Pharmaceutical Patent Regime And Public Access To Health: A Legal Conundrum
A registered patent grants monopoly right, approved by the government, to the
inventor to utilize his/her invention to the exclusion of all others for a
limited or bounded period of 20 years. A registered patent possesses significant
economic value, helps foster innovation and research in society. Patents play a
critical role in the pharmaceutical industry as it's a highly globalized sector
with only 15-20 multinational companies dominating the industry (Oliver, 2017).
Hence, in such an intensely competitive and R&D-driven sector, combined with the relative ease of reverse-engineering, an originator firm is highly dependent on Intellectual Property Rights (IPRs), particularly patents, to fend off competition and accordingly appropriate the rents derived from technological innovation. A patent regime is put in place not only keeping in mind the promotion of innovation and protecting the patent holder from exploitation but also addressing the unmet global health needs.
The 'Right to Health', for a long time now, has been a central element of all the international human rights system. Access to essential medicines is crucial for accomplishing universal health coverage and honoring the right to health to every person. Such goals can be attainable through the collective efforts of the public & private healthcare sectors in the pharmaceutical industry are included in the field of innovation, especially in developing countries and LDCs. Moreover, various internationally recognized conventions help maintain the balance between access to public health and the protection of IP rights.
With the pandemic of coronavirus and its global impact, there is a visibly highlighted significance & the utmost need for the equilibrium between a potent pharmaceutical patent regime and access to public health to the masses, mainly due to the shortage of vital recovery drugs and vaccines availability. In such severe times, devising an accurate balance between protecting the IP rights tends to cause serious impediments in manufacturing products for the mass population and public welfare. Hence, a successful patent regime requires keeping the rights of the inventors and the access to public health in equilibrium.
Intellectual Property- Definition
As per World Intellectual Property Organization, Intellectual Property means "Literary artistic and scientific works, performances of performing artistic, phonograms and broadcasts, inventions in all fields of human endeavour, scientific discoveries, industrial designs, trademarks, service marks, and commercial names and designations, protection against unfair competition and all other rights resulting from intellectual activity in the industrial, scientific, literary and artistic fields.[1]
Intellectual Property is the creations of the mind - everything from works of art to inventions, computer programs to trademarks, and other commercial signs.[2] Intellectual property is an asset and, as such, it can be bought, sold, mortgaged, licensed, exchanged, or gratuitously given away like any other form of the property. Further, it provides the creator of the intellectual property with the exclusive legal right over the property, and the same property cannot be used by another person without the consent of the creator for a certain period.
Intellectual Property can be loosely defined as the creations of the human mind that emerged on the center stage of world commerce and stage with the formation of the World Trade Organization. The conclusive of the Uruguay Round of Multilateral Trade Negotiations and the signing of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) is a major landmark in the development of international law in the field of Intellectual Property Rights.[3]
Taking into account the various distortions to international trade and the need for the promotion of adequate protection of IP Rights, the TRIPS Agreement was introduced. Further, it recognizes that "Intellectual Property Rights" are private rights and protection of them includes development and technological advancements.
The SC has explained that the "object of patent law is to support scientific research, new technology and industrial progress. Grant of exclusive privilege to own, use or sell the method or the product patented for a limited period, the invention at the patents office, which after the conclusion of the period of patent protection, passes into public domain."[4]
The Indian Patent Regime vis-à-vis the Pharmaceutical Products
According to the (previous act) Patent Act of 1911, which India inherited from the colonist period protected all inventions and innovations excluding the inventions relating to atomic energy & the patent term of 16 years from the date of application. However, a few domestic channel and pharmaceutical enterprises that attempted to develop their technology in the early 1960s ran into trouble with foreign patent owners.
The foreign patent holders in several cases were neither using their patents in domestic manufacturing nor authorizing them to be used by local firms. That highly contributed towards the build-up of pressure and duress in the late 1960s for a new potent patent protection regime. Indian firms were not against patents but wanted greater access to patented know-hoe especially when patents owners not allowing their patents to be used.
The conflict of views was sharper in chemical and pharmaceutical where patients had been used to disallow the entry of Indian firms. Therefore, a new Patent Act was adopted in 1970 that reduced the scope of patentability in food, chemical, and pharmaceuticals to only processes and not products. Since virtually any chemical compound can be made by a variety of processes, the scope of patent protection was greatly reduced. The term of process patents was reduced to seven years in food, drugs, and chemicals and 14 years for other products. The compulsory licenses (CLs) could be issued after a fixed period of 3 years.[5]
Prior to the Act of 1970 under the provisions of the Patents and Designs Act, 1911, India had provided their authorization to the product patents for the drugs which allowed the multinational and global firms from developed countries especially the United States, Germany and United Kingdom to command the domestic market for pharmaceutical research and products with a share of 86%.
Although, following the alterations made through the formulation of a New Act of 1970, which acknowledged exclusively the process patents in the pharmaceutical drug industry, the same control of multinational & global firms circumspectly shrank over the years and was about 38% in the early 2000s. Hence, The Indian Patent Act of 1970 was hailed as it projected a harmonic balance or equilibrium between the patent rights assigned to the patent holder and his obligations. [6]
Indian Pharmaceutical Structure
The growth of the industry over recent years has been supportively ushered by increasing globalization and significant industry restructuring. A noticeable trend is of mergers and acquisitions consolidating firms into larger multinational enterprises. Paradigm shifts have transpired with outsourcing of Research and Development, manufacturing, an upsurge in the importance of small biotechnology firms as suppliers of biological entities for drug discovery, changes in the technology for drug discovery systems.
Pharmaceuticals can be defined as:
"Chemicals or biological substances accommodating one or more active ingredients utilized in the treatment or avoidance to diseases".[7] The Indian Pharmaceutical and Drug Industry could be defined as all those players who contribute to the creation and supply of pharmaceutical products.[8]
Pharma Industry Prior to 1991
In the initial days of Pre-Independence period the size of the pharmaceutical and drug market and production was negligible. In 1954 the government of India has established Hindustan Antibiotic Ltd. (HAL) and later on Indian Drugs & Pharmaceuticals Ltd. (IDPL) was established. To set up the manufacturing units in India government has provided incentives to Multinational companies (MNCs) and also took up important steps in 1970s to promote and develop the Drugs and Pharmaceutical Industry. Even the Government of India introduced the regulatory norms. They are:
Pharma Industry After 1991
From 1991 onwards economic reforms have been introduced in various areas of the economy thereby bringing substantial alterations, the liberalization of the Indian foreign investment regime and overall economy faced more activities from the foreign players. The MNCs not only increased the steps in Indian subsidiaries and Joint-Ventures, rather they also have also been expanding their product credentials & portfolios by way of entering into the established segments and also by their own patent product.
They are outsourcing greater amount both in bulk and formulation requirements, when compared to Indian manufacturers and they are entering in co-marketing agreements with the India players who have strong marketing and distribution network (Ranbaxy, Nicholas etc.).
India became signatory to Washington Treaty of 1989, which is administered by WTO and acceded to Patent Cooperation Treaty (PCT) in December 1998. Meanwhile international pressure urged India to improve its legislation and administration or Intellectual Property Rights. India had transitional period until 2005 for strengthening IPR in line with its commitments to the WTO. Transitional period gives to adopt a product patent regime by which provides a three-phase obligation plan under the WTO on TRIPS. The three phases are:
Generally, Patents are classified into two categories:
Globalisation and its Impact on Indian Pharma Industries and Patent Regime
The Pharmaceutical & Drug Industry in India was affected by the globalization. Because at the time of independence the MNCs used to take the assistance of the Patent and Designs Act, 1991 of the British colonial period which were exploited the drug market. They were engaged mainly within the import of medicinal drugs and products from their country of origination. 99% of the drugs & pharmaceutical patents in India were owned by foreign MNCs.
The establishment of Hindustan Antibiotic Ltd. (HAL) and the Indian Drugs, Pharmaceutical Ltd. (IDPL) units and Drugs Policy of 1978 has been largely responsible for the easy access to medicines & drugs at relatively much lower prices in the nation.
Bulk Drugs
Bulk drug production was increased from 900 crores in the 1991-92 to 5439 crores in 2001-02. When the growth of bulk drug production is higher than the bulk drug consumption, there is a probability for a large scale drug export. This is clearly evident from the bulk drug export growth rate.
Product Patent vs. Process Patent
In India there was no product patent for medicine and food products till the climax of the year 2004. According to Section 5 of the Indian Patent Act, 1970 only process patent was in vogue. Keeping the perspective of healthcare system in India and to provide food & medicine available to downtrodden and under privileged group of society, it was thought appropriate that only process patent could serve the purpose. The grant of process patent means anybody could use different process for product selling an Active Pharma Ingredient (API) and also to develop a new formation.
