ABSTRACT

Recently, the economic survey in the year 2023 revealed that India ranks 3rd worldwide when it comes to production of pharmaceutical products by volume and 14th by value. With the intellectual property rights becoming more and more important on one hand and the pharmaceutical industry of India growing rapidly on the other, it becomes crucial to understand the interplay between the two in order to ensure that the inventors can enjoy certain exclusive rights and reap the deserved commercial benefits out of their creations. The pharmaceutical products are governed by the patents law in India which has been amended multiple times in a quest to clear the ambiguity surrounding it. This article aims to interpret the Indian Patents Act specifically, Section 3 (d) in the context of the TRIPS agreement to examine the status quo of the legislation and clear the disagreements which exist relating to the correct intent and use of the aforesaid section till date. This article also discusses the implications of the patent law on the pharmaceutical industry, big companies and generic drug manufacturers. While examining the inherent conflicts between the competition law and patents law in India, the article cites myriad case laws to provide a clear picture of the challenges pertaining with respect to patent protection of pharmaceutical products. The article aims to answer two lacunae notably the use of strategic techniques by big pharmaceutical companies to establish a monopoly of their own in the market which is referred to as ever greening of patents; and the lack of any direct relationship between the stringent national patent laws and TRIPS agreement with the growth of the drugs industry.

INTRODUCTION

According to the World Intellectual Property Organization, Intellectual Property refers to “creation of mind such as inventions: literary and artistic works, designs, symbols, names used in commerce”. Safeguarded by legal mechanisms like patents, copyrights and trademarks, these protections enable individuals to receive their due recognition and financial benefits in return of their creations thus fostering an environment where the welfare of the creators and the people can be balanced and innovation can thrive efficiently. In the backdrop of patent protection in this industry finding its place in the international scenario, the patent law in India works as an efficient mechanism to promote pharmaceutical research and development. With the prevailing concerns of the patent act reducing the attainability of generic drugs and curtailing access to medications in India, it is crucial that patents are in reality used for encouraging research using the disclosure system. With India rejecting the data exclusivity clause before signing the “Trade and Economic Partnership Agreement” (TEPA) with the European Free Trade Association so as to not restrict Indian pharmaceutical companies to produce their own generic drugs, many questions are raised relating to the IPR in the realm of the pharmaceutical sector which this article seeks to answer.

THE CURRENT LEGAL SYSTEM IN THE CONTEXT OF TRIPS AGREEMENT

India along with many other developing countries had to craft a legislative regime in IPR that imitated the legislation of the developed world and this led to the passing of the Indian Patents Act, 1970. Since then the act has been amended thrice, first in 1999 to introduce mailbox and EMR, that is, exclusive marketing rights; in 2002 to increase the compliance of the act with TRIPS, and lastly in 2005 to omit Section 5 which provided process patent of inventions relating to food, drugs, and medicines for a short period of seven years. According to the Indian Patent Act, as amended in 2005, the pharmaceutical products patents have to follow certain rules while the need to fulfill the patentable criteria is obvious. Any invention which satisfies the parameters of novelty, non-obviousness and utility is patentable. Patents for pharmaceuticals products which are or have the potential to be used as foods, drugs or medicines were earlier solely granted for the production process not the substance itself compared to the current law where product patents are also available for a term of twenty years. When in 1970, the Patents Act had excluded pharmaceutical products from being patentable, Mr Prabuddha Ganguly, the advisor of VISION-IPR had expressed, “Thus, under our existing patent laws, molecules, which are products of chemical reactions, are as such non-patentable in India. This restriction, coupled with the restriction on mere admixtures resulting in aggregation of properties in which the components do not exhibit any synergistic behaviour, severely limit the items, which can be patented in India. In such cases only the process, i.e. the method of making the product is patentable”.

