Novartis Loses Patent Bid: Lessons From India’s 3(d) Experience

New Delhi – On 1 April, in a packed room in India’s Supreme Court, two judges – Justice Aftab Alam and Justice Ranjana Desai – delivered a verdict that has the potential to dramatically change the national and global conversation about patents and patients.

Analysts say the landmark ruling by India’s top court dismissing Swiss drugmaker Novartis AG’s appeal for a patent for its cancer drug, marketed by Novartis as Gleevec in the United States, and Glivec elsewhere, will boost India’s generic drug industry and impact the operations of multinational drug companies in the country.

The Supreme Court decision is available here [pdf].

The case was closely monitored in India and around the world, and fuelled a highly polarising discussion about India’s interpretation of intellectual property rights and its attempts to balance public and private interests. The outcome of this case has grabbed national and international headlines because it is seen to affect not only the patenting of this particular anti-cancer drug but also as a precedent-setter to determine the position of India on patenting of new forms of already known substances.

A key aspect of the outcome is the possibility of curtailing a brand-name pharmaceutical industry practice of extending patent monopolies by getting new patents on variations of existing products.

The issues which have come to the fore in the wake of the Supreme Court’s verdict will not likely disappear any time soon. The reason: there is simply too much at stake. A 2011 report by Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC) pointed out that India’s pharmaceutical industry is today the third largest market globally in terms of volume and 14th largest by value.

The domestic pharma market in India is expected to grow at a CAGR (compound annual growth rate) of 15 to 20 per cent annually to be a US $49 billion to $74 billion market by 2020. At a time when the pharmaceutical industry the world over is slowing, Indian companies are seen as offering a ray of hope.

This makes India the epicenter of many battles in the days ahead.

At it its core, the Glivec case has been about the interpretation of Section 3 of India’s patent law, which explains what does not constitute “invention” under India’s patent regime Section 3(d) in particular states that

“the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.” [corrected]

This clause is one of the patent law’s public interest safeguards and is likely to play an increasingly important role in the ongoing battle between Big Pharma and India’s generic drug manufacturers. The provision was introduced by the Indian Parliament in the country’s patent law in 2005 to prevent patenting of new forms of known substances unless they exhibit enhanced efficacy.

In their 112-page judgment [pdf], the Supreme Court judges noted, “In whatever way therapeutic efficacy may be interpreted, this much is absolutely clear: that the physico-chemical properties of beta crystalline form of Imatinib Mesylate,namely (i) more beneficial flow properties, (ii) better thermodynamic stability, and (iii) lower hygroscopicity, may be otherwise beneficial but these properties cannot even be taken into account for the purpose of the test of section 3(d) of the Act, since these properties have nothing to do with therapeutic efficacy.”

Reactions to the verdict have been strong but along predictable lines. Public health advocates are jubilant. (Intellectual Property Watch was present at the Court, and witnessed the elation that broke out when the verdict was announced). Not surprisingly, Novartis is unhappy. So is Big Pharma overall.

Reactions: Implications of the Verdict

“A decision issued today by the Indian Supreme Court regarding the Novartis breakthrough medicine Glivec (imatinib mesylate) provides clarification on Indian patent law and discourages innovative drug discovery essential to advancing medical science for patients,” Novartis said in a public statement soon after the Supreme Court’s verdict.

Novartis reiterated that more than 9 out of 10 patients currently taking Glivec in India will continue to receive the drug free of charge through Novartis Oncology Access programmes. But health activists who have taken on Novartis argue that this does not tell the full story because Novartis is not counting the much larger group that cannot afford the branded drug and have been using cheaper generic versions. In its branded form, Glivec costs about $2,600 a month. Its generic version is available in India for around $175 per month.

Ranjit Shahani, vice chairman and managing director of Novartis India, painted a grim scenario for India in the wake of the Supreme Court verdict. Shahani told Intellectual Property Watch that “This ruling is a setback for patients and will hinder medical progress for diseases without effective treatment options.”