The issue relating protection of product patent and protection of process patent is very relevant in the plight of inventions in the drug & chemical field. The grant of product patent means a product could be manufactured by a totally new and different method. In such cases the patentee attains the complete & exclusive right for himself his grantee or license to use, or exercise the process or method in the specific country which authorized the patent.
The grant or authorization of a patent for any kind of product, by itself, disallows another person in commercially utilizing the procedure or process the patent owner has developed for the preparation of the product without securing a license from the owner itself.
The inception of product patents especially for medicines & drugs drastically affected the generic players, as majority of the Indian pharmaceutical companies who hither to can grow faster in the absence of the product patent regime.
Increase in Drug Prices
The costs of drugs are increasing highly alone with costs of other commodities in recent times. The Drug Price Control Order (DPCO) lost control from 1987 onwards. In 1987 this was diluted and the number of drugs were restricted which declined to 347, in the same year it was dropped down to 163 & in year 1994 only 73 drugs were under drug price control order (DPCG).
The industry was not happy with the development, license, they wanted the control to be abolished totally. A government has to reimburse excess profits to the Department of Health. As a result of reduction of the custom duties on foreign imports many drugs manufactured in India have really become nonviable compared to the foreign goods spread across the Indian market.
Public Sector and Mergers
With the minimized part of centre under globalization, the drug companies of the public sector have to overlook certain significant problems coupled with imminent closure. Public Pharmaceutical companies like Hindustan Antibiotics Ltd. (HAL). Indian Drugs & Pharmaceuticals Ltd. (BCPL) played an important role of the publicly owned companies and has marginalized, and made to become sick.
As a result of Global & National magnitude mergers,[10] takeovers & acquisitions pharmaceutical corporations have become even more sizable supported with greater financial power in their possession over their competitions. Through the process the MNCs would gradually perpetuate their grip on the Indian Pharmaceutical industry by the creation of a limited number of mega companies having monopoly control and domination worldwide.
Indian Firms Concentrating on Generic Products
A number of big pharmaceutical firms would start concentrating on generic products as their central source of revenue. There is a big market for generic products (products whose patents have expired) in the west and the Indian firms would be eyeing to capture the market through pit competency in low-cost production. The generic market would witness intensive competition among all the left-over firms.
Standardization of Products
With the regularization of products and patents, the market would witness one standardness of products in every corner of it in place of the variety of values for similar products found presently. For e.g.: "Cetrizine", which has different versions of similar kind being circulated around regularization would have only one product distributed by the patent owners since post January 1, 2005. This would help in removing the confusion of which such multiple copies of same products create sometime.
Research and Development
Research & Development in a developing country like India are much less than that in the developed world and both new & advanced drug discovery research and newer drug delivery systems programmes can be conducted at very competitive rates. India has well established network of research labs and skilled scientific personnel. The success of a few companies in this era has also demonstrated to the rest of the industry that funding in research & development could yield handsome returns.
TRIPS: The Pharmaceutical & Public Healthcare Dimension
The much-debated TRIPS Agreement, a part of the WTO Convention is shortly become a reality in its application to the Pharmaceutical Industry & the Public Healthcare System particularly in the developing world. The TRIPS Agreement, a comprehensive document containing 73 Articles is going to be the guide in implementation of Intellectual Property Rights at the global level. The TRIPS Agreement has raised several apprehensions in the minds of the people in the third world countries, particularly the context of the vital drug industry and the Public Healthcare System.
There is a reason for apprehensions among the people about the implementation of the TRIPS Agreement in the third world countries. India as a signatory to the internationally recognized TRIPS Agreement has also to bear the brunt of the adverse effects of TRIPS Agreement on the Pharmaceuticals Industry & the Public Healthcare System.
Impact of TRIPS on Pharmaceutical Products
India had to amend its patent law regime in January 2005 in order to deliver for the product patents relating to pharmaceutical and drug products, in order to implement its commitment to the TRIPS Agreement. The new patent regime model grants Exclusive Marketing Rights (EMRs)[11] with respect to inventions concerning pharmaceutical & related products, until the product patenting with respect to them could have been granted after 1995. Therefore, if an individual is permitted exclusive marketing rights, he is empowered for sale or distribution of the patented article exclusively in India. This can be classified as a transitory provision in order to cover the time-period between 1995 and 2005 in India.[12]
Pharmaceuticals is one among India's most successful industries. The industry's benefactory involvement to its economy is not only largely cruicial but it also grants drugs and medicines at affordable prices to various classes of our society. Majority the whole of domestic demand is met through the industry's production which is totally indigenous. Today, India is amongst top fifteen pharmaceuticals manufacturing countries in the whole world.[13]
A recent survey shows that the lifesaving drugs in India is many times cheaper compared to the developed countries. For instance, an Anti-Cancer drug like vinclastin (10 mg) costs Rs. 195 in India, Rs. 400 in Pakistan, and Rs. 1743.22 in US and Rs. 976.35 in UK. Similarly, in 1998 the anti-AIDS drug Flucanazole $ 55 in India for 100 tablets (150 mg) but $ 697 in Malaysia, $ 703 in Indonesia and $ 817 in Philippines.[14]
Apprehensions of the Pharma Industry
The inception of TRIPS & its abidance does come along certain challenges against the pharmaceutical industry.[15]
The TRIPS agreement is visibly tipped in the favour of developed nations and the major multination pharmaceutical firms and moreover there is only little trade related about TRIPS and the right to trade which can be advantageous to developed countries.
The public health policy of the country shouldn't be compromised at huge costs to the Indian public. It is put forward that TRIPS Agreement poses a threat to the human rights of people.
TRIPS would strike at the industry's capability to participate in sustainable development is self-reliant way.
TRIPS would obstruct the preservation and additionally become a greater threat towards the process of innovation and the manufacturing of indigenous medicines like Ayurveda and Unani.
Companies lacking R &D competence may not be able to survive in the highly competitive market and will be forced towards mergers, joint-ventures etc.
The required expense budget with regard to R&D would be twice as compared to before.
It would significantly impact the overall growth of the industry and could even put a stop to it for some time.
Most importantly, the costs of drug would go beyond control and therefore going way out of the monetary capacity of a common man.
Impact of TRIPS on Public Access to Healthcare & Human Rights
Right to Health has been recognized as a fundamental right not just in India but in nearly every third world countries. In so far as India is concerned. Though Right to Health is not expressly recognized as a fundamental right, the judiciary has recognized it as a fundamental right under Art. 21 of the Constitution which guarantees right to life and personal liberty. Therefore, the right to health care and access to healthcare services at affordable prices have become a universally recognized fundamental right.[16]
Even TRIPS agreement also acknowledges that the member countries may be ruled out from patentability, inventions and prevention under their territory of the exemption, manipulation of which it is necessary to protect public order and morality including the protection of all living beings and their health to avoid serious prejudice to environment.[17]
The Doha Declaration gives the developing countries (or commonly known as the third world coutnries) the best chance of protecting the health of their citizens in spite of the TRIPS obligation. For the first time the developed countries have realised that the health of people of third world countries is as precious as the health of their own people.[18]
The intellectual property Rights manage two conflicting social concerns viz.
The Present Scenario
NOVARTIS Case (NovartisAG v. Union of India & Ors.)
The Novartis judgment has started an enormous war of words. The patent drug manufacturers declared: "Woe is us. This could be the end of inventions." On the other hand, the generic drug makers said: "Well done Supreme Court. Now we can supply lifesaving drugs to India and the world at much cheaper prices."
Firstly, allow me to present certain facts about the Novartis case and its judgement. The drug under discussion is Gleevec, that is employed by patient for curing certain types of cancer. The drug is based on the Imatinib Mesylate (IM) a free base which was a crucial discovery and undoubtedly a new-fangled invention accredited to Dr. Zimmerman. IM was transformed into salt in a crystalline form referred to as 'IM Alfa' which was further improvised into the 'IM Beta' crystalline form. This particular form of crystalline was argued to be granted the status of invention as the results showed enhanced flow properties, thermostability and nether hygroscopicity, in other words creating a more stable and digestible than the earlier versions.
The main question remained- Whether the Beta form was an invention or not? This particular question had mighty implication in terms of the ground realities in two significant ways. The lifetime of the first Zimmerman patent would be extended by 20 years. If another "improvement" was accepted as a patentable invention, it might be extended for an additional 20 years. In jurisprudence and practice, this phenomenon identified as "evergreening."
