India’s Patenting Laws in the Balance?
Anita Sekhri [anita.sekhri@pxvlaw,com]
Much has been reported about the hearing by the Supreme Court of India relating to the patentability of Novartis’s anti-cancer drug, Glivec. One of the key issues in the case revolves around section 3(d) of the Patents Act of 2005 (a provision unique to Indian patent laws) and the meaning of “efficacy” as used in that section, but the outcome of the case has wider implications for India’s position as a player on the pharmaceutical industry world stage.
Section 3(d) of the Patents Act 2005 states that derivatives of known substances cannot be patented unless they “differ significantly in properties with regard to safety and/or efficacy.” This creates a significant hurdle for those seeking patents on pharmaceutical products, but its aim is to prevent “evergreening” which is the practice of extending the term of patent protection for a single product by obtaining additional patents covering modified forms, or other variations of the same product. This is closely related to the creation of “patent thickets” or “patent clusters” which is the filing of numerous additional patents for the same product. The aim of both these practices is ostensibly to prevent generic competitors entering the market and bringing down the price of drugs.
But how serious a problem is it? In 2009 the European Commission conducted an inquiry into the pharmaceutical sector and published the following findings:
“The sector inquiry found that originator companies use a variety of strategies and instruments to maintain revenue streams from their medicines, in particular blockbusters, for as long as possible. These practices can delay generic entry and lead to healthcare systems and consumers paying more than they would otherwise have done for medicines. The instruments include…. strategic patenting…” 
According to the Commission’s findings, some ‘blockbuster’ drugs “are protected by up to nearly 100 product-specific patent families, which can lead to up to 1,300 patents and/or pending patent applications across the European Member States. A significant number of patent applications occur very late in the life cycle of a medicine”, particularly in the case of blockbuster medicines. The report goes on to say that this can make it very difficult for a generic or other competitor to see if they can develop a similar drug without infringing any of these patents and therefore reduces competition. In addition, in many cases those filing such patents know they are inherently weak.
So, from this perspective, section 3(d) seems like a laudable provision. After all, the problem seems to lie with the patent offices that grant such patents. A system is required “where patent examiners have up-to-date and specific expertise; where their workload remains manageable in spite of a steadily increasing number of technologies applicable for protection; and where patent offices are free from national political interests. In today’s patent reality, many cases slip through the mazes.”  There is also no doubt that this would also apply to the Indian Patent Office, which has faced much criticism from a number of legal and patent professionals as well as patient groups, for its red tape and lack of transparency in decision making.
However, this being the case, coming back to the current Novartis case before the Supreme Court, if patent offices are struggling as it is, how can they be expected to determine the “therapeutic efficacy” of an invention? This is what would be required if the Supreme Court does not overturn the previous findings in the Novartis case. Does such a determination not require some medical expertise and review of clinical trial data – an activity normally carried out by experienced clinicians and other professionals in the various regulatory authorities such as the US Food & Drug Administration or the European Medicines Agency? Also there are issues as to the availability of such data – often patents are filed at a very early stage of a drug’s development, well before clinical trials are even contemplated!
It is suggested that patent authorities must restrict themselves to looking, (perhaps more rigorously) at the usual patenting criteria of novelty, inventiveness and industrial application.
Apart from the practicalities of importing a medically therapeutic effect into the meaning of Section 3 (d), it is also suggested that the Madras High Court erred in using a pharmacology dictionary to determine the meaning of “efficacy”. It is a well established “golden rule” of statutory interpretation that the words of statute must prima facie be given their ordinary meaning. As Shamnad Basheer and T Prashant Reddy argue in their paper, “The “Efficacy” of Indian Patent Law Ironing out the Creases in Section 3(d)”, using anything other than the plain meaning of the word would limit the scope of Section 3(d) only to the field of pharmacology whereas the section must also necessarily cover other chemicals such as agrochemicals. The paper also argues that such an interpretation would deny patentability to incremental inventions such as new drug delivery systems, a “field of technology in which Indian firms are proficient” and which may provide a greater benefit to patients. Surely this cannot have been the legislative intent of Section 3(d)? This point is also picked up in the Mashelkar Committee Report (2009) commissioned by the Indian Government, “The process of innovation is continuous and progressive leading to an ever extending chain of knowledge. Innovative incremental improvements based on existing knowledge and existing products is a ‘norm’ rather than an ‘exception’ in the process of innovation. Entirely new chemical structures with new mechanisms of action are a rarity rather than a rule. Therefore, “incremental innovations” involving new forms, analogs, etc. but which have significantly better safety and efficacy standards, need to be encouraged. What is important, however, is for the patent office to be vigilant about setting high standards of judging such innovations so that efforts on “evergreening” are scrupulously prevented.”