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The Indian Patent Act also states that after three years from the date of sealing the patent, anyone who is keen on working on the patented invention has the opportunity to apply for a compulsory license in order to make sure that essential products are universally accessible. The compulsory licensing plays a crucial rule when the drugs currently under patent are sold at exorbitantly high prices. Some examples include Novoseven (Antihaemophilic globulin b & prothrombin complex) being sold at a price of 79000 per unit and Jevtana 60 mg injection at the price of 330000 per unit. The act also includes “licenses of right” where the union government can apply for an order of licenses of rights if the terms are mutually agreed upon. This can be done even after the completion of three years. According to Section 92A of the aforesaid act, a compulsory license may be granted for both the production and export of patented pharmaceutical products to countries which lack sufficient manufacturing capacity to address public health issues. In regard to this, the MoHFW in the year 2004, when the talks of the act being amended were prominent, had stated that “As India is the leader in the global supply of affordable antiretroviral drugs and other essential medicines, we hope that the Indian government will take the necessary steps to continue to account for the needs of the poorest nations that urgently need access to anti-retroviral, without adopting unnecessary restrictions that are not required under the TRIPS Agreement and that would impede access to medicines”.

Another notable regulation is that of Section 3 (d) in the Indian Patent Act which states that mere additions or minor changes in the chemical process for an already patented product will not make the new product patentable separately. To patent the new product, therapeutic efficacy has to be substantiated. For this, applicants are permitted to use additional data and experimental results. This simply indicates that second medical use of a product is prevented in India under Section 3 (d). For instance, Pfizer had patented a cardio vascular agent called Sildenafil Citrate but the patent for its second medical use to treat impotence was rejected by the European Patent Office. Similarly, Minexodil can’t be granted a patent on the unveiling of its new use for hair growth as compared to its preceding utilization for hypertension. On the contrary, the patent for Griseofulvin which is an agent known to cure fungal infections was allowed when it was discovered that it could be used orally too if the dimensions of its molecules are decreased as this reflected enhanced functional efficacy. Certain ambiguities revolve around Section 3 (d) which initially commenced when Novartis had appealed against the repudiation of the patent of “crystal modification of a N-Phenyl-2- Pyrimidineamine derivative” and challenged the constitutional validity of the above mentioned section of the Indian Patents Act on the grounds that it was inconsistent with Article 27 of TRIPS (which is discussed below). It also bestowed arbitrary authority to the Controller to dismiss patent applications hence violating Article 14 of the Indian constitution. However, the honourable court clarified that it should not be interpreted that this section was introduced to prevent patent protection for the different additive inventions in the pharmaceutical substances. Rather the reason why the application for this patent was rejected was the failure on the part of Novartis to explicitly assert a relationship between the bioavailability and therapeutic efficacy accompanied with research data. No evidence was furnished by the applicant to show that the beta crystalline form of Imatinib Mesylate produces some sort of enhanced therapeutic efficacy at the molecular level compared to the Imatinib free base. The Division bench in another case, Hoffman-La Roche Ltd. v. Cipla Ltd, stated in its judgement that Section 3 (d) takes into consideration the caution that in some cases the gradual changes may be so negligent that the result is more or less the same. Section 2 (1) (j) and Section 3 (d) use the words ‘products’ and ‘substance’ respectively which demonstrates the legislative intent that all substances may not be categorized as products, only the latter being eligible for patenting.

The WTO’s TRIPS, that is, Agreement on Trade Related Aspects of Intellectual Property Rights, with which India has to maintain consonance, seeks to strive an equitable balance between the long term goal of incentivizing future inventions and the short term goal of permitting public to utilize the existing ones. This balance is manifested in a three-fold manner which includes:

1. inventions acting as catalysts for new creations due to the social and technological benefits being granted combating the high development cost;

2. patented inventions being disclosed adding value to the existing pool of knowledge without compromising its protection;

3. and providing flexibility for the governments of the member countries to make exceptions to the patent rights which also includes within its purview compulsory licensing.