The second ground reality was that a patent would be a "monopoly." This also means the owner of the merchandise can impose any price it wants. Of course, countries can impose a compulsory license if there's scarcity, but that option comes with too many restrictions. This was the Euro-American solution devised by the TRIPS (Trade Related Intellectual Property Rights) treaty within the new WTO (World Trade Organization).
The Supreme Court viewed that Gleevec didn't have novelty-therein IM was within patent protected under the Cancer Research article and further related publications. Nor could it be proved that it involved an ingenious step because an individual skilled performing the task with what was known would be ready to discover the IM within the crystalline form with the properties claimed for Gleevec. The wanting decision in the case concerns whether Gleevec may well be given a product patent for improvements brought about now. The solution to that is crystal clear. Novartis was unable to get a product patent but was entitled under a process patent to guard how it had been made. Effectively, the 'evergreening' of Gleevec was withhold. [20]
But Novartis said the judgement "discourages future innovation in India". The firm's managing director and vice-president, Ranjit Shahani said "this particular ruling is setback for patients too, as it will hinder the medical progress for diseases by limiting the treatment options." He said Swiss company are going to be cautious about investing in India, especially over introducing new drugs, and seek patent protection before launching any new products. It would further refrain the firm's R&D activities within the country. Shahani further added that "Such an environment isn't very encouraging for intellectual property."
Gleevec is a crucial drug for the treatment of myeloid leukaemia and has revolutionized the prospects for patients in rich countries. It blocks the cancer growth in patients with a specific gene mutation. But being targeted therapy, it's very expensive, costing £1,700 a month. [21]
Effects of the Novartis Case
Cipla Ltd. vs. F. Hoffmann-La Roche Ltd.
Over the years the nation has experienced many patent disputes between Foreign Multinational Pharmaceutical companies and Indian Drug companies. But the suit between Roche and Cipla has surely set the standards when it involves a patent violation suit. Roche is a Swiss-multinational healthcare company operating throughout the world whereas Cipla is an Indian Multinational Pharmaceutical Company.
Bayer vs. Cipla & Union of India
This is another judgment which was against the monopoly of the big players in the pharmaceutical industry and appropriately keeping in mind the larger public access to health and interest of the public. Moreover, many major pharma companies repeatedly attempted to bring about some tweaks within the Indian legislation with regard to patent infringement and this particular decision came as a caution signal for such companies.
Covid Vaccine Patent Waiver Debate
The Coronavirus disease 2019 (COVID-19) pandemic has ceased to be of a purely medical nature and now confine other crucial areas including global trade, no less than World Trade Organization (WTO) recognized this reality by expressing "represents an unprecedented negative effect on the worldwide economy and world trade, as production and consumption are scaled back across the world."[23]
The extension of the pandemic into these supplementary areas has also highlighted disparities within the global distribution of COVID-19 vaccines. Additionally, this inequality is present within the area of manufacturing too. It is under this relation that the South Africa nation and India-member states of the WTO-earlier urged the WTO to temporarily discontinue the IP rights associated to COVID-19, in hopes of ensuring access to vaccines, medication, and other innovations needful to suppress the pandemic. Moreover, South Africa and India accounted for their proposed waiver by expressing that IP rights constitute a restraint to accessible treatment and to international sharing of technology and knowledge.
Furthermore, South Africa and India urged the Council for TRIPS to suggest to the WTO General Council that Sections 1, 4, 5, and 7 of Part II of the TRIPS Agreement be ceded from their implementation, application, and enforcement. These Sections are pertinent to copyright and related rights, industrial designs, patents, and protection of undisclosed sensitive information. Moreover, the suggested waiver would only last until widespread, global vaccination and herd immunity are achieved.
This suggested waiver, however, came to a standstill. One the one hand, developed countries-including Australia, Norway, the EU, Japan, Canada, Switzerland, United Kingdom, and United States-are against the suggested waiver. On the other hand, around 80 developing countries support of the same.
The concept of necessity-which has been perceived as an "objective standard"[24]. The proposed TRIPS Agreement waiver, in consistent with the aforementioned factors, is necessary for two reasons: First, the proposed waiver pursues the goal of addressing drug-making companies' lack of manufacturing capacity; and second, the proposed waiver rectifies the pandemic's impact on global trade.
Moreover, the proposed TRIPS Agreement waiver is practicable because the TRIPS Agreement, without the proposed waiver, is insufficient. The developed nations who are against the proposed waiver-backed by pharmaceutical giants-predominantly argue that the TRIPS Agreement already gives adequate legroom over IP rights for governments to efficaciously counter to public health emergencies requirements.
Voluntary Licenses (VL) are one alternative which is proposed by the developed countries at odds with the proposed waiver. By definition, VLs are a "technique for patent holders to willingly permit other parties to capitalize on their patents.".[25] Furthermore, VLs essentially selectively authorize the patent holder to determine who produces the patented goods and the places wherein the product can be sold.
But history supports the finding that VLs are, indeed, confining towards the manufacturing amplitude to fulfil with requirements. Hence, even though VLs admittedly lead the way towards drug affordability in some cases, they are habitually tainted by uncomplimentary and abusive terms and conditions that lead to drug inaccessibility for many others.
The concept of beneficiality, although not concisely expressed in WTO jurisprudence, is one wherein nations and other stakeholders gain advantages from a certain measure rather than disadvantages, or, at the very least, where the advantages outweigh the disadvantages. The suggested TRIPS Agreement waiver is advantageous for three reasons: First, it can banish intellectual property barriers and elevate the manufacturing capacity; second, it is in the interest of all nations' economies; and third, it presents a "win-win" situation.
The nations against the proposed waiver may bicker about the safe-guarding of Intellectual Property Rights elevating innovation[26] and that there is a direct relationship between such IP rights protection and innovation. However, these arguments are circumstantial at best.
There is sufficient evidence that an equitable distribution of vaccines and medicines isn't only within the interest of Global North nations but is additionally within the interest of Global South nations. The worst-case scenario would be where Global North nations put the pandemic under control by fully immunizing their populations, while Global South nations are left behind-the global economy enduring an aggregate loss of US$9 trillion or more, nearly 50% of which will be borne by Global North nations.
And even the best-case and most suitable scenario would be where Global North nations fully inoculate their populations, while Global South nations immunize certain percentage of their populations which still presents a global economic loss.
Aside from being capable of ramping up manufacturing capacities around the world and being mutually advantageous to all nations' economies, the suggested waiver does not actually take away the monetary stimulus in the form of incentives for the frontrunners, as previously established in this paper. Granting due course to the suggested waiver does not change the reality that the frontrunning pharma companies have gained more than US$12 billion in research funding.[27]
The COVID-19 pandemic divulged that the world is far more connected and interdependent than they are split-up and independent. This divulgence places prominence on the necessity to concert a global effort striving towards regularizing the production, procurement, and distribution of COVID-19 vaccines and medicines.
The absenteeism of an effective equalizing mechanism is not only detrimental to nations who are left out but is detrimental to the entire world at whole. The suggested TRIPS Agreement waiver- being vital, practicable, and beneficial-is the effective levelling mechanism that the world needs to curb the repercussions of and put an ultimate end to the COVID-19 pandemic.
John Donne, in his poem, said it best: "No man is an island entire of itself; every man is a piece of the continent, a part of the main."
The Future Prospect: The Strategy
The influence of Intellectual Property Rights hugely depends upon the developmental footing of the economy such as the attainability of technical manpower and infrastructure; capacity of domestic industry. A country with potent indigenous industry like India is in a moderately advantageous position than the countries where the indigenous industry isn't potent enough and mainly depends on multinational contributions. Hence, it can be said that R & D investment in India has sky rocketed with new WTO patent regime.
Some of the larger pharmaceutical members have begun vitalizing their R & D sectors and as a result, have started filing numerous applications regarding new patents. Many have also resorted towards mergers and amalgamations in order to pool together their human and financial resources and attain a strengthened R&D department to develop new innovative products. Certain R&D firms have also made deals with multinationals, overseeing research and assuring large scale manufacturing on their behalf. Besides the R & D investment in traditional chemical-based screening, some of the R & D firms are looking for breakthrough in biotechnology research.
Pharmaceutical outsourcing is increasing world over and it is expected to increase still more with the vertical disintegration of activities by the multinationals as they review their core competencies. Henceforth, R & D could take place in one country, manufacturing in another and marketing rights could be given to totally different country.
