearly self-sufficient in the production of bulk drugs.
Regulatory framework for Pharmaceutical Patent before TRIPS Agreement:
The focus of the intellectual property regime that India has had to adopt since it took Commitments under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) have remained on the ability of the country to provide mechanisms which can ensure that the country is able to provide access to medicines to its citizens at affordable prices. India has had a unique position among the countries in the developing world for it has a strong generic pharmaceutical industry, which has been able to provide medicines at prices that were among the lowest in the world. Much of the credit for this development goes to the Patents Act that India enacted in 1970. Two key provisions facilitated this process.
• The first was introduction of a process patent regime for chemicals and,
• The second, shortening of the life of patents granted for pharmaceuticals.
The Patent Act 1970 stated objective was to foster the development of an indigenous Indian pharmaceutical industry and to guarantee that the Indian public had access to low-cost drugs. The Act replaced intellectual property rights laws left over from the British colonial era and ended India’s recognition of Western-style “product” patent protection for pharmaceuticals, agricultural products, and atomic energy. Product-specific patents were disregarded in favor of manufacturing “process” patents that allowed Indian companies’ to reverse engineer or copy foreign patented drugs without paying a licensing fee. This allowed the domestic industry build up considerable competencies and offer a large number of cheaper “copycat” generic versions legally in India at a fraction of the cost of the drug in the West, as long as they employed a production process that differed from that used by the patent owner. The Act protected process patents for 7 years instead of the usual 15 years needed to develop and test new drugs.
Indian Patent (Amendment) Act, 2005 (In consensus with TRIPS Agreement):
On March 23, 2005, the Indian Parliament passed the Patent (Amendment) Bill 2005 (Bill No. 32-C of 2005). It was the third amendment to the Indian Patent Act (1970). The amended Patent Act conforms to requirements set forth by the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Since the new law came into effect on January 1, 2005, there have been serious concerns regarding the role of the domestic Indian generic industry in the new product patents regime, and the continued availability of essential medicines at affordable prices.
To meet its TRIPs obligations, India amended its patent law on March 22, 2005, abolishing its “process” patents law and reintroduced Western style “product” patents for pharmaceuticals, food, and chemicals. This action effectively ended 36 years of protection for Indian pharmaceutical companies and stipulated that Indian companies selling copycat drugs must pay foreign patent holders a “reasonable” royalty for copies sold in the Indian market. The amendment made reverse engineering or copying of patented drugs illegal after January 1, 1995.
The Act allowed for only two types of generic drugs in the Indian market:
• Off-patent generic drugs and,
• Generic versions of drugs patented before 1995.
At present, nearly 97 percent of all drugs manufactured in India are off patent and therefore will not be affected by this Act. It also introduced a provision establishing compulsory licenses for exports to least developed countries with insufficient pharmaceutical manufacturing capacities. The Amendment grants new patent holders a 20-year monopoly starting on the date the patent was filed and, without a compulsory license, no generic copies can be sold during the duration of the patent.
Compulsory Licensing:
Compulsory Licensing is a procedure whereby a Government can allow any company, agency or designated person the right to make a patented product, or use a patented process under license, without the consent of the original patent holder. 36 Under section 84(1) of the amended Act, an application can be made for compulsory license three years after the grant of a patent: “At any time after the expiration of three years from the date of the grant a patent, any person interested may make application to the Controller for grant of compulsory license.”
Pharmaceutical Patent under TRIPS Agreement and Access to Medicines:
The World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS or “Agreement”), which sets out the minimum standards for the protection of intellectual property, including patents for pharmaceuticals, has come under fierce criticism because of the effects that increased levels of patent protection will have on drug prices. While TRIPS does offer safeguards to remedy negative effects of patent protection or patent abuse, in practice it is unclear whether and how countries can make use of these safeguards when patents increasingly present barriers to medicine access.