“We should be more worried about what impact this will have on patient well-being and the ability to address the challenge of unmet medical needs,” Shahani said. Meanwhile, all R&D investments in any case have moved to China with seven global companies having invested billions of dollars after the patent law was promulgated in India. These are Novartis, Roche, Sanofi, Pfizer, GSK, Astra Zeneca and Elli Lilly. Not a single investment came to India. “That speaks loudly about the innovation ecosystem we have here,” he said.

However, “Novartis most certainly will continue to seek patents for its innovative products in India,” he said. “We believe it is the legitimate way to go. Novartis will be cautious in investing in India especially with regard to introduction of innovative medicines.”

The Indian Supreme Court’s decision to deny a patent to Glivec, upholding a decision by a lower court, is also coming under heavy fire from other quarters.

“To ensure continued health benefits and advancements for patients, it is important that biopharmaceutical innovation is sustained and supported with adequate intellectual property rights,” said Peter Shelby of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA). “The Indian court’s decision not to support this is unfortunate and can serve to undermine patients’ needs.”

“The decision against patent rights in India today will negatively impact businesses’ ability to invest in tomorrow’s medical and technological advancements,” US Chamber of Commerce Global Intellectual Property Center Executive Vice President Mark Elliot said in a statement. “Upholding the integrity of intellectual property rights is essential to guaranteeing future innovation not just for India, but for other countries around the world. This is especially the case in sectors like pharmaceuticals and medical research, which require extensive up-front research and development expenses and exhaustive resources in time and manpower.”

Elliot’s statement reiterates a point that Novartis has made repeatedly: over 40 countries from around the world, including China, Mexico, Russia and the United States, have granted Glivec’s parent company, Novartis, patent rights for the breakthrough cancer treatment.

Health advocates and legal activists see the situation in a totally different way. Within hours of the Supreme Court verdict, the Lawyers’ Collective, the Delhi Network of HIV Positive People, Cancer Patients’ Aid Association (CPAA) and Médecins Sans Frontières (MSF), which have been campaigning for access to affordable medicines, called a press conference to brief the media about the significance of the Court’s decision.

Anand Grover, senior counsel and director of Lawyer’s Collective HIV/AIDS Unit who represented the CPAA, one of the parties against Novartis in the Glivec case, told Intellectual Property Watch, “This is a victory for patients’ groups and generic companies. Since day one, Novartis has been trying to water down the safeguard in the patent law to not allow the new forms to be patented unless they are significantly more efficacious than the known substance. It is good that the Supreme Court has rejected their attempt.”

The Supreme Court’s verdict has renewed the debate on what constitutes real innovation.

“It is a huge relief for the millions of patients and doctors in developing countries who depend on affordable medicines from India, and for treatment providers like MSF,” MSF President Unni Karunakara said in a statement. “The Supreme Court’s decision now makes patents on the medicines that we desperately need less likely.”

“This marks the strongest possible signal to Novartis and other multinational pharmaceutical companies that they should stop seeking to attack the Indian patent law,” he said.

“Instead of seeking to abuse the patent system by bending the rules and claiming ever longer patent protection on older medicines, the pharmaceutical industry should focus on real innovation, and governments should develop a framework that allows for medicines to be developed in a way that also allows for affordable access. This is a dialogue that needs to happen. We invite Novartis to be a part of the solution, instead of being part of the problem,” Karunakara said.

“This ruling is only about rejecting those patent applications which claim an ‘invention ‘which is not new but are new formulations of already known drugs,” he said. “Novartis has failed to satisfy the Court on how its patent application meets the criteria of Section 3(d). The Court also said that Section 3(d) should be interpreted narrowly and strictly and this view is overwhelmingly supported on the basis of legislative intent.”

“Increased bioavailability per se does not qualify as enhanced efficacy,” Leena Menghaney, manager for MSF’s Access Campaign in India, told Intellectual Property Watch. “The scope of a patent should be construed on the basis of disclosure in the patent application and an attempt to differentiate between disclosure and coverage is not acceptable.”

Many of the points raised by MSF find resonance in assertions by others who support India’s position on public safeguards in the patent law.

“The Indian generic industry, the pharmacy of poor in the Global South that supplies over 80 per cent of AIDS medicines for the 8 million people in low- and middle-income countries, will not have to delay introduction of medicines year after year as Big Pharma evergreens its patent monopolies by seeking new 20-year patents on minor variations to existing medicines,” Prof. Brook Baker, policy analyst at Health GAP, told Intellectual Property Watch.