In efforts to elevate the global prospects of pharma industry post 2005, the Centre had established a cut-off point of December 2003, to comply with Good Manufacturing Practices. The World Health Organization set a mandatory limit on the incurring expenditures to the range from ₹15 Lakhs to ₹1 Crore per unit. Reverse Engineering is kind of a strength of the Indian Pharmaceutical Industry. Such units by utilizing the provisions under CL, anomaly to the exclusive rights of the patent holder and the Bolar exception should focus on manufacturing the generic version of patented drugs or medicines and even the ones which near expiry of protection term period.
Many firms parallelly work in the research of new mechanism related to drug delivery and also recognizing new applications of already existing drugs or products. Hence, it is also necessary to safeguard the already introduced innovations and techniques through technology spill overs.
Various options are possible within the WTO regime which can be adopted by the Indian pharmaceutical industry. These are to:
This prowess employed within the WTO framework with priority laid on the quality standards will certainly grant a country like India a competitive ascendency over its other Asian counterparts.
B.C. Nirmal[28] has written about Indian Pharmaceutical Industry and The New Patent Regime. According to him the pharmaceutical industry is well developed and capable to produce and sell practically all the drugs required in the country. Indian companies supply a large number of generic bulk drugs and their formulation to the global market. According to a study, 67 percent of the medicines produced in India are exported to developing countries.
The leading firms in India recently have acquired over 20 companies aboard and the indigenous Indian industry has now become global in certain segments. The biggest Indian pharmaceutical firms have sales turnovers of $50 million to $1.2 billion. Although this size of sales turnover is relatively small as compared to annual sales of the leading MNCs of US, Europe and Japan which are in the range of $5 billion to $60 billion, the position of the Indian industry as well-recognized global player is widely acknowledge and Indian companies have adequate capabilities to create riche position in the global market in the further years to come.
The Indian pharma industry is quite positive with regard to the export prospects. In fact, many of them believe that the growth in exports will wholly than indemnify for the declining domestic opportunities in the new product patent regime. But our assessment is that the export possibilities in the further coming years may not be as bright as it is many a time thought to be Product patent protection in pharmaceuticals in India was abolished in India in 1972.
The positive influence of the same was not felt immediately. It took almost two decades for the indigenous generic firms to unlock its full potential and establish themselves. Similarly, the negative impact of the patent protection will take a while to felt. It is possible that Indian generic companies are still too much influenced by the past growth and experience and are yet unable to properly assess the negative impact of shrinking domestic opportunities.
Recommendations
Conclusion
Indian Pharmaceutical Industry has to face new challenges on account of reforming of Indian economy and globalisation. Indian Pharmaceutical Industry in India received a fillip during 1st World War & the same continued till today in spite of many hurdles and obstacles. The Pharmaceutical Industry worldwide and particularly the pharmaceutical industry of India saw a precipitous change with the emergence of globalization, which brought a sense of competition and enhanced the condition of the market and the industry with considerable mergers and acquisitions and firms consolidating into one larger multinational firm.
With the ever-growing importance of various human rights, the legal and administrative regimes worldwide also needed to adapt to the same. The public access to healthcare and crucial medicines became one of the major goals of TRIPS Agreement with the necessary push provided by the WHO. The Pharmaceutical Patent Regime is can be considered the heart of the quest to provide easy access to healthcare and medicine. Hence, it is of the utmost necessity that Patent Regime and the quest to larger public access to healthcare go hand in hand and not create a legal conundrum.
In a globalized economy, it is often that the need of the common person is totally side-lined and a significant amount of effort is given towards the race to make more and more profits. But in an economy, wherein the common man is to be regarded as the backbone of the same. And therefore, unless the needs of the common man are not fulfilled, no system can be considered as useful.
End-Notes:
Hence, in such an intensely competitive and R&D-driven sector, combined with the relative ease of reverse-engineering, an originator firm is highly dependent on Intellectual Property Rights (IPRs), particularly patents, to fend off competition and accordingly appropriate the rents derived from technological innovation. A patent regime is put in place not only keeping in mind the promotion of innovation and protecting the patent holder from exploitation but also addressing the unmet global health needs.
The 'Right to Health', for a long time now, has been a central element of all the international human rights system. Access to essential medicines is crucial for accomplishing universal health coverage and honoring the right to health to every person. Such goals can be attainable through the collective efforts of the public & private healthcare sectors in the pharmaceutical industry are included in the field of innovation, especially in developing countries and LDCs. Moreover, various internationally recognized conventions help maintain the balance between access to public health and the protection of IP rights.
With the pandemic of coronavirus and its global impact, there is a visibly highlighted significance & the utmost need for the equilibrium between a potent pharmaceutical patent regime and access to public health to the masses, mainly due to the shortage of vital recovery drugs and vaccines availability. In such severe times, devising an accurate balance between protecting the IP rights tends to cause serious impediments in manufacturing products for the mass population and public welfare. Hence, a successful patent regime requires keeping the rights of the inventors and the access to public health in equilibrium.
Intellectual Property- Definition
As per World Intellectual Property Organization, Intellectual Property means "Literary artistic and scientific works, performances of performing artistic, phonograms and broadcasts, inventions in all fields of human endeavour, scientific discoveries, industrial designs, trademarks, service marks, and commercial names and designations, protection against unfair competition and all other rights resulting from intellectual activity in the industrial, scientific, literary and artistic fields.[1]
Intellectual Property is the creations of the mind - everything from works of art to inventions, computer programs to trademarks, and other commercial signs.[2] Intellectual property is an asset and, as such, it can be bought, sold, mortgaged, licensed, exchanged, or gratuitously given away like any other form of the property. Further, it provides the creator of the intellectual property with the exclusive legal right over the property, and the same property cannot be used by another person without the consent of the creator for a certain period.
Intellectual Property can be loosely defined as the creations of the human mind that emerged on the center stage of world commerce and stage with the formation of the World Trade Organization. The conclusive of the Uruguay Round of Multilateral Trade Negotiations and the signing of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) is a major landmark in the development of international law in the field of Intellectual Property Rights.[3]
Taking into account the various distortions to international trade and the need for the promotion of adequate protection of IP Rights, the TRIPS Agreement was introduced. Further, it recognizes that "Intellectual Property Rights" are private rights and protection of them includes development and technological advancements.
The SC has explained that the "object of patent law is to support scientific research, new technology and industrial progress. Grant of exclusive privilege to own, use or sell the method or the product patented for a limited period, the invention at the patents office, which after the conclusion of the period of patent protection, passes into public domain."[4]
The Indian Patent Regime vis-à-vis the Pharmaceutical Products
According to the (previous act) Patent Act of 1911, which India inherited from the colonist period protected all inventions and innovations excluding the inventions relating to atomic energy & the patent term of 16 years from the date of application. However, a few domestic channel and pharmaceutical enterprises that attempted to develop their technology in the early 1960s ran into trouble with foreign patent owners.
The foreign patent holders in several cases were neither using their patents in domestic manufacturing nor authorizing them to be used by local firms. That highly contributed towards the build-up of pressure and duress in the late 1960s for a new potent patent protection regime. Indian firms were not against patents but wanted greater access to patented know-hoe especially when patents owners not allowing their patents to be used.
The conflict of views was sharper in chemical and pharmaceutical where patients had been used to disallow the entry of Indian firms. Therefore, a new Patent Act was adopted in 1970 that reduced the scope of patentability in food, chemical, and pharmaceuticals to only processes and not products. Since virtually any chemical compound can be made by a variety of processes, the scope of patent protection was greatly reduced. The term of process patents was reduced to seven years in food, drugs, and chemicals and 14 years for other products. The compulsory licenses (CLs) could be issued after a fixed period of 3 years.[5]
Prior to the Act of 1970 under the provisions of the Patents and Designs Act, 1911, India had provided their authorization to the product patents for the drugs which allowed the multinational and global firms from developed countries especially the United States, Germany and United Kingdom to command the domestic market for pharmaceutical research and products with a share of 86%.
Although, following the alterations made through the formulation of a New Act of 1970, which acknowledged exclusively the process patents in the pharmaceutical drug industry, the same control of multinational & global firms circumspectly shrank over the years and was about 38% in the early 2000s. Hence, The Indian Patent Act of 1970 was hailed as it projected a harmonic balance or equilibrium between the patent rights assigned to the patent holder and his obligations. [6]
Indian Pharmaceutical Structure
The growth of the industry over recent years has been supportively ushered by increasing globalization and significant industry restructuring. A noticeable trend is of mergers and acquisitions consolidating firms into larger multinational enterprises. Paradigm shifts have transpired with outsourcing of Research and Development, manufacturing, an upsurge in the importance of small biotechnology firms as suppliers of biological entities for drug discovery, changes in the technology for drug discovery systems.
