Of Evergreening and Efficacy, Part III

By Ryan Abbott

This is the last in a three-part series (Part I, Part II) of posts I’ve written about the case between Novartis and the Union of India, in which the Supreme Court of India denied Novartis a patent for its anti-cancer drug Glivec. Today I’m continuing the discussion of the practical outcome of the case. What effect is the Glivec patent decision going to have on access to medicines in India and other developing countries?

Beyond issues specific to the transition period, the Supreme Court was considering challenges to Section 3(d) of its patent act, which prohibits patents for a new form of an existing drug without a change in therapeutic efficacy. It is designed to prevent evergreening, a term used to label practices where a small change is made to an existing product and claimed as a new invention. When Section 3(d) was enacted in 2005, it was unique to India—there was no analogous provision in any other country.

Novartis had at one point tried to argue that Section 3(d) was unconstitutional under the Indian constitution and non-compliant with TRIPS, but those arguments were rejected by the High Court at Madras in 2007. Novartis did not appeal those decisions. The High Court rejected the TRIPS claim because in India private plaintiffs may not challenge a national law based on its compatibility with an international agreement. However, the court also referred to the Doha Declaration, which affirms that “the TRIPS Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.” This means that WTO members can set their own standards for patent protection within the bounds of TRIPS. Section 3(d) establishes a higher standard for an inventive step, which means that drugs patentable in other countries won’t necessarily be patentable in India.

Narrowly then, in India, there are a number of pre-grant opposition cases currently being appealed by pharmaceutical companies. If the Supreme Court had weakened the interpretation of Section 3(d), it could have allowed denied applications to be granted on appeal. Aside from that, it’s possible that this decision will have limited impact given that it involves issues fairly specific to India.

Yet some other countries, such as Argentina and the Philippines, have already incorporated provisions similar to Section 3(d). As a consultant for Health Research for Action in 2009, I coauthored a report recommending to Caribbean nations that they adopt provisions like Section 3(d). In the aftermath of this case, it is more likely other countries will follow India’s lead.

More importantly, India’s victory in this case may be a signal regarding changing political attitudes toward the demands of multinational corporations (MNCs). Historically, MNCs have taken a hard line against “lax” patent protection for pharmaceutical products. Even as recently at 2006 and 2007, Thailand faced retaliation after issuing compulsory licenses for two on-patent HIV/AIDS drugs and an antiplatelet drug. Abbott, the maker of one of the HIV/AIDS drugs, subsequently withdrew all applications to register medicines in Thailand. The United States Trade Representative (USTR) then placed Thailand on the 301 Report’s Priority Watch List and threatened to terminate Thailand’s export privileges.

India is becoming increasingly aggressive with regards to IP protections. Last year, India’s Patent Office issued its first compulsory license to a generics manufacturer for an on-patent medicine. The Indian company Natco is now licensed to produce and sell a generic version of the Bayer anti-cancer drug Nexavar. India also revoked Pfizer’s patent for its anti-cancer drug Sutent. Both companies are appealing.

This may be the way of the future if the pharmaceutical industry fails to significantly change its model. Glivec and Nexavar can both cost $70,000 a year in India, where the average person makes $1,500 annually. Those economics are simply unworkable, even though Novartis and Bayer both provide free distribution programs for certain cancer patients.

Roy Waldron, the Chief Intellectual Property Counsel for Pfizer, stated last month that, “India has taken steps that call into question the sustainability of foreign investment and the ability of American companies to compete fairly. In fact, the Global Intellectual Property Center’s International Intellectual Property Index, ranked India dead last in terms of overall protection of intellectual property. Despite being a member of the World Trade Organization, and an important global trading partner, India has systematically failed to interpret and apply its intellectual property laws in a manner consistent with recognized global standards.” He concluded the U.S. government should signal such actions are not condoned, and that the U.S. should pursue a robust trade agenda. MNCs and developed countries such as the U.S. continue to push for higher levels of intellectual property protection in bilateral and regional free trade agreements, and in multinational agreements like the Trans‐Pacific Partnership Agreement (TPP).

Still, there is no way MNCs will make good on threats to withdraw innovative medicines from India. First, because with the possible exception of certain biological drugs, Indian generics companies could domestically produce just about any drug MNCs fail to introduce. Second, India’s pharmaceutical sector is booming; the domestic market is expected to experience double-digit growth this year, and it is among the top five pharmaceutical emerging markets. India’s pharmaceutical sector attracted foreign direct investments worth $4.9 billion in 2000–2011. No one is going anywhere while there is money to be made.

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