Question of efficacy

The country is clearly shaping its legislation to promote access to medicines by fostering generic production.

INDIA'S approach to the revision of its Patents Act in 2005 is a clear example of a country shaping its legislation to promote access to medicines by fostering generic production. Although World Trade Organisation (WTO) rules made it mandatory for India to put in place a patent regime for medicines by 2005, nothing obliges developing countries such as India to replicate the patent system of wealthy countries, which involves charging the highest possible price and protecting that price through patent monopolies that extend way beyond 20 years.

India has used important flexibilities under international law to include provisions in its domestic patent law not only to reduce the number of secondary patents but also to have a licensing mechanism that kicks in with excessive pricing of patented medicines. The application of these safeguards by the Indian patent office benefiting patients in India and other developing countries is increasingly inviting the ire of the multinational pharmaceutical industry and its associations.

The Indian government is faced with court cases and the diplomatic offensive that the protectors of the pharmaceutical industry in the United States and the European Union are now launching.

In India, the importance of generic (local) production of medicines in fostering competition and reducing prices was first recognised by lawmakers in the Patents Act of 1970, which brought in a legal regime that did not allow product patents on pharmaceuticals. In the following decades, India not only was successful in making drugs affordable but also significantly increased their availability by building domestic capacity to produce essential and life-saving drugs. It also went on to become the pharmacy of the developing world, supplying medicines to countries that lacked the capacity and resources to produce the drugs themselves or pay the high prices demanded by originator pharmaceutical companies.

The production of more affordable generic medicines in India has been instrumental in driving down the price of AIDS (acquired immune deficiency syndrome) medicines by 99 per cent, and nearly six million people living with HIV have been put on treatment on Indian generic medicines in the past 10 years.

In 2005, India was obliged to change its patent law in order to comply with its obligations as a member of the WTO, bringing into effect the TRIPS Agreement. The most significant change was the introduction of product patents for medicines. When framing the new patent legislation in 2005, Parliament sought to ensure that provisions to protect public health and access to medicines were incorporated into it. It, therefore, included explicit legal safeguards and guidance on how the patentability requirements should be applied.

In particular, evergreening, a well-known abuse of the patent system where companies seek new monopolies or, alternatively, extend a monopoly by seeking to patent minor changes such as new uses, new forms and other routine improvements of known medicines was addressed. Section 3(d) of the Indian Patents Act explicitly allows the broad exclusion from patentability of new uses and new forms of known medicines. In sum, Section 3(d) gave explicit guidance to the Indian patent office on how to weed out patent claims on routine improvements of known medicines and protect the country's capacity to act as a factory for the production and supply of affordable generic medicines.

Legal challenge

In 2006, in a landmark decision, the Indian patent office rejected Swiss pharmaceutical company Novartis' patent application for the life-saving anti-cancer drug imatinib mesylate. The application for a patent on a beta crystalline salt form of imatinib was rejected on the grounds that it lacked novelty, was obvious, and was un-patentable under Section 3(d) of the Patents Act. In retaliation, Novartis mounted a legal challenge to have Section 3(d) declared unconstitutional. Medecins Sans Frontieres (MSF) launched an international campaign calling on the company to drop the case, attracting close to half a million signatures. In 2007, the Madras High Court rejected Novartis' plea and in 2009 the Intellectual Property Appellate Board (IPAB) rejected its patent application on imatinib mesylate once again.

But the company is not backing down. After failing to have Section 3(d) struck down, it is now again seeking to limit its effect. In 2009, Novartis filed a special leave petition in the Supreme Court against India in relation to the patentability criteria to be applied to imatinib mesylate.

Under Section 3(d) of the Patents Act, new forms of already known substances cannot be patented if they fail to demonstrate the required degree of efficacy; it requires demonstration of increased efficacy for a medicine to deserve a patent. The interpretation of the definition of efficacy is therefore central to this case and to the future of India's role as the pharmacy of the developing world.

In 2007, in its constitutional challenge against Section 3(d) before the Madras High Court, Novartis had argued that increased bioavailability of the salt form of imatinib meant increased efficacy, entitling it to a patent. But the High Court clarified that efficacy meant therapeutic effect in healing a disease.

The IPAB, where appeals for unsuccessful patent applications are heard, subsequently applied this interpretation and held that the salt form of imatinib mesylate did not meet the test of therapeutic efficacy. It, therefore, confirmed the rejection of Novartis's patent application.

High standards crucial for tests in patent law

Setting high standards for the various tests in the patent legislation, particularly the efficacy test of Section 3(d) and the inventive step requirement, leading to fewer patents on new forms of known medicines, is important to safeguard access to affordable generic medicines from India. Novartis has now taken its case to the Supreme Court to argue against the interpretation of efficacy in Section 3(d) by the Madras High Court and the IPAB. This case has the potential to severely affect access to affordable essential medicines for millions of people across the developing world. It will determine whether Section 3(d) will continue to ensure that patents are granted only on medicines that are truly new and inventive. Many developing countries rely on affordable medicines produced in India, and such medicines constitute over 80 per cent of the AIDS drugs used in the developing world. MSF is closely following the outcome of this case.