Pharmaceuticals can be defined as:
"Chemicals or biological substances accommodating one or more active ingredients utilized in the treatment or avoidance to diseases".[7] The Indian Pharmaceutical and Drug Industry could be defined as all those players who contribute to the creation and supply of pharmaceutical products.[8]
Pharma Industry Prior to 1991
In the initial days of Pre-Independence period the size of the pharmaceutical and drug market and production was negligible. In 1954 the government of India has established Hindustan Antibiotic Ltd. (HAL) and later on Indian Drugs & Pharmaceuticals Ltd. (IDPL) was established. To set up the manufacturing units in India government has provided incentives to Multinational companies (MNCs) and also took up important steps in 1970s to promote and develop the Drugs and Pharmaceutical Industry. Even the Government of India introduced the regulatory norms. They are:
- Drug Price Control Order (DPCO),
- Indian patent Act (IPA),
- High Import Tariff, and
- FERA in 1970s.
Pharma Industry After 1991
From 1991 onwards economic reforms have been introduced in various areas of the economy thereby bringing substantial alterations, the liberalization of the Indian foreign investment regime and overall economy faced more activities from the foreign players. The MNCs not only increased the steps in Indian subsidiaries and Joint-Ventures, rather they also have also been expanding their product credentials & portfolios by way of entering into the established segments and also by their own patent product.
They are outsourcing greater amount both in bulk and formulation requirements, when compared to Indian manufacturers and they are entering in co-marketing agreements with the India players who have strong marketing and distribution network (Ranbaxy, Nicholas etc.).
India became signatory to Washington Treaty of 1989, which is administered by WTO and acceded to Patent Cooperation Treaty (PCT) in December 1998. Meanwhile international pressure urged India to improve its legislation and administration or Intellectual Property Rights. India had transitional period until 2005 for strengthening IPR in line with its commitments to the WTO. Transitional period gives to adopt a product patent regime by which provides a three-phase obligation plan under the WTO on TRIPS. The three phases are:
- The Indian Patent Act 1970 was amended in March 1991 through the Patent (Amendment) Act 199
- The Patent (Amendment) Bill 1999 was introduced in December 1999 and was signed into law as Patent (Amendment) Bill 2002 to provide Exclusive Marketing Rights (EMRs).
- Following the Patent (Amendment) Ordinance, 2004 & further, the Patent (Amendment) Rules, 2005 Indian Patent Act has been amended by formally presenting of the Patent (Amendment) Act, 2005 with a view to all allow product patents for food medicine and drugs as well as substances prepared or produced by chemical process.
Generally, Patents are classified into two categories:
- Process Patents:
If the outcome of a new process is a recently developed object or article or a far better article or a less expensive article than that produced by an old method that process is patentable and is named process patents.
- Product Patents:
The grant of monopoly right to produce that product which necessarily means preventing any other person from producing the same product, whether improved or otherwise and even by adopting a different or new process for the period of patents.[9]
Globalisation and its Impact on Indian Pharma Industries and Patent Regime
The Pharmaceutical & Drug Industry in India was affected by the globalization. Because at the time of independence the MNCs used to take the assistance of the Patent and Designs Act, 1991 of the British colonial period which were exploited the drug market. They were engaged mainly within the import of medicinal drugs and products from their country of origination. 99% of the drugs & pharmaceutical patents in India were owned by foreign MNCs.
The establishment of Hindustan Antibiotic Ltd. (HAL) and the Indian Drugs, Pharmaceutical Ltd. (IDPL) units and Drugs Policy of 1978 has been largely responsible for the easy access to medicines & drugs at relatively much lower prices in the nation.
Bulk Drugs
Bulk drug production was increased from 900 crores in the 1991-92 to 5439 crores in 2001-02. When the growth of bulk drug production is higher than the bulk drug consumption, there is a probability for a large scale drug export. This is clearly evident from the bulk drug export growth rate.
Product Patent vs. Process Patent
In India there was no product patent for medicine and food products till the climax of the year 2004. According to Section 5 of the Indian Patent Act, 1970 only process patent was in vogue. Keeping the perspective of healthcare system in India and to provide food & medicine available to downtrodden and under privileged group of society, it was thought appropriate that only process patent could serve the purpose. The grant of process patent means anybody could use different process for product selling an Active Pharma Ingredient (API) and also to develop a new formation.
The issue relating protection of product patent and protection of process patent is very relevant in the plight of inventions in the drug & chemical field. The grant of product patent means a product could be manufactured by a totally new and different method. In such cases the patentee attains the complete & exclusive right for himself his grantee or license to use, or exercise the process or method in the specific country which authorized the patent.
The grant or authorization of a patent for any kind of product, by itself, disallows another person in commercially utilizing the procedure or process the patent owner has developed for the preparation of the product without securing a license from the owner itself.
The inception of product patents especially for medicines & drugs drastically affected the generic players, as majority of the Indian pharmaceutical companies who hither to can grow faster in the absence of the product patent regime.
Increase in Drug Prices
The costs of drugs are increasing highly alone with costs of other commodities in recent times. The Drug Price Control Order (DPCO) lost control from 1987 onwards. In 1987 this was diluted and the number of drugs were restricted which declined to 347, in the same year it was dropped down to 163 & in year 1994 only 73 drugs were under drug price control order (DPCG).
The industry was not happy with the development, license, they wanted the control to be abolished totally. A government has to reimburse excess profits to the Department of Health. As a result of reduction of the custom duties on foreign imports many drugs manufactured in India have really become nonviable compared to the foreign goods spread across the Indian market.
Public Sector and Mergers
With the minimized part of centre under globalization, the drug companies of the public sector have to overlook certain significant problems coupled with imminent closure. Public Pharmaceutical companies like Hindustan Antibiotics Ltd. (HAL). Indian Drugs & Pharmaceuticals Ltd. (BCPL) played an important role of the publicly owned companies and has marginalized, and made to become sick.
As a result of Global & National magnitude mergers,[10] takeovers & acquisitions pharmaceutical corporations have become even more sizable supported with greater financial power in their possession over their competitions. Through the process the MNCs would gradually perpetuate their grip on the Indian Pharmaceutical industry by the creation of a limited number of mega companies having monopoly control and domination worldwide.
Indian Firms Concentrating on Generic Products
A number of big pharmaceutical firms would start concentrating on generic products as their central source of revenue. There is a big market for generic products (products whose patents have expired) in the west and the Indian firms would be eyeing to capture the market through pit competency in low-cost production. The generic market would witness intensive competition among all the left-over firms.
Standardization of Products
With the regularization of products and patents, the market would witness one standardness of products in every corner of it in place of the variety of values for similar products found presently. For e.g.: "Cetrizine", which has different versions of similar kind being circulated around regularization would have only one product distributed by the patent owners since post January 1, 2005. This would help in removing the confusion of which such multiple copies of same products create sometime.
Research and Development
Research & Development in a developing country like India are much less than that in the developed world and both new & advanced drug discovery research and newer drug delivery systems programmes can be conducted at very competitive rates. India has well established network of research labs and skilled scientific personnel. The success of a few companies in this era has also demonstrated to the rest of the industry that funding in research & development could yield handsome returns.
TRIPS: The Pharmaceutical & Public Healthcare Dimension
The much-debated TRIPS Agreement, a part of the WTO Convention is shortly become a reality in its application to the Pharmaceutical Industry & the Public Healthcare System particularly in the developing world. The TRIPS Agreement, a comprehensive document containing 73 Articles is going to be the guide in implementation of Intellectual Property Rights at the global level. The TRIPS Agreement has raised several apprehensions in the minds of the people in the third world countries, particularly the context of the vital drug industry and the Public Healthcare System.
There is a reason for apprehensions among the people about the implementation of the TRIPS Agreement in the third world countries. India as a signatory to the internationally recognized TRIPS Agreement has also to bear the brunt of the adverse effects of TRIPS Agreement on the Pharmaceuticals Industry & the Public Healthcare System.