The Fourth WTO Ministerial Conference, held in 2001 in Doha, Qatar, adopted a Declaration on TRIPS and Public Health (“Doha Declaration” or” Declaration”) which affirmed the sovereign right of governments to take measures to protect public health. Public health advocates welcomed the Doha Declaration as an important achievement because it gave primacy to public health over private intellectual property, and clarified WTO Members’ rights to use TRIPS safeguards. Although the Doha Declaration broke new ground in guaranteeing Members’ access to medical products, it did not solve all of the problems associated with intellectual property protection and public health. The recent failure at the WTO to resolve the outstanding issue to ensure production and export of generic medicines to countries that do not produce may even indicate that the optimism felt at Doha was premature.
Indian generic drug manufacturers have been manufacturing generic versions of branded drugs. Under the Act, such generic drug manufacturers that had made significant investment and were marketing the product before January 2005 can continue marketing the product in the new regime. The Act grants them immunity from infringement suits from patent holders. They would only have to pay a reasonable royalty to the patentee. Indian generics makers still retain significant scope for copycatting patented Western drugs, legally or illegally, without penalty. And Western companies have seen relatively few of their patent applications approved. Industry observers who expected India’s IPR climate to suddenly change after the 2005 Act may have been overly optimistic in their estimate of how fast things can change in this industry.
India is one of the few developing countries that decided to use the full ten-year transitional period (1995-2004) under the TRIPS Agreement. During this period from 1995 to 2004, India received numerous product patent applications that the Indian Patent Office started examining in 2005. These applications are at various stages of examination and whether they are granted or not will have a significant impact on continued access to generic medicines.
Flexibilities available under TRIPS and its use by the Indian Government to secure access to essential medicines:
The introduction of pharmaceutical patents in India has been particularly controversial. Indian producers have long been suppliers of low-cost medicines (including key HIV/AIDS treatments), domestically and also to other low- and middle-income countries. In amending its patent law to meet new international obligations, India, like many developing countries, attempted to take advantage of flexibilities in TRIPS to ameliorate potentially negative effects that pharmaceutical patents might have on the supply of medicines. India used its full transition period, waiting to introduce pharmaceutical product patents until 2005 (pharmaceutical process patents were already available prior to TRIPS). Applications dating from 1995 onward were received but were not examined on HIV/AIDS (UNAIDS) and civil society groups, defend 3(d) and point to India as a model for developing countries attempting to use TRIPS flexibilities to promote public health.
In 2005, when India was compelled to re-introduce the product patent regime, the Indian Parliament, aware of its responsibility not only to Indians but to patients across the world adopted the only pragmatic solution available — to utilize flexibilities available under TRIPS in an attempt to secure the availability, affordability and accessibility of medicines. According to this approach, TRIPS does not set any universal common standard for the substantial aspects of the patent law. Thus, as the Doha Declaration on the TRIPS Agreement and Public Health (Doha Declaration), clearly states every WTO member has the right “to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”. Thus the TRIPS implementation strategy was “to find the means within the patent system and outside it, to generate the competitive environment that will help to offset the adverse price effect of patents on developing country consumers. The cautious approach suggests the implementation of TRIPS should be done with minimum damage”.
As noted above, the various amendments to India’s patents law introduced flexibilities at both the pre- and post-grant stage of a patent application. This study explores the potential of three of these key flexibilities in allowing continued generic production of medicines.
• The first relates to medicines invented prior to 1995. Under TRIPS there is no obligation to provide patent protection to products invented prior to 1 January 1995.
• The second is one of the most important flexibilities employed by India which is the restriction of the scope of patentability in relation to known substances. Thus, section 3(d) of the Patents Act, 1970 prohibits the patenting of known medicines unless the patent applicant can demonstrate increased therapeutic efficacy. It must be borne in mind that section 3(d) is not a blanket prohibition on such patents. However, the Indian Patent Office is expected to apply this provision strictly while examining the applications before it. It is also expected to apply the provisions of section 3(e) that prohibits the patenting of mere admixtures and section 3(i) which excludes from patenting any process of “medical or surgical, curative, prophylactic or other treatment of human beings…”
• Finally, section 11A(7) of India’s patents Act, 1970 provides that where a company was already producing and marketing a product before 1 January 2005 on which a patent application was made in the mailbox, should that patent be granted, the company may continue manufacturing that product on the payment of a reasonable royalty. These are only some of the flexibilities available under the Indian law. However, if applied strictly they offer a significant space for generic production.
