By Kevin E. Noonan --
One of the signal achievements of late 20th Century trade diplomacy was the ratification of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), and specifically the Trade-related Aspects on Intellectual Property Rights (TRIPS). These international agreements created the World Trade Organization and changed national practices regarding intellectual property rights protection, which was a quasi quid pro quo for membership. Part of the GATT/TRIPS related changes mandated that intellectual property rights be expanded and protected without discrimination against non-native patent holders, and that certain national practices (like banning outright intellectual property rights for entire categories of inventions) would cease.
The most economically significant and high-profile of such practices relate to the pharmaceutical industry and specifically to patents on drugs; countries like India frankly refused to patent drugs or to permit actions against Indian companies making generic versions of drugs patented elsewhere. This all changed, or was supposed to change, with India's ratification of GATT. However, change comes slowly if at all and the years since Indian ratification of the new system have seen many drugs in many contexts run into national legislation, government agency action, or litigation-related court orders that have thwarted attempts by Indian patent holders, predominantly Western drug companies, from enforcing their patents to prevent generic competition.
This is part of a larger trend, exemplified by passage of the Doha Declaration of 2001 and compulsory licensing provisions in national TRIPS implementing laws. This has created a crisis for Western pharmaceutical companies, who have seen the trend for compulsory licensing, or the threat of such licenses, expand from anti-AIDS drugs to other drugs less relevant to "national medical emergencies," to where the levels of protection may be lower in the post-TRIPS world than they were before the GATT treaty was signed (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries").
While other countries have been more vigorous in using these provisions to reduce their levels of compliance with the spirit if not the letter of TRIPS, including Thailand, Brazil, and Venezuela, India has perhaps created the biggest problem for Western drug companies. This is because India has a large, educated middle class and a democratically elected government, meaning that India's middle class has the clout to influence the government to act in their (and India's) best interests. Coupled with its large generic pharmaceutical industry, the outcome is not surprising: Western pharmaceutical companies have been embroiled in several disputes regarding compulsory licensing and an outright refusal to patent several important drugs, while seeing India provide generic drugs for the rest of the world (ROW) (and, in some instances, including Western countries as well).
The latest patent imbroglio (Novartis v. Union of India) involves imatinib mesylate, sold by Novartis as Gleevec® (in the U.S.) and Glivec® (in the ROW) for the treatment of chronic myelogenous leukemia and certain gastrointestinal cancer. As reported today in The New York Times ("India's Supreme Court to Hear Dispute on Drug Patents" by Vikas Bajaj and Andrew Pollack), the case has moved through the Indian legal system for six years. At issue is the application of Section 3(d) of the Indian patent statute:
Section 3(d): 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 new use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.
Initially, the Indian Patent Office refused to grant a patent to the drug maker, Novartis. Novartis appealed, and it has taken until now for the case to arrive at the Indian Supreme Court, which will hear argument later this month. A great deal is at stake: while a year's treatment of Gleevec can cost $70,000 in the U.S., Novartis has made attempts to provide it for greatly reduced cost (and, in some cases for free) in an effort to blunt the political pressure to uphold the government's refusal to grant the patent. Generic Gleevec is available for about $2,500 a year, and various non-governmental organizations, like Doctors without Borders, are afraid this drug (and others like it) will become unavailable if Novartis is granted an Indian patent.
For its part, the Obama administration is reportedly exerting pressure on the Indian government to grant the patent. NGOs are exerting political pressure of their own, including protesting at a Novartis shareholder meeting in Basel, Switzerland and at several Novartis company locations in he U.S. The article also reports that the U.S. has demanded that a new treaty for the Pacific region, the Trans-Pacific Partnership, contain provisions requiring member countries to grant patents for drugs like Gleevec, according to what are called "a leaked text of the government's position." The article also speculates that the case could influence Western drug manufacturers' appetite for investment in India.
As described in the article, the dispute concerns a provision of the law that precludes patent protection for drugs known or developed before 1995 unless it is in a new form that "significantly improves the medicine's 'efficacy,' or effectiveness." Because the ability to protect new forms of old drugs is common (termed "evergreening"), it is not limited to Gleevec, and this, according to the article, is another source of concern for some groups. Brook K. Baker, a professor of law at Northeastern University in Boston and a policy analyst for the Health Global Access Project, is quoted as posing the question "Do you get one patent monopoly for the basic ingredient or do you keep tweaking it to get more patents?" (While not a bad question it ignores the reality that the "old" form of the drug, once off patent, can be made, used and sold free of the patent "monopoly," as illustrated nicely for omeprazole, sold first as Prilosec® and, in altered form, as Nexium®. No one needs to take Nexium, and omeprazole has been available in the U.S. as a genetic for almost 10 years.) Ironically, the "earlier" version of Novartis' Gleevec, although patented in the early 1990s, was never marketed as a drug, and the "newer" version was approved at least in part because it is "30 percent easier for the body to absorb" than the older drug. And of course the earlier version of the drug was not patented in India because India did not grant pharmaceutical patents at that time. Paul Herrling was quoted as explaining that it is frequently the case that the first embodiment of a drug compound is not what ultimately becomes the approved drug product. Under these circumstances, India's position would prevent patenting of the actual drug, which frequently has important beneficial properties (compared with the first patented compound, which "might not be absorbed into the bloodstream well enough, or it might be chemically unstable, or unsafe").
The implications of the case extend to other cancer drugs (such as erlotinib, sold by Roche as Tarcera®, and numerous anti HIV drugs, including tenofovir, sold by Gilead Sciences as Viread®).
The positions taken by Professor Baker and Shamnad Basheer, a law professor at West Bengal National University of Juridical Sciences in Kolkata who has filed an amicus brief, provide an interesting perspective. Professor Baker takes the traditional legal academic view, that Western drug companies "want India shut down as a place that can make early versions of generic medicines that can compete with them" while conceding that "a victory for Novartis would not shut off the production of generic Gleevec or of other existing generics." Professor Basheer, on the other hand, said that "[i]t is important that the court take on the matter and interpret the law in a way that balances the need for innovation against public health concerns." His amicus brief argued that the improved "effectiveness" standard needed clarification and that "[i]t would be impractical for drug companies to seek patents only after they have conducted years of clinical trials that could provide definitive proof that updated drugs work better than their older version." On the other hand, evergreening is an important concern, however, and the Indian government has a legitimate interest in protecting its generic drug industry.
The Indian Supreme Court will make its decision, and thereafter it is possible we will see whether and to what extent either of these positions is correct.