Impact of TRIPS on Pharmaceutical Products
India had to amend its patent law regime in January 2005 in order to deliver for the product patents relating to pharmaceutical and drug products, in order to implement its commitment to the TRIPS Agreement. The new patent regime model grants Exclusive Marketing Rights (EMRs)[11] with respect to inventions concerning pharmaceutical & related products, until the product patenting with respect to them could have been granted after 1995. Therefore, if an individual is permitted exclusive marketing rights, he is empowered for sale or distribution of the patented article exclusively in India. This can be classified as a transitory provision in order to cover the time-period between 1995 and 2005 in India.[12]
Pharmaceuticals is one among India's most successful industries. The industry's benefactory involvement to its economy is not only largely cruicial but it also grants drugs and medicines at affordable prices to various classes of our society. Majority the whole of domestic demand is met through the industry's production which is totally indigenous. Today, India is amongst top fifteen pharmaceuticals manufacturing countries in the whole world.[13]
A recent survey shows that the lifesaving drugs in India is many times cheaper compared to the developed countries. For instance, an Anti-Cancer drug like vinclastin (10 mg) costs Rs. 195 in India, Rs. 400 in Pakistan, and Rs. 1743.22 in US and Rs. 976.35 in UK. Similarly, in 1998 the anti-AIDS drug Flucanazole $ 55 in India for 100 tablets (150 mg) but $ 697 in Malaysia, $ 703 in Indonesia and $ 817 in Philippines.[14]
Apprehensions of the Pharma Industry
The inception of TRIPS & its abidance does come along certain challenges against the pharmaceutical industry.[15]
The TRIPS agreement is visibly tipped in the favour of developed nations and the major multination pharmaceutical firms and moreover there is only little trade related about TRIPS and the right to trade which can be advantageous to developed countries.
The public health policy of the country shouldn't be compromised at huge costs to the Indian public. It is put forward that TRIPS Agreement poses a threat to the human rights of people.
TRIPS would strike at the industry's capability to participate in sustainable development is self-reliant way.
TRIPS would obstruct the preservation and additionally become a greater threat towards the process of innovation and the manufacturing of indigenous medicines like Ayurveda and Unani.
Companies lacking R &D competence may not be able to survive in the highly competitive market and will be forced towards mergers, joint-ventures etc.
The required expense budget with regard to R&D would be twice as compared to before.
It would significantly impact the overall growth of the industry and could even put a stop to it for some time.
Most importantly, the costs of drug would go beyond control and therefore going way out of the monetary capacity of a common man.
Impact of TRIPS on Public Access to Healthcare & Human Rights
Right to Health has been recognized as a fundamental right not just in India but in nearly every third world countries. In so far as India is concerned. Though Right to Health is not expressly recognized as a fundamental right, the judiciary has recognized it as a fundamental right under Art. 21 of the Constitution which guarantees right to life and personal liberty. Therefore, the right to health care and access to healthcare services at affordable prices have become a universally recognized fundamental right.[16]
Even TRIPS agreement also acknowledges that the member countries may be ruled out from patentability, inventions and prevention under their territory of the exemption, manipulation of which it is necessary to protect public order and morality including the protection of all living beings and their health to avoid serious prejudice to environment.[17]
The Doha Declaration gives the developing countries (or commonly known as the third world coutnries) the best chance of protecting the health of their citizens in spite of the TRIPS obligation. For the first time the developed countries have realised that the health of people of third world countries is as precious as the health of their own people.[18]
The intellectual property Rights manage two conflicting social concerns viz.
- Protecting the rights or creators of technology by restricting conditions of diffusion for commercial use, and
- Permitting open access to and sharing of scientific progress.
The Present Scenario
NOVARTIS Case (NovartisAG v. Union of India & Ors.)
The Novartis judgment has started an enormous war of words. The patent drug manufacturers declared: "Woe is us. This could be the end of inventions." On the other hand, the generic drug makers said: "Well done Supreme Court. Now we can supply lifesaving drugs to India and the world at much cheaper prices."
Firstly, allow me to present certain facts about the Novartis case and its judgement. The drug under discussion is Gleevec, that is employed by patient for curing certain types of cancer. The drug is based on the Imatinib Mesylate (IM) a free base which was a crucial discovery and undoubtedly a new-fangled invention accredited to Dr. Zimmerman. IM was transformed into salt in a crystalline form referred to as 'IM Alfa' which was further improvised into the 'IM Beta' crystalline form. This particular form of crystalline was argued to be granted the status of invention as the results showed enhanced flow properties, thermostability and nether hygroscopicity, in other words creating a more stable and digestible than the earlier versions.
The main question remained- Whether the Beta form was an invention or not? This particular question had mighty implication in terms of the ground realities in two significant ways. The lifetime of the first Zimmerman patent would be extended by 20 years. If another "improvement" was accepted as a patentable invention, it might be extended for an additional 20 years. In jurisprudence and practice, this phenomenon identified as "evergreening."
The second ground reality was that a patent would be a "monopoly." This also means the owner of the merchandise can impose any price it wants. Of course, countries can impose a compulsory license if there's scarcity, but that option comes with too many restrictions. This was the Euro-American solution devised by the TRIPS (Trade Related Intellectual Property Rights) treaty within the new WTO (World Trade Organization).
The Supreme Court viewed that Gleevec didn't have novelty-therein IM was within patent protected under the Cancer Research article and further related publications. Nor could it be proved that it involved an ingenious step because an individual skilled performing the task with what was known would be ready to discover the IM within the crystalline form with the properties claimed for Gleevec. The wanting decision in the case concerns whether Gleevec may well be given a product patent for improvements brought about now. The solution to that is crystal clear. Novartis was unable to get a product patent but was entitled under a process patent to guard how it had been made. Effectively, the 'evergreening' of Gleevec was withhold. [20]
But Novartis said the judgement "discourages future innovation in India". The firm's managing director and vice-president, Ranjit Shahani said "this particular ruling is setback for patients too, as it will hinder the medical progress for diseases by limiting the treatment options." He said Swiss company are going to be cautious about investing in India, especially over introducing new drugs, and seek patent protection before launching any new products. It would further refrain the firm's R&D activities within the country. Shahani further added that "Such an environment isn't very encouraging for intellectual property."
Gleevec is a crucial drug for the treatment of myeloid leukaemia and has revolutionized the prospects for patients in rich countries. It blocks the cancer growth in patients with a specific gene mutation. But being targeted therapy, it's very expensive, costing £1,700 a month. [21]
Effects of the Novartis Case
- Breaking the Monopoly:
According to Christian Mazzi, this is not only momentous moment for India, but it's a "global trend", which totally boasts Big Pharma companies, biotech and generic drug firms on its clients book. "Predominantly, the governments have been protecting themselves…by warding off the access to the market or by administering prices, but never by controlling the patent protection. And this impacts the very primary core of pharmaceutical business model, founded on a tacit monopoly creating by patent protection regime."
- R&D Argument:
The real issue is that the R&D valuation intrinsic in drugs creation. The Novartis spokesperson stated that, "Only one outside of ten thousand of experimental fusions in development manage to reach the marketplace - at a price, according to one recent survey, of $1billion (£642million) for every medicine approved. Thus, each successful molecule that creates it as a drug must buy hundred thousand of molecules that tend to not pass ... In the absence of patents, the funding in R&D will plunge and other people affected by diseases without effective options are going to be left hopeless. In simple terms, there would be a lack of new medicines for the untreated diseases and also generics would be difficult to manufacture in such a market.
However, the funding in R&D in particular country's market, you base it on the entire global market. in European Union or US or Japan … the law is not getting to change. they're secure in the above-mentioned countries, that's where surplus is made, where surplus is protected. Many regard that the recent fights within the courts in India to be a symbol of massive Pharma's heightening distress; stubborn efforts to hold close old business models instead of face the reality of escalating research and development costs. the lack to seek out new successes has nothing to attempt to with the selling of a few of medicine within the Indian pharma market.
- Changing the Indian Business Model:
India being a developing country, the biggest peril Big Pharma faces is handling compulsory licences. It's more from their own inability to stay prices down and provides drugs and medicines in the markets at low and affordable prices. The pharmaceutical industry is an innovative one and this is a problem that affects the society. Sometimes, it is necessary to collectively think as one & come up with ways so that we'll be able to fund R&D in a certain way that we will make drugs that we need, instead of the drugs that just make profits.
Cipla Ltd. vs. F. Hoffmann-La Roche Ltd.
Over the years the nation has experienced many patent disputes between Foreign Multinational Pharmaceutical companies and Indian Drug companies. But the suit between Roche and Cipla has surely set the standards when it involves a patent violation suit. Roche is a Swiss-multinational healthcare company operating throughout the world whereas Cipla is an Indian Multinational Pharmaceutical Company.
- This particular case is the First Patent Litigation case in India,
making it quite unique and distinctive in nature. It involved the
questions regarding pricing issues, public interest, public access to
healthcare and hence preventing the evergreening of patents.
- Cipla managed to win the landmark judgement filed at the High Court (Delhi)
against Roche involving a version of cancer treatment drug, named Eriotinib.
According to Hon'ble court judgement, halting or stopping the manufacture of
Cipla drug in question would be against the interest of the public and further
affecting the public access of healthcare.
