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Challenges to India’s Patent Regime: Pharma Industry

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The works of the founder of the states, law givers tyrant destroyers and Heroes cover but narrow spaces, and endure but for a little time, while the Work of the inventor though of less pomp is felt everywhere and last forever. (Francis Bacon).

A PATENT is an exclusive right granted to a person who invented a new article or an improvement of an existing article or a new process of making an article. It consists of an exclusive right to manufacture the new article invented or manufacture an article according to the invented process for a limited period.

Object of Patent Law:

The object of granting a patent is to encourage and develop a new technology and industry. An inventor may disclose the new invention only if he is rewarded, otherwise he may work it secretly. Thus the theory upon which the patent system is based upon is that the opportunity of acquiring exclusive rights in an invention stimulates technical progress in four ways:
• that it encourages research and invention
• that it induces an inventor to disclose his discoveries instead of keeping them as trade secret;
• that it offers the reward for the expenses of developing invention to the stage at which they are commercially practicable; and
• that it provides an inducement to invest capital in new lines of production which might not appear profitable if many competing producers embark on them simultaneously;

Value of Patent System:

Some controversy exists as to precise extent of the contributions made by the patent system to the economic development of a country. But the adoption of some kind of the patent production for inventions in all most all countries, and the ever increasing number of applications for patents received by the patent offices in all industrially advanced countries is an indication of the universal recognition of the value of the patent system. Most of the inventions and discoveries made in technology in all fields are published in the patents specifications field in the patent offices of different countries. A world wide exchange of technical information has been made possible only by the publications of such patent specifications.

International character

In a sense patents have assumed an international character. The increasing number of applications for Patents from foreigners received in almost all countries in recognition of fact. Attempts are being made from time to time by international associations for the protection of individual property and to introduce more and more uniformity and harmonization among national Patents systems. The International convention for the Protection of Industrial property (Paris Convention) and GATT and TRIPS agreement are examples of attempts at harmonization of the law of patents & other forms intellectual property.

Main Provisions Associated With Trips Agreement

The TRIPS consistent Indian patent law addressed three important issues relating to patent of products:
i) Adoption of definition of “pharmaceutical substance”;
ii) Exclusion of “mere discovery of a new form of known substance” and “new use for a known substance”; and
(iii) Protecting the interests of those who are already producing the products which may be granted patent protection in the new regime.

The patent regime adopted in TRIPS by the developed countries is somehow of the capitalists nature and it prioritizes the profit motive over the social responsibilities. In continuation to these discrepancies, TRIPS also rule out any discrimination between the technological sectors and advocates the same protection for all the technological inventions fulfilling the criteria.

Even after the acceptance of the TRIPS agreement, the following five major areas still controversial for both the parties to the trips:
1) IPRs and access to medicines,
2) IPRs, community property rights and indigenous knowledge,
3) IPRs and biodiversity,
4) IPRs, biotechnology and agriculture,
5) IPR policy and trade.

There is no doubt that “product patent regime” have spurred the R&D for diseases- notably, those with the lucrative potential market in the industrialized world. However, TRIPs has failed and will continue to fail to stimulate sufficient R&D for diseases that primarily affect poor countries. TRIPs had forced all the developing countries to switch over to product patent regime from process patent regime and hence, restrict the access of the cost effective essential medicines to their people.

Challenges to patent regime in India

India enjoys several strengths amongst others developing and least developing countries, particularly, in case of the production of the food grains and drugs, and proudly hosts world cheapest pharma industries. Even with these impressive facts, one billion Indians, spend the same amount on medical drugs per year as seven million men and women in Switzerland. The amount spent on drugs here in India roughly corresponds to the profit made by a single pharma MNC “Novartis” in a typical year. These figures are enough to reflect the dying conditions of the public health services in India. It is now almost a well established fact that TRIPs provisions have already started affecting a person’s human right to access health services (India and the WTO)

HIV/AIDS alone have caused death of about 3 million people in 2002, including 60000 children. Around 5 million new patients were victimized by it. Around 95% of the 42 million AIDS victims are the people living in developing countries. Only 3 lakh of the 60 lakh advance stage patients of HIV have access to life saving medicines in third world countries. These figures and facts are clearly indicating the adverse effects of TRIPS Provisions in the form of restriction on access to essential medicines to the poor people and diminishing possibilities of introduction of new drugs for their diseases.