Judiciary Opinion:
Supreme Court on: Access to Medicines (Novartis Case)
The Indian Supreme Court has refused to allow one of the world’s leading pharmaceutical companies to patent a new version of a cancer drug, a decision campaigner hailed as a major step forward in enabling poor people to access medicines in the developing world.
Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies in India to manufacture and sell cheap copies of the drug in the developing world and has implications for HIV and other modern drugs too.
Campaigners were jubilant. A ruling in Novartis’s favour would have reduced poor people’s access to the drug, said Jennifer Cohn, of Médecins Sans Frontières (MSF). “The fact that India says patents is to reward innovation as opposed to small changes does stay true to the concept of what a patent should be.”
F. Hoffman-La Roche Ltd., v. Cipla Ltd. (Delhi High Court):
The Court, while rejecting the application from Roche for a temporary injunction preventing Cipla from manufacturing and selling at very low price the generic version of the cancer drug erlotinib, observed:
“therefore, this Court is of the opinion that as between the two competing public interests, that is, the public interest in granting injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favour of the latter. The damage or injury that would occur to the plaintiff in such case is capable of assessment in monetary terms. However, the injury to the public which would be deprived of the defendant’s product which may lead to shortening of lives of several unknown persons, who are not parties to the suit, and which damage cannot be restituted in monetary terms, is not only uncompensatable, it is irreparable. Thus irreparable injury would be caused if the injunction sought for is granted.”
Problem of Data Exclusivelity in Access to Medicine in India:
Pharmaceutical companies have to submit test and clinical data to the national health authorities to obtain marketing approval for a new drug. The national health authorities keep the innovator data confidential against “unfair commercial use” for ascertain time period, thus barring generic manufacturers from using the submitted innovator data for the stipulated period.
The US and EU grant “data exclusivity” for five years and eleven years, respectively. Most often, companies use data exclusivity provisions to seek a period of monopoly in a country even if it does not have any patents on the product in the country. As such, data exclusivity provisions have considerable implications for developing countries like India.
So far, India has not introduced provisions pertaining to data exclusivity in the three amendments to the Patents Act, 1970. India is now considering amendments to the Drugs & Cosmetics Act, 1940 and the Indian Insecticides Act, 1968 incorporating provisions for data protection.
Once data exclusivity is introduced, generic companies would have to do their own safety and efficacy tests. The huge cost involved in this exercise could result in generic companies being barred from producing a generic version of a product for a period extending effectively beyond 20 years. It may also result in the ineffective use of compulsory license due to data exclusivity provisions, were such a license issued to a generic manufacturer.
Conclusion:
Since 1970, India’s Patent Act has allowed Indian manufacturers to legally produce generic versions of medicines patented in other countries. India’s expertise in reverse drug engineering and the efficiency of its pharmaceutical manufacturing industry fast established it as the prime source of generic medicines in the world. 2005 marks a fundamental and potentially dramatic change in access to medicines in developing countries: countries which do not yet grant patents on medicines, such as India, now have to implement patent laws in compliance with the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. The Act has some clear provisions to protect the interests of the domestic generic manufacturers. It has achieved a reasonably fine balance among stringent IP measures, while making use of some of the flexibilities that TRIPS offers. The amended Patents Act has an effective opposition system for challenging frivolous patents, limited patentability exceptions, elaborate provisions pertaining to compulsory licensing, and parallel importation.
The changes to the new Patents Act could enable India to continue playing the pioneer role that it played in the pre-TRIPS period, making drugs available at cheap prices to consumers both domestically, and around the world.