- Whereas, the Divisional Bench upheld the judgement but shifted their focus
towards the failure of the Swiss Company in establishing a prima facie case
relating to infringement. A Special Leave Petition filed by them with regard to
the Bench's decision was declined as well.
- Then, Roche and Cipla again returned to a single judge regarding the main
relief on trial, in which the Roche was unable to sufficiently provide evidence
in order to prove that infringement of their patent occurred.
- When the case was considered by the Division Bench, the judgement was
delivered to the preference of Roche. The judgement stated that, any and all
forms of this specific form (in any polymorphic form) is subsumed within the
patent (IN 774) owned by Roche.
- This particular landmark judgement brought about various guidelines applicable to many further pivotal patent infringement cases.
Bayer vs. Cipla & Union of India
This is another judgment which was against the monopoly of the big players in the pharmaceutical industry and appropriately keeping in mind the larger public access to health and interest of the public. Moreover, many major pharma companies repeatedly attempted to bring about some tweaks within the Indian legislation with regard to patent infringement and this particular decision came as a caution signal for such companies.
- The active pharmaceutical compound in question in this particular case was "Sorafenib" which helps in treatment of liver and kidney cancer and the patent for the compound was owned by the Bayer Corporation. The same compound is marketed all over the world under the name NEXAVAR.
- Cipla, an Indian generic manufacturer, began the production and marketing a generic version of the compound "sorafenib" under the name SORANIB. Bayer, aware of the situation, filed an infringement case against Cipla.
- With the already ongoing case of Cipla v. Bayer, another generic-drug manufacturing company Natco Pharma filed a request for compulsory licensing on the same compound drug.
- The request filed by Natco Pharma was based upon the basis of Section 84 (1)
of the Indian Patent Act of 1970, which mentioned that for compulsory license
after the termination of three years period from the time of the grant of a
patent on the following grounds:
- the reasonable demands of the public concerning to the patented innovation have not been fully contended, or
- the patented invention is not accessible to the masses at a considerately affordable price, or
- the patented invention is not performed in the territory of India.[22]
- According to the Controller, Natco's request for compulsory licensing was deserving to be approved and hence both Natco and Cipla could manufacture and market their version of the compound.
- In the appeal hearing filed against the decision of the Controller, it was mentioned that condition (b) and (c) were not were not fulfilled by the patent owner
- Bayer and consequently the decision could not have been reversed as the drug was necessary and monopoly of the same was against the public interest and access to public healthcare to the masses.
Covid Vaccine Patent Waiver Debate
The Coronavirus disease 2019 (COVID-19) pandemic has ceased to be of a purely medical nature and now confine other crucial areas including global trade, no less than World Trade Organization (WTO) recognized this reality by expressing "represents an unprecedented negative effect on the worldwide economy and world trade, as production and consumption are scaled back across the world."[23]
The extension of the pandemic into these supplementary areas has also highlighted disparities within the global distribution of COVID-19 vaccines. Additionally, this inequality is present within the area of manufacturing too. It is under this relation that the South Africa nation and India-member states of the WTO-earlier urged the WTO to temporarily discontinue the IP rights associated to COVID-19, in hopes of ensuring access to vaccines, medication, and other innovations needful to suppress the pandemic. Moreover, South Africa and India accounted for their proposed waiver by expressing that IP rights constitute a restraint to accessible treatment and to international sharing of technology and knowledge.
Furthermore, South Africa and India urged the Council for TRIPS to suggest to the WTO General Council that Sections 1, 4, 5, and 7 of Part II of the TRIPS Agreement be ceded from their implementation, application, and enforcement. These Sections are pertinent to copyright and related rights, industrial designs, patents, and protection of undisclosed sensitive information. Moreover, the suggested waiver would only last until widespread, global vaccination and herd immunity are achieved.
This suggested waiver, however, came to a standstill. One the one hand, developed countries-including Australia, Norway, the EU, Japan, Canada, Switzerland, United Kingdom, and United States-are against the suggested waiver. On the other hand, around 80 developing countries support of the same.
The concept of necessity-which has been perceived as an "objective standard"[24]. The proposed TRIPS Agreement waiver, in consistent with the aforementioned factors, is necessary for two reasons: First, the proposed waiver pursues the goal of addressing drug-making companies' lack of manufacturing capacity; and second, the proposed waiver rectifies the pandemic's impact on global trade.
Moreover, the proposed TRIPS Agreement waiver is practicable because the TRIPS Agreement, without the proposed waiver, is insufficient. The developed nations who are against the proposed waiver-backed by pharmaceutical giants-predominantly argue that the TRIPS Agreement already gives adequate legroom over IP rights for governments to efficaciously counter to public health emergencies requirements.
Voluntary Licenses (VL) are one alternative which is proposed by the developed countries at odds with the proposed waiver. By definition, VLs are a "technique for patent holders to willingly permit other parties to capitalize on their patents.".[25] Furthermore, VLs essentially selectively authorize the patent holder to determine who produces the patented goods and the places wherein the product can be sold.
But history supports the finding that VLs are, indeed, confining towards the manufacturing amplitude to fulfil with requirements. Hence, even though VLs admittedly lead the way towards drug affordability in some cases, they are habitually tainted by uncomplimentary and abusive terms and conditions that lead to drug inaccessibility for many others.
The concept of beneficiality, although not concisely expressed in WTO jurisprudence, is one wherein nations and other stakeholders gain advantages from a certain measure rather than disadvantages, or, at the very least, where the advantages outweigh the disadvantages. The suggested TRIPS Agreement waiver is advantageous for three reasons: First, it can banish intellectual property barriers and elevate the manufacturing capacity; second, it is in the interest of all nations' economies; and third, it presents a "win-win" situation.
The nations against the proposed waiver may bicker about the safe-guarding of Intellectual Property Rights elevating innovation[26] and that there is a direct relationship between such IP rights protection and innovation. However, these arguments are circumstantial at best.
- Firstly, the proposed TRIPS Agreement waiver, being tapered and time-bound, is not dominating enough to knock down the incentive-driven system put in place by IP rights.
- Secondly, even though the suggested TRIPS waiver were to be accepted, the frontrunning pharmaceutical companies producing COVID-19 vaccines and medicines would still receive incentives.
There is sufficient evidence that an equitable distribution of vaccines and medicines isn't only within the interest of Global North nations but is additionally within the interest of Global South nations. The worst-case scenario would be where Global North nations put the pandemic under control by fully immunizing their populations, while Global South nations are left behind-the global economy enduring an aggregate loss of US$9 trillion or more, nearly 50% of which will be borne by Global North nations.
And even the best-case and most suitable scenario would be where Global North nations fully inoculate their populations, while Global South nations immunize certain percentage of their populations which still presents a global economic loss.
Aside from being capable of ramping up manufacturing capacities around the world and being mutually advantageous to all nations' economies, the suggested waiver does not actually take away the monetary stimulus in the form of incentives for the frontrunners, as previously established in this paper. Granting due course to the suggested waiver does not change the reality that the frontrunning pharma companies have gained more than US$12 billion in research funding.[27]
The COVID-19 pandemic divulged that the world is far more connected and interdependent than they are split-up and independent. This divulgence places prominence on the necessity to concert a global effort striving towards regularizing the production, procurement, and distribution of COVID-19 vaccines and medicines.
The absenteeism of an effective equalizing mechanism is not only detrimental to nations who are left out but is detrimental to the entire world at whole. The suggested TRIPS Agreement waiver- being vital, practicable, and beneficial-is the effective levelling mechanism that the world needs to curb the repercussions of and put an ultimate end to the COVID-19 pandemic.
John Donne, in his poem, said it best: "No man is an island entire of itself; every man is a piece of the continent, a part of the main."
The Future Prospect: The Strategy
The influence of Intellectual Property Rights hugely depends upon the developmental footing of the economy such as the attainability of technical manpower and infrastructure; capacity of domestic industry. A country with potent indigenous industry like India is in a moderately advantageous position than the countries where the indigenous industry isn't potent enough and mainly depends on multinational contributions. Hence, it can be said that R & D investment in India has sky rocketed with new WTO patent regime.
Some of the larger pharmaceutical members have begun vitalizing their R & D sectors and as a result, have started filing numerous applications regarding new patents. Many have also resorted towards mergers and amalgamations in order to pool together their human and financial resources and attain a strengthened R&D department to develop new innovative products. Certain R&D firms have also made deals with multinationals, overseeing research and assuring large scale manufacturing on their behalf. Besides the R & D investment in traditional chemical-based screening, some of the R & D firms are looking for breakthrough in biotechnology research.