The Indian Patents (Amendment) Act, 2005 (The Act ) introduced product
Patents in India and marked the beginning of a new patent regime aimed at protecting the
Intellectual property rights of patent holders. The Act was in fulfilment of India’s
Commitment to World Trade Organization (WTO) on matters relating to Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).

As part of its WTO-TRIPS regime obligations under Articles 70.8 and 70.9, India created the "mail-box" to withhold patent applications which had pharmaceutical products as a subject-matter. What was unveiled as a provisional measure was the transitional system of "Exclusive Marketing Rights" to ensure the interests of domestic manufacturers who mainly survived on off patenting and reverse engineering of patent able bulk drugs and formulations for a long time. In the last years of the regime, grant of two major yet controversial EMR's to Novartis and Eli Lily showed how the entire system shook up the domestic manufacturer who waged a litigative battle in response to the first simulation of the post-product patent industry scenario in India. This not only lay threadbare as to how the grant mechanism was liberal, draconian and absolutist in the eyes of the Indian manufacturer. The focus which the policy makers lost in connecting quality control regulations with grant process of marketing rights was the bureaucratic red tape surrounding the operation of provisions in the Drugs and Cosmetics Act, 1940 and the way clinical trials were conducted in India

Litigation Battle: Novartis Sues India

The letter and spirit in which India transitioned into the new patent regime has been put to litmus test by Novartis which sued India with the institution of a writ Petition before the High Court of Judicature at Madras. Several countries praised India’s contribution to life saving drugs and requested Novartis not to challenge. However, Novartis filed its case with Indian court at Chennai and sought patentability of its product Gleevac filed under EMR provisions on the grounds alleging:

(i) illegality in procedure adopted and also the text of 3(d) of The Act which was in violation of Article 27(1) and 27(2) of TRIPS Agreement;
(ii) arbitrariness by the Controller General of Patents & Designs, Chennai and ignoring rationality underlying Articles 253 and 51(c) of the Indian Constitution whereby national laws are required to be harmonized with International treaties;
(iii) Provision relating to discovery of “new form” contained in 3(d) is illogical and against the concept of patents which encourages innovation and Intervention by rewarding the person associated with such acts beneficial for society;
(iv) Deliberate incorporation after approval of its product Gleevac under the earlier prevailing EMR provisions resulted in disturbing the level playing field laid under the Act in compliance with conditionality under TRIPS Agreement.

The Technical Expert Group on Patent Law Issues with Mr. Mashelkar as it’s Chairman (Mashelkar Committee ) submitted its report to the Government of India on its terms of reference which favoured incremental modifications / innovations for qualifying for the grant of patent as New Chemical Entities (NCE).Several NGOs opposed the case filed by Novartis and urged the doctors and medical professionals to boycott its products in India. The Indian court rejected the plea of Novartis on patent of Gleevac for violation of TRIPS Agreement. This patent case is considered to be a threat to developing nations and the treatment of AIDS patients will be seriously impaired if Novartis ultimately succeeds in obtaining favourable award on its patent matter from the Higher courts in India.

Revival of Yoga and Impact of Baba Ramdev

Baba Ramdev revived Pranayama which acts as the best medicine involving rhythmic control of breath through bodily exercises and awakens divine powers essential for curing disease and enabling creation of "Disease Free Society - Medicines Free World". Yoga Pranayama & the Ayurvedic & Herbal medicines used at Baba Ramdev’s Yoga camps have scientifically proved to provide cure for most of the diseases including: (i) control & cure of HIV/AIDS by improving the CD4 (T-helper lymphocytes) cell count of the people affected by AIDS; (ii) control and cure of cancer; (iii) Diabetes; (iv) hypertension; and (v) depression.
Baba Ramdev’s increasing popularity and the immense pressure exerted by the powerful global pharma lobby has made India seriously consider revising: The Drugs and Cosmetic Act, 1940 and Drugs and Magic Remedies Act, so that good men like Baba Ramdev are prevented from claiming that Indian traditional medicine can cure diseases like HIV / AIDS, cancer, diabetes, high blood pressure etc. The Health Ministry issued notices to over 80 organizations including the high-profile ashram of Baba Ramdev and also instructed them to stop claiming curing serious diseases like AIDS and cancer.

