Modi’s exhortation on international fora
Interacting with America’s top CEOs [including US based multinationals in pharmaceutical and agrochemical space] in September, 2015, Prime Minister Modi assured the global innovative industry that India will do all it can to protect intellectual property. He opined “We are committed to protecting Intellectual Property Rights [IPRs]. That is essential to fostering creativity”.
In October, 2015, during his meeting with German Chancellor, Angela Merkel, he reiterated that “the government will soon come out with a comprehensive IPR policy.” Germany too is home to multinationals in pharmaceutical, agro-chemicals sectors spending billions of dollars on research and development [R&D] and like US, has a fundamental interest in protection of IPRs.
The commitments made by Modi on international forum generated huge expectations regarding a conducive new National IPR policy. The policy has been in the works for over an year now and after examination of stakeholders comments on the draft, department of industrial policy and promotion [DIPP] is expected to notify Patent [Amendment] Rules 2015 in this month.
Patent [Amendment] Rules, 2015
The Rules focus primarily on augmentation of IP infrastructure [opening up of more dedicated benches, increasing examiners etc], better implementation of IP laws, creating an environment for encouraging domestic innovations with greater focus on innovation by small & medium enterprises and increased collaboration between universities, research institutes and industry.
These give incentive to an innovator who already has a manufacturing facility in India for the “to-be-patented” product [or commits to set up in a fast track mode] by way of expeditious processing of his application. This will also apply to cases where Indian patent office is also a designated search authority for applications filed simultaneously in several countries/jurisdictions.
The policy also provides for creating a comprehensive and exhaustive repository of patents and creating platform for their trade-ability and faster commercialization. The rules lay emphasis on making all patent and trademark applications on-line with a view to bring about greater transparency and accountability besides speeding up processing of applications and patent grant.
All of the above is standard stuff aimed at plugging existing void in IP infrastructure and effective enforcement of patent laws. However, on substantive matters, the policy strikes a discordant note. It rules out any dilution in contentious Section 3[d] of the Patent [Amendment] Act 2005 and also refuses to yield on government’s stance regarding grant of compulsory licenses for patented drugs.
In its latest Annual Special 301 report on national IPR regimes, the US Trade Representative [USTR], Michael Forman had kept India on “priority-watch list” implying that its patent laws is a matter of concern. However, he refrained from initiating “out-of-cycle review” – a euphemism for engaging with the government on IPR challenges. Now that India has emphatically ruled out addressing its key concerns, it may be considering such review.
Section 3[d] – incremental innovations
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 the main thrust of amended Act i.e. to provide for product patent. USTR has been protesting against this section for over a decade and India has been refusing 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. Apart from satisfying tests of invention as laid down under Section 2 [1], 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 [SC] [2013] in case of Glivec – 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 & implement’ it. So, it viewed test of efficacy to mean ‘therapeutic efficacy’ implying that ‘pharmacological/chemical properties’ only need be considered to the neglect of innovations in a host of other categories; effectively shutting the door to ‘incremental’ innovations.
Most of the incremental innovations are in the area of ‘new dosage form’; ‘new delivery systems’ etc. The value of these to the patients in terms of ‘quality’ & ‘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. And, that in turn, will be a huge set back to continued R&D.
This is what worries global R&D companies and USTR. The scope for research & innovations in these areas is phenomenal. Indian companies are already taking patents in favourable jurisdictions abroad. Why should they be denied such opportunities on home turf? The logic cannot change simply because MNCs are applying for such patents in India.
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 & 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 protection.
Compulsory Licensing
The other major concern flagged by USTR relates to grant of compulsory licensing [CL] to generic Indian drug firms for the much-in-demand new drugs for which an innovator holds a patent. A CL authorizes the concerned entity to manufacture and market a patented product even without prior consent from the innovator/holder of patent. The government can issue CL when it deems necessary to do so in public interest.
Such flexibility allowed under TRIPs agreement was incorporated in Indian Patent [Amendment] Act 2005. Under Section 84, a license can be issued for “private commercial use” if it is found that the patent holder has not taken required steps to make the patented product available in sufficient quantities or the price charged is not ‘affordable’ to the patients/consumers. On the other hand, under Section 92, which allows the government route for issue of CL, the controller can issue the license 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 TRIPs agreement was that government would use grant of CL ‘sparingly’; in fact, as a last resort. It was meant to be used when there is clinching evidence that innovator is exploiting the monopoly power for personal gains un-mindful of the overarching interests of patients/users. However, actions of the authorities viz., office of the patent controller and ministry of health [MOH] in recent years show that this is being observed more in breach.
Thus, in 2012, the patent controller using Section 84 granted CL to generic company 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, MOH 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 for other blockbuster drugs like Roche’s trastuzumab [Herceptin] for treatment of breast cancer.
In both aforementioned 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 serious encroachment on patent rights.
Way forward
While, TRIPs agreement allows flexibilities to developing countries to help them make drugs affordable to patients, recourse to these cannot be pushed to point of undermining the rights of innovator/patent holder. Ironically, Section 3[d] and frequent recourse to CL seek to do precisely that.
The government needs to shed its current intransigence on the issue. 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, Modi should consider making necessary amendments in patent rules.
This will bring sustainable benefits to the health sector in the medium to long-term by galvanizing Indian companies to intensify their efforts on indigenous R&D for developing medicines and solutions to suit our needs at much lower cost leveraging our cheap scientific manpower and vast network of research institutions.