Pharmaceutical outsourcing is increasing world over and it is expected to increase still more with the vertical disintegration of activities by the multinationals as they review their core competencies. Henceforth, R & D could take place in one country, manufacturing in another and marketing rights could be given to totally different country.
In efforts to elevate the global prospects of pharma industry post 2005, the Centre had established a cut-off point of December 2003, to comply with Good Manufacturing Practices. The World Health Organization set a mandatory limit on the incurring expenditures to the range from ₹15 Lakhs to ₹1 Crore per unit. Reverse Engineering is kind of a strength of the Indian Pharmaceutical Industry. Such units by utilizing the provisions under CL, anomaly to the exclusive rights of the patent holder and the Bolar exception should focus on manufacturing the generic version of patented drugs or medicines and even the ones which near expiry of protection term period.
Many firms parallelly work in the research of new mechanism related to drug delivery and also recognizing new applications of already existing drugs or products. Hence, it is also necessary to safeguard the already introduced innovations and techniques through technology spill overs.
Various options are possible within the WTO regime which can be adopted by the Indian pharmaceutical industry. These are to:
- Production of patented generic drugs,
- Production patented drugs under compulsory licensing,
- Invest in R & D to participate in new product development,
- Produce patented and various additional drugs on contractual basis,
- Explore the options of newer and advanced drug delivery systems and other possibilities with regard to utilization of existing drugs, and
- Partner with multinationals in order to engage in R & D, clinical trials, product development, or retailing the already patented drugs or medicines on a contract agreement etc. Apart from these strategies, process development skills are considered a strength of the Indian Pharma sector.
This prowess employed within the WTO framework with priority laid on the quality standards will certainly grant a country like India a competitive ascendency over its other Asian counterparts.
B.C. Nirmal[28] has written about Indian Pharmaceutical Industry and The New Patent Regime. According to him the pharmaceutical industry is well developed and capable to produce and sell practically all the drugs required in the country. Indian companies supply a large number of generic bulk drugs and their formulation to the global market. According to a study, 67 percent of the medicines produced in India are exported to developing countries.
The leading firms in India recently have acquired over 20 companies aboard and the indigenous Indian industry has now become global in certain segments. The biggest Indian pharmaceutical firms have sales turnovers of $50 million to $1.2 billion. Although this size of sales turnover is relatively small as compared to annual sales of the leading MNCs of US, Europe and Japan which are in the range of $5 billion to $60 billion, the position of the Indian industry as well-recognized global player is widely acknowledge and Indian companies have adequate capabilities to create riche position in the global market in the further years to come.
The Indian pharma industry is quite positive with regard to the export prospects. In fact, many of them believe that the growth in exports will wholly than indemnify for the declining domestic opportunities in the new product patent regime. But our assessment is that the export possibilities in the further coming years may not be as bright as it is many a time thought to be Product patent protection in pharmaceuticals in India was abolished in India in 1972.
The positive influence of the same was not felt immediately. It took almost two decades for the indigenous generic firms to unlock its full potential and establish themselves. Similarly, the negative impact of the patent protection will take a while to felt. It is possible that Indian generic companies are still too much influenced by the past growth and experience and are yet unable to properly assess the negative impact of shrinking domestic opportunities.
Recommendations
- In today's world, it is necessary to gear up the administrative and also
the legal measures to implement the TRIPS Agreement & the government should
ensure protection of pharmaceutical industries and healthcare structure in
India which are the life for our society to thrive and survive.
- Though the Indian Parliament has already revamped its IP law to make
TRIPS acquiescent to a large scale however, in view of the merging
challenges pertaining Pharmaceutical Industries and advancement of
technology it is imminent necessity to amend the Indian legal regime further
to afford better and effective protection to the same.
- The realm of IPR is the new mechanisms through which developed nations
strengthen their monopoly over world resources, they formulate high
technological and financial prowess, so the developed nations wield their
clout to bully Southern nations in International for a therefore:
- There must be provisions for compulsory licensing in Pharmaceutical Industries and Health care Services.
- There should be frequent review of the working of the current TRIPS model regarding the pharmaceutical products.
- Steps should be taken to see that the important lifesaving drugs are
available for the public at all times at reasonable rates.
- Moreover, the still-ongoing pandemic has made realize that a country is never truly out of the woods as long as another country remains deep therein and hence it is pivotal that true efforts are made in order to abolish the unequal access to necessary lifesaving drugs and medicines and also vaccines.
Conclusion
Indian Pharmaceutical Industry has to face new challenges on account of reforming of Indian economy and globalisation. Indian Pharmaceutical Industry in India received a fillip during 1st World War & the same continued till today in spite of many hurdles and obstacles. The Pharmaceutical Industry worldwide and particularly the pharmaceutical industry of India saw a precipitous change with the emergence of globalization, which brought a sense of competition and enhanced the condition of the market and the industry with considerable mergers and acquisitions and firms consolidating into one larger multinational firm.
With the ever-growing importance of various human rights, the legal and administrative regimes worldwide also needed to adapt to the same. The public access to healthcare and crucial medicines became one of the major goals of TRIPS Agreement with the necessary push provided by the WHO. The Pharmaceutical Patent Regime is can be considered the heart of the quest to provide easy access to healthcare and medicine. Hence, it is of the utmost necessity that Patent Regime and the quest to larger public access to healthcare go hand in hand and not create a legal conundrum.
In a globalized economy, it is often that the need of the common person is totally side-lined and a significant amount of effort is given towards the race to make more and more profits. But in an economy, wherein the common man is to be regarded as the backbone of the same. And therefore, unless the needs of the common man are not fulfilled, no system can be considered as useful.
End-Notes:
- WTO Convention, July 14, 1967
- https://www.wipo.int/publications/en/details.jsp?id=4528
- Jayashree Watal, Intellectual Property Rights, p iii (2000)
- Bishwanath Prasad Radhyshyam v. Hindustan Mental Industries, 1979, 2SCC 511.
- Nagesh Kumar, IPR, Technology and Development, Economical Political Weekly, pp 217 and 218 (January 18, 2003)
- G.B. Reddy, IPR and the law, p.192.
- Parry I.G. and Thwaites, R.M., The Pharma Industry in Australia: A Benchmark Study APMA, Sydney. 91 (1998)
- Justin Hill Adrian Kirchner and Anne Hollmes, Phanna Industry Action Agenda,
(September 2001)
- Krishna Iyer, V.R., Human Health and Patent Law, Frontline, Vol.17, issue 21, October, 2000, pp. 14-27.
- Internationally Amrcn Indigenous Products merged with Cynamid, SKB with Sterling, Glaxo with Burroughs Wellcome, Cibaa Geiigy with Sanduz etc. are merged.
- Under Art. 65(5) of TRIPS Agreement.
- UN Development Report, UNDP, p. 84 (2000)
- TRIPS is it a Healthy Prescription for Indian Pharma Industry, International Conference on Innovation and IPR Strategy, 12-13 Sept. 2002.
- Under Chapter IVA, sections 24A to 24F inserted by the Patents (Amd.) Act, 1999 dt. 26.3.92 with effect from 1.1.95.
- G.B Reddy's Intellectual Property Law, p. 193.
- SC Judgment in Consumer Education Research Centre v. Union of India, AIR 1995, SC 922, Kirloskar Bros Ltd. V. ESI Corp., 1996 2 SCC 682 and Vincent Panakurlagara v. Union of India, 1987 2 SCC 165.
- Article 27(2) of the TRIPS Agreement.
- Ibid., 196.
- Ibid., 198
- Rajeev Dhavan Norvartis and health analysis, http://barandbench.com/content/novartis-and-health-analysis-rajeev-dhavan#.UexAkI2GqZK
- The Guardian, Novartis denied cancer drug patent in landmark Indian case, Monday 1 April 2013
- https://indiankanoon.org/doc/799603/
- Communication from India and South Africa, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment, and Treatment of COVID-19, World Trade Organization-Council for Trade Related Aspects of Intellectual Property Rights, IP/C/W/669 [hereinafter "Communication-India and South Africa"], ¶2 (2 October 2020).
- 3 Appellate Body Report, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, ¶304 (7 April 2005).
- Suzanne Scotchmer, Innovation And Incentives (2004).
- Heidi Williams, Intellectual Property Rights and Innovation: Evidence from the Human Genome, JOURNAL OF POLITICAL ECONOMY (February 2013).
- Médecins Sans Frontières, Governments Must Demand Pharma Make All COVID-19 Vaccine Deals Public, Press Release [hereinafter "Governments Must Demand"] (11 November 2020).
- B. C. Nirmal, "Indian Pharmaceutical Industry and The New Patent Regime", The Pharma Review, April, 2007.
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