“This ruling is important not just because it augurs well for the continued enforcement of strict standards of patentability in India, but also because it shows that courts can and should stand up to attempts to extend transnational corporate power and monopolies on medicines,” Baker said.

“The decision is about one important issue for India and other countries – can a WTO member eliminate many of the “evergreening” patents on new medicines, not eliminating patent protection for new drugs, but eliminating all sorts of patents on new delivery mechanisms, doses, and new formulations of older drugs? The answer, by the court, was yes. This is a hugely significant decision, but there will still be battles over patents on new medicines that are not affected by this judgement,” said James Love of Knowledge Ecology International (KEI) via the KEI portal.

What Lies Ahead?

It remains to be seen whether India is going to be isolated or will inspire others, and whether multinational companies will carry out their threat and refuse to roll out new drugs in this country.

Pharma analysts that Intellectual Property Watch spoke to discounted the possibility of an apocalyptic scenario in the near future.

But Health Gap’s Baker warned that the bigger fight is not over. “Although India, its generic industry, and patients around the world have won a key victory in the fight for affordable access to life-saving medicines, Big Pharma and its supporters in US and EU trade offices will not stop pressuring and threatening India and other countries to allow longer, stronger, and broader patent and data monopolies on medicines,” he said. “Indian policymakers, health advocates, and courts must continue to remain vigilant in trade negotiations and elsewhere to resist intellectual property proposals that encroach on fulfilment of the right to health.”

Tahir Amin, director of the New York-based Initiative for Medicines, Access and Knowledge (I-MAK), a US-based NGO consisting of lawyers and scientists working towards increasing access to affordable medicines worldwide, told Intellectual Property Watch that India’s top court’s decision “affirms India’s position and policy on defining how it defines inventions from a patenting point of view for its development needs. It challenges the patenting standards and practices of the developed countries which are the ones really in much need of reform.”

“This decision will put to test how much actual innovation is going on in the ‘innovator’ industry and could challenge a number of these so-called new medicines, many of which are incremental changes to existing compounds with no added therapeutic benefit,” Amin said, predicting the decision will now be challenged even more through the political process.

“There are a number of pre-grant opposition cases for HIV drugs (and others) that were won under Section 3(d) but appealed by pharma companies,” he said. “Had the Supreme Court diluted the interpretation of Section 3(d), it would have been used to successfully appeal those patents currently refused.”

The decision also affirms that strong patentability criteria only work “truly with a participatory mechanism like pre-grant opposition,” he said. “This exists under Section 25(1) of India’s patent law. It was one of the provisions activists fought to maintain when the law passed in 2005. However, India has been under pressure from the United States and the European Union to repeal the provision,” Amin said.

Amin says the Indian market is too important and lucrative and Big Pharma may not carry out the threats it has been making. “And even if that were to happen, I believe the Indian generics would have the capability to manufacture these newer drugs, especially as … many re-tinker existing compounds.”

The sentiment is echoed by Indian generics companies.

“Multinational companies have to follow the law of the land,” and Section 3(d) of India’s patent law is compliant with the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Adi Narayana, company secretary at Natco, told Intellectual Property Watch. Natco was one of the companies that were pitted against Novartis in the Glivec case.

“So what is the problem?” he said. “India is an emerging market. I doubt if anyone can afford to not release new products here. Multinational pharma companies will roll out new drugs. If that does not happen, India’s generic companies have the ability to make cheaper versions of these new drugs through reverse engineering.”

Adi Narayana said he was happy with the Court’s judgment and that the Court asked Novartis to pay for the costs incurred by the other side.

The Novartis ruling is also important in another significant way – several other developing countries have followed India’s lead and have adopted comparable strict patenting standards as a key flexibility under international law.

Though India has been under fire from multinational pharma companies for a public interest safeguard like Section 3(d) in its patent law, it is not the only country to have such a provision. Argentina and Philippines have put in place a mechanism similar to Section 3(d), and other countries are considering such a proposition.