Novartis is basing its claim for a patent on the salt of imatinib on the fact that there is a 30 per cent increase in the bioavailability of the drug in this new form. But, according to the guidelines for the examination of pharmaceutical patents developed by the World Health Organisation (WHO) and the International Centre for Trade and Sustainable Development (ICTSD), the selection of a salt of the active ingredient with the purpose to improve bioavailability is known in pharmaceutical science. It is common knowledge in the field that salts result in different solubility and, therefore, in different bioavailability.

The final arguments in the case have started. The next date of hearing is set for July 10. If Novartis wins, many other medicines, even those that show no increased therapeutic efficacy, will be patentable in India, and the availability of affordable medicines will be threatened. If the substance is taken out of Section 3(d), abusive evergreening practices, where drug companies maintain artificially high prices on medicines well beyond the original patent period by securing fresh patents on minor modifications of existing drugs, will become rampant in the future.

If, on the other hand, the high threshold for patentability is upheld, generic production will continue to drive the price of life-saving medicines down. Multinational pharmaceutical companies such as Novartis will find it difficult to argue that routine improvements such as new forms of existing medicines that result in improved stability, enhanced bioavailability, increased solubility, improved flow properties and lower hygroscopicity meet the efficacy requirements of Section 3(d). In addition, the improved therapeutic efficacy would have to be supported with actual clinical data that demonstrate this effect.

The Supreme Court case is the final act in a legal battle that stretches back over six years between Novartis and the Indian government. The government, hopefully, will argue for a strict interpretation of efficacy so that patents on new forms of known medicines such as the one on the cancer drug imatinib mesylate are not granted as a matter of routine by the country's patent office. Novartis has lined up very senior and very expensive lawyers, including two former Solicitors General, to argue its case. But there appears to be no information on whether the government has appointed its own top lawyer, the Attorney General, in this case.

Opening the door for compulsory licensing

In another test case on access to treatment, seven years after India revised its 1970 Patents Act, the Controller General of Patents issued the first-ever compulsory licence (CL) to the Hyderabad-based company Natco to produce an affordable version of a patented anti-cancer medicine (sorafenib tosylate) of the German pharmaceutical company Bayer Corporation, marketed under the brand name of Nexavar. The generic version produced by Natco, which will pay 6 per cent royalty on net sales to Bayer, will be 97 per cent cheaper.

The decision was made on the basis of the fact that not only had the patentee, Bayer, failed to price sorafenib tosylate at a level that made it accessible and affordable but it was also unable to ensure that the medicine was available in sufficient and sustainable quantities within India. Bayer has time until mid-June to appeal against the order.

Like many other giant drug companies, Bayer defended the inflated cost of sorafenib by specifying the high spending on research and development. However, what it did not highlight was that the United States National Institutes of Health had sponsored almost 70 per cent of the second phase of its clinical trials. Later, this drug was given an orphan drug designation by the U.S.' Food and Drug Administration (FDA) for the treatment of renal cell carcinoma, entitling Bayer to 50 per cent tax credits, which further lowered the company's costs for the third and most expensive phase of clinical trials.

The CL is quickly being dubbed by pharmaceutical companies such as Novartis as a move that will stifle innovation. Indeed, pharmaceutical companies at present try to recover their investments by charging excessively high prices and protecting their drugs through patent monopolies. However, R&D costs are only a fraction of the profits thus made, and a large part of the profits are spent on brand-building and marketing. In 2011, Bayer spent nearly 9 billion on sales and advertising. In the same period, only 2.9 billion was spent on research.

The patent system also has another drawback. Innovation currently fails to address the needs of patients in developing countries.

The drug companies also repeatedly warn that measures such as the CL adversely affect the confidence of foreign investors. But a study published in Thailand in 2009 by the Health Intervention and Technology Assessment Program (HITAP) found little evidence of a link between the granting of CLs and the level of foreign direct investment (FDI) in the country.

The recently granted CL actually highlights a potentially new patent model that routinely allows low-cost alternatives in lieu of royalty payments, not only helping originators to recoup their development costs but also ensuring that people in developing countries have access to medicines. It is in line with licensing decisions in other jurisdictions. Recently, a U.S. court decided not to prevent a competitor from marketing a medical device used for skin grafts, and instead put in place a system of royalties from the competitor to the patent owner. At the core of this decision was the idea that the public has a right to access innovative health products and this should not be blocked by excessive prices.

The Novartis and Bayer cases highlight that the country is entering a new era in which disputes on the public's access to and the affordability of drugs will become more frequent.

Leena Menghaney is campaign coordinator of Medecins Sans Frontieres in India and is based in New Delhi.