There are also well versed arguments about how Section 3(d) may be incompatible with TRIPS as also suggested by the Mashelkar Committee in its report. All in all this leads to the conclusion that the Supreme Court must move away from the findings of the IPAB and the Madras High Court before it, and broaden the scope of the interpretation of Section 3(d). It is suggested that not doing so will harm India’s ability to compete globally. Roger Bate, in a paper written in February 2007 concludes, “India is at a crossroads, and the Novartis case may determine its direction. It can follow the route it has taken in software engineering, with sensible intellectual property protection that spurs growth, or it can travel the opposite route with idiosyncratic rules that limit growth and innovation.”
It is argued that multinational countries with the money and expertise to conduct innovative research, will not bring such research to India unless the patenting requirements are changed. Such companies will be reluctant to pass on know-how to Indian companies unless there is the comfort of the added protection of a patent. As was pointed out by Ranbaxy in the Annexure to the Mashelkar Committee Report, restricting patentability is an attractive solution only in the short-term: “Restriction of patentability to NCEs alone is likely to benefit only MNCs which have the resources and the experience to develop NCEs. Indian companies that have far less resources are better placed to benefit from early commercialization of incremental innovations. A prerequisite to successful licensing deal for such products is the protection of the IP in the form of a patent, preferably in the country itself since products are being manufactured here. “
Whilst providing drugs to Indians at affordable prices must also be a priority, it is suggested that rather than concentrating on the prevention of “evergreening”, other mechanisms should be looked at, such as at anti-trust laws, abuse of rights laws, pricing negotiation strategies such as those recently adopted in Germany and reforming regulatory hurdles, as being methods of helping generic entry into the market and increasing innovation that can only benefit the growing Indian pharmaceutical industry – especially when the market for drugs in India alone is projected to be worth over $8 billion in the next few years. Such action also becomes increasingly important as India faces stiff competition from China.
The Supreme Court faces a delicate balancing act between the interests of the powerful generics industry and those who wish to innovate and move “higher up the pharmaceutical value chain”. Their decision and reasoning is awaited with interest.
 Pharmaceutical Sector Inquiry – Preliminary Report, Fact Sheet “Originator-Generic competition”. See http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/
 nccr trade regulation, Swiss national centre of competence in research, Working Paper No 2011/23, May 2011
“The Legal Notion of Abuse of Patent Rights” by Michelangelo Temmerman.
 See also the revised Mashelkar Committee report (March 2009) that states, “The Indian patent office has the full authority under law and practice to determine what is patentable and what would constitute only a trivial change with no significant additional improvements or inventive steps involving benefits. Such authority should be used to prevent ‘evergreening’, rather than to introduce an arguable concept…of “statutory exclusion” of incremental innovations from the scope of patentability.”
 (2008) 5:2 SCRIPTed 232 http://www.law.ed.ac.uk/ahrc/script-ed/vol5-2/basheer.asp
 “Agreement on Trade-Related Aspects of Intellectual Property Rights” (April 15, 1994).
 “India and the Drug Patent Wars”, No. 3 February 2007 – Robert Bate, American Enterprise Institute for Public Policy Research
 See http://www.bloomberg.com/news/2010-11-11/astrazeneca-drugmakers-may-face-added-german-price-pressures.html where companies have one year to negotiate prices with insurers. If no agreement is reached, the maximum price is determined by the Health Ministry and the drug must undergo a cost benefit analysis by a semi-state agency.
 Ranjit Shahani in a 2006 KPMG report on the Indian Pharmaceutical Industry – see http://www.in.kpmg.com/pdf/Indian%20pharma%20outlook.pdf