Generic Pharmaceutical Manufacturing

1. When the mailbox applications are cleared and patents awarded, newly-introduced generics in the Indian market may have to be withdrawn. This, for example, is why Indian brands of “Tadalafil” have disappeared from the shelves. And, newer antipsychotic, antidepressant, antiepileptic and other drugs will be permitted to be marketed only by the patent holder. Costs to the patient will then inevitably rise.
2. New drugs that emerge in the international arena will be available to Indian patients only from the patent holder. Again, the cost is almost certain to be high.
Rise in Drug Prices and Access to Medicines for the Poor.

While discussing the post-2005 Healthcare scenario, one of the major concerns among all stakeholders is the issue of the impact of the emerging product patent regime on drug prices in India and other developing countries, which did not permit patenting of drugs per se under their earlier legislations. The general impression is that drugs which are under patents are expensive compared to generic products and once the product patent regime is in place, they will be unaffordable to the majority of Countries of the developing world and as a consequence their healthcare status will be seriously affected. High prices of patented drugs affect not only the patients in developing countries, but also in the developed world.

Based on these premises, it would therefore appear that if Society wants new and better life-saving drugs, the price to pay for that would be unaffordable to most of the patients who need them. Even for the pharmaceutical Companies, the costs for R&D on New Drugs have been accepted as unaffordable, under their present structure, leading to a spate of mergers and acquisitions during the last two decades, Some recent studies indicate that such a strategy is also not paying off, partly since, the larger the Corporation, the greater the challenge to remain creative, make decisions and cut down the gestation period for moving R&D programmes from concept to the market.

Competition from China

Indian pharmaceutical industry is expected to face competition from the Chinese pharmaceutical industry as China is known for its cheap manufacturing capabilities.

Chinese government has introduced several initiatives in providing boost to its pharmaceutical industry and there are trends indicating increased investments by global MNCs. The advantages of Chinese pharmaceutical industry to that of Indian pharmaceutical industry include: (i) better data protection mechanism; (ii) favourable domestic pricing issues; (iii) Chinese government’s strong commitment to pro-industry policies; and (iv) existence of a strong patent regime. More than 20 major MNC pharmaceutical companies have already established their manufacturing and R&D facilities in China and are also associated with carrying out drug discovery and Phase I-II clinical trials related activities . MNCs like Sanofi Aventis, Merck etc., are likely to establish R&D facility in China. The case ruling against Novartis is expected to change the plans of the Swiss pharma giant who may seriously consider reorienting its investment plans in India that may benefit China with its increased investments in Pharmaceutical business.

New Initiatives and Measures for Protection and Promotion

The several initiatives and measures taken by the Indian government for providing the required support, boost and encouragement for Indian pharmaceutical industry include: (i) permitting 100 % Foreign Direct Investment (FDI) for manufacture of drugs and pharmaceuticals provided the activity does not attract compulsory licensing or involve use of recombinant DNA technology and specific cell / tissue targeted formulations; (ii) tax incentives under the Income Tax Act, 1961 for in-house R&D.; (iii) life saving vaccines exempted from excise duty; (iv) clinical trial of new drugs exempted from service tax to make India a preferred destination for drug testing; (v) anti-AIDS drugs and life saving vaccines exempted from excise duty to encourage companies like Cipla; (vi) all drugs and materials used in clinical trails to be provided customs and excise duty exemption; (vii) companies in knowledge-based pharmaceutical business to be provided equity support; (viii) customs duty reduced to 5% on 10 anti-AIDS and 14 anti-cancer drugs; and (xix) duty on certain life saving drugs, kits and equipment reduced and such drugs are also exempted from excise duty and countervailing duty.

The new patent regime in India touched the hornets’ nest and has raised several contentious issues relating to right to health of the people, which is in conflict with the economic right of patent holders. It is also likely to restrict access of allopathic medicines to only the affluent, affordable and more privileged class of people in India and other countries in the immediate future. The institutions associated with enforcement and protection of right to health of human beings whilst upholding the rights of patent holders are faced with the daunting task and challenge of devising ways and means for fulfilling their defined, designed and desired roles so that the conflict in rights pertaining to rights of intellectual property owners and the right to health of human beings is minimized whilst balancing the prevailing hierarchy of human rights for achieving the social and economic objectives.

 1.( India and the WTO: The Development Agenda by: Deepika M.G)
2. available at
3. Patent Regime In India: Sashi Sharma.
4. Novartis AG vs. Union of India and others.WP no.24749 of 2006 filed before H.C of Madras
5. (Available at
6. ( Available at Indian journal of Psychiatry)
7. (Impact of new Patent Regime and price. By. Dr.M.D Nair)

The author can be reached at: / Print This Article

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