Patent problems

Novartis judgment might have many side effects

The Supreme Court has finally ended Novartis' seven-year quest to patent its cancer drug Glivec in India. In 2006, after the Patent Controller in Chennai rejected the patent, Novartis went to court against the Government of India, a patients' lobby, and four Indian companies that manufacture generic drugs (Natco, Cipla, Hetero and Ranbaxy), before the Madras High Court. The Swiss multinational told the Madras High Court that the Patent Controller's decision should be overturned. It also challenged Section 3(D) of the Indian Patents Act, under which the Patent Controller had denied the application. The Section, which bars patenting of a "mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance", is designed to prevent what is known as "evergreening", in which pharmaceutical companies essentially keep profitable drugs under patent indefinitely by making minor, non-essential modifications and then pretending that the subsequent drug is "new". The court has essentially upheld the position of the Patent Controller and the non-governmental organisations (NGOs).

The implications of this decision are far-reaching, and may not all be immediately evident. On the one hand, India's future as the location of low-cost drug manufacturing seems secure - the aim of some of those who have been highlighting this case, such as the international NGO Medecins Sans Frontieres or Doctors Without Borders. Together with the government's decision earlier this year to grant Natco a "compulsory licence" to produce Bayer's liver medicine Nexavar, it is clear that the generic drugs industry is safe. The effect on the consumers of drugs is less certain over time. On the one hand, Glivec was being offered by Novartis at over Rs 1 lakh a month - but generic versions of the drug might cost under Rs 10,000 a month. On the other hand, Indians must accept the imputed price of these decisions: that future big, new drugs will likely not be rolled out in India by MNCs, and patients will have to wait additional months or years until generic versions are available. There are lives on both sides of this balance. Ironically, while generic business sees this as a uniform positive, the effect on leukaemia patients in India of even this specific verdict is likely to be negative. Most of those consuming Glivec are reportedly receiving it free from Novartis under its patient assistance programme; many are too poor to afford the generic version. Novartis' CEO recently complained to Financial Times that, unlike MNCs, Indian generic companies neither invest in nor hand out free drugs to the disadvantaged. He added that foreign companies would likely end investment in the Indian pharma industry if intellectual property protection was weak.

To protect its generic industry and - very arguably - its patients, India has established itself as an outlier on the question of intellectual property in pharmaceuticals. This may or may not be defensible from an ethical standpoint, but its implications for other sectors should also be noted. In particular, by becoming such an outlier - and by trumpeting a pharma sector that depends on generic manufacturing - India may have created new hurdles, for example, in the signing of a free trade agreement between India and the European Union that depends on the adherence to a strong intellectual property regime by all the signatories. The effects of the Novartis judgment are not, therefore, quite as simple as they seem.