According to Article 27 of the TRIPS Agreement, an invention should fulfill the criteria of novelty, involve an inventive step and should be capable of industrial application to become eligible for patenting. The agreement also specifies three exceptions in relation with public health under which the government can refuse to grant patents. Along with Article 27.2 clearly mentioning inventions which necessitate the prevention of commercial exploitation to safeguard human, animal or plant life and health, Article 27.3a authorizes government to refuse the patenting of those inventions which include “diagnostic, therapeutic and surgical methods for the treatment of humans and animals”. The agreement also stipulates, in line with Article 39.3, that when members require the submission of undisclosed data or test results for the approval of pharmaceutical products containing new chemical entities, they must protect this information from unfair commercial use. According to this agreement, pharmaceutical products patents pose a discordant conflict and are being opposed by developing countries due to the contention that strong protection would impede the accessibility of drugs due to high prices and growth of domestic industries.

 EFFECT OF PATENT LAWS ON INDIAN PHARMACEUTICAL SECTOR

India, the largest manufacturer of generic drugs globally, is ranked third in pharmaceutical production growing at a compound annual growth rate of 9.43%. Known for its affordable medicines, this market is also expected to reach US $ 130 billion by the year 2030. Despite known to hold a reputation of reliable drug manufacturing all across the world, the industry had met with new-fangled dilemmas after the 2005 amendment. The implications were not fatal to the big Indian firms but grave to the small pharmaceutical industries which were not well-equipped with high quality research and development.

Due to lack of patent protection for pharmaceutical products before 2005, generic manufacturers in India were able to provide drugs, for example the triple combination anti-retroviral used for the treatment of human immunodeficiency virus, at a lesser cost as compared to multinational pharmaceutical companies. Companies and industries which manufactured drugs and medicines in bulk were not affected by this amendment mainly because they already operated at a highly competitive environment. On the other hand, those industries which could not inculcate the production of new drugs were expected to be adversely affected. Indian companies were also keen in introducing new products and promoted them aggressively in the retail formulations market as they anticipated the shrinkage in domestic operations.

DILEMMAS FACED BY PHARMACEUTICAL PATENTS

Section 3 (5) of the Competition Act protects the rights of an IPR holder. However, it does not mean that the actions permitted under IPR lie outside the ambit of scrutiny under the Competition Act. Thus, the first conflict that the patent law faces is its conflict with the antitrust laws which constitute contradictory theoretical foundations. The antitrust laws try to promote competition by ensuring that no single company or industry establishes a monopoly by acquiring exclusive market power of a particular good or service. The strategies used by pharmaceutical industries to prolong the patent protection of their most lucrative drugs through legislative means are inherently at odds with the antitrust laws and the interests of generic producers. In the past, pharmaceutical products were shielded with a single patent but companies now pursue additional safeguards of patent protection encompassing various facets of the drugs to strengthen their market standing. Often referred to as secondary patents or life cycle management, they include aspects like the drug’s manufacturing process, formulations, specific forms and more. As a result, even after the primary patent protecting the compound expires, secondary patents successfully continue to protect the same drug. This strategy expands the product’s protection especially in cases where the secondary patent expires after the primary patent.

This practice of ever greening can have adverse effects on the price of drugs, for instance, AbbVie, a huge pharmaceutical company had increased the price of Humira, the best-selling biological prescription drug in the US, by 100% using secondary patents. This not only hinders the affordability of drugs but also undermines the fundamental objective of accessibility of essential medicines in any country. Pharmaceutical companies believe that such high prices are wholly justified on the grounds that they have to incur a huge expenditure on the research and development of drugs. But ironically, they spend a comparatively greater amount on its advertisements and marketing. The rationale behind companies resorting to ever greening is that after the expiration of patents on the completion of twenty years, generic drugs are allowed to enter the market which are equal to branded drugs in terms of strength, dosage, quality, results and intended use. The only line of demarcation is that they do not bear any brand name and hence are sold at lower prices diminishing the market presence and profitability of major pharmaceutical companies. The more intricate the web of such secondary patents, the greater is the difficulty for generic producers to create their own generic versions of drugs and such strategic use of the patenting mechanism is against the competition laws.

The TRIPS does have a regulatory exception against the possibility of monopoly by companies. Generic manufacturers can use the patented invention and also get a marketing approval to produce their own versions of drugs which they can sell as soon as the patent gets expired. This is known as the “Bolar” provision under Article 30. Recently, in March 2023, soon after the Indian Patent Office had dismissed Johnson & Johnson’s application to protract the patent of Bedaquiline, a drug used for treating tuberculosis, the company had expressed its intention to refrain from enforcing patents for SIRTURO in the treatment of multidrug resistant tuberculosis across the low and middle income nations. This decision aims to assure the generic manufacturers that they can make and sell high quality generic versions of SIRTURO without the apprehension of enforcement of patent by the company contingent upon the product being medically acceptable, and used exclusively in the low and middle income countries.

IS THERE ANY NEED FOR PATENT LINKAGE SYSTEM IN INDIA?

To protect the innovator’s interests, the US follows the system of patent linkage which refers to the relationship between patents and regulatory approvals and this is statutorily provided in the Hatch Waxman Act, 1984. Under this system, any generic drug manufacturer who wishes to market a drug needs to show to the drug regulator that it is not covered by any of the active patents. A list of all the approved patented drugs is maintained in what they call the Orange book. If the drug which has been proposed by the generic producer is found in the list, the manufacturer would have to prove its non-infringement or invalidity to the Food and Drug Administration. If the manufacturer fails to do so then he would have to wait till the expiry of the original patent. Simply put, whenever a second application is submitted with regards to a generic drug already mentioned in the Orange book, the applicants can attach any of the required certifications saying that the patent has expired; the information regarding the patented drug is not available or the patent is invalid; or they won’t launch their drug in the market till the original patent lapses. This method is beneficial in three ways: there exists a possibility of conditional registration for generic drugs in the absence of patents; companies get a chance to revive those patent terms which were excluded due to regulatory hindrances and lastly the original clinical data is protected from misuse as the strict data exclusivity bars generic manufacturers from using the same to get market approval. In the case Bayer Corporation v. Cipla, the Supreme court had rejected the execution of patent linkage system in India on the grounds that India is under no obligation to follow this rule which is specified under ‘TRIPS plus’ and the Drug controller is not authorized to tackle any matter related to patents as he is governed by the Drugs and Cosmetics Act not the patents act and does not possess the technical or legal expertise. The absence of a clearly defined legal provision for patent linkage somehow increases competition by promoting generic drugs curations. Along with the bolar exemption and compulsory licensing, the prices of the drugs are also controlled by the Drugs Prices Control Orders issued in the Essential Commodities Act, 1955 under Section 3. Also, the marketing approvals will only ascertain if the drug is safe to use or not and subsequently whether they can perform clinical trials. This would provide an incentive for generic drug manufacturers to focus more on research rather than inventing alternatives of the original drugs which may lead to a hike in prices. India gaining the reputation of ‘the pharmacy of the world’ with an exception performance in terms of both quality and quantity, it is yet to be seen whether the establishment of a linkage between drugs and patents will affect the pharmaceutical industry or not.

CONCLUSION

The Indian Patents Act as amended in 2005 sets an almost ideal patent legislation by balancing the interests of all the stakeholders including the inventors and the consumers. With many changes since 1970 and the signing of the TRIPS agreement, India instigated new modifications in the scope of the production and sale of drugs as well as research and development transforming the pharmaceutical industry of India as one of the most successful industries in the world. However, it is necessary for the inventors to take into consideration all the principles of patentability and should wisely consult an expert to avoid unnecessary confusion and litigation. As India is moving towards a greater share of global markets and is gradually competing with the international standards in both prices and research and development, the outlook of the Indian pharmaceutical industry relies on the patent protection laws and their proper enforcement.

Author : Suhana, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.