RAJIV GANDHI NATIONAL UNIVERSITY OF LAW, PATIALA

PROJECT SUBMISSION FOR THE SUBJECT OF

LAW AND PRACTICE RELATING TO PATENTS, DESIGN AND GEOGRAPHICAL INDICATORS

ON THE TOPIC

PHARMACEUTICAL PATENTING IN INDIA

SUBMITTED TO: SUBMITTED BY:

DR. MANOJ SHARMA ASHWATHI UMARIA

(ASSISTANT PROFESSOR OF LAW) ROLL NO. 15176

 ACKNOWLEDGMENT

I express my gratitude and deep regards to my teacher for the subject Dr. Abhinandan Bassi
for giving me such a wonderful opportunity to make a research project on the topic which
involves such a relevant question of law. It will indeed enhance my knowledge and also
widen the scope of my study. I would like to thank her for her exemplary guidance,
monitoring and constant encouragement throughout the course of this study.

I also take this opportunity to express a deep sense of gratitude to my classmates in the
college for their cordial support, valuable information and guidance, which helped me in
completing this task through various stages.

I am obliged to the staff members of the Library, for the timely and valuable information
provided by them in their respective fields. I am grateful for their cooperation during the
period of my assignment.

Lastly, I thank my family for their constant encouragement without which this assignment
would not have been possible.
TABLE OF CONTENTS
ACKNOWLEDGMENT......................................................................................................................... 2
INTRODUCTION .................................................................................................................................. 4
REGULATORY FRAMEWORK........................................................................................................... 5
Pharmaceutical Patent under TRIPS Agreement and Access to Medicines ............................................ 7
Flexibilities available under TRIPS and its use by the Indian Government to secure access to essential
medicines ................................................................................................................................................ 8
Conclusion ............................................................................................................................................ 10
 INTRODUCTION

In India, all drugs were generics before 2005 because there were no product patents for
pharmaceuticals. India became fully TRIPS compliant in 2005 through the introduction of
pharmaceutical patents, with legislation that included safeguards to protect public health. In
particular, section 3(d) of India’s Patent Act was included to prevent the extension of patent
protection through minor product modifications, unless a ‘significant enhancement of
efficacy’ can be demonstrated. Marred by expensive medicines, disparity with
government and the pharmaceutical companies, increased tax slabs, more import duty, threat
to pull out of business and growing escalation of unrealistic demands while not bridging the
supply chain of essential and affordable drugs is making our mortality rate a number
that cannot be ignored or misrepresented for the sake of public relations.

The judgment in Novartis AG vs. Union of India[ii] is a game changer in these situations.
Novartis took legal action against the Indian government to challenge the constitutionality
of section 3(d). When this was rejected, the company sought to have Imatinib
Mesylate, recognised as patentable although it did not have any effective efficacy. The
Novartis case is important because it highlights that it’s no longer acceptable to the global
public that hundreds of millions of people are denied access to life-saving drugs because of
monopoly pricing. And the case shows that governments in developing countries with some
economic and political clout, such as India’s, are prepared to fight the big pharmaceutical
companies.

The right to life and health is a fundamental right guaranteed to every person living in India
and is non-negotiable. India has amended the Patents Act in 1999 and 2002 to comply with
the obligations of Trade-related Aspects of Intellectual Property Rights (TRIPS) The only
pending obligation with regard to TRIPS is the introduction of product patents to medicines
and agro-chemicals. The product patent prohibits others from making, using, offering for
sale, selling or importing the patented product. As a result, the product patent gives a
monopoly to the patent owner for the production of patented article during the term of the
patent (20 years). Therefore, product patent protection for medicines and agro-chemicals
creates monopoly and eliminates competition in the pharmaceutical market.
Drug companies often abuse the patent monopoly and fix exorbitant prices for the patented
medicines. The introduction of product patent thus reduces accessibility and affordability of
drugs[iv]. The net result of the TRIPS accord has been high cost of medicines and the
consequent denial of access to medicines to the poor across the globe. Further, it has also led
to a situation where medicines required to treat diseases that predominantly occur among the
poor are not researched at all. Instead drugs that are being researched are drugs used for
“lifestyle” diseases like impotence, baldness, obesity, etc . While the pharmaceutical industry
claims that high prices are explained by the massive expenditure on R&D, the truth is that
drugs they actually research have little relevance to real medical needs. Moreover, the kinds
of profits that big pharmaceutical MNCs generate are an indication of profiteering and not
just legitimate profit making.

Before signing of the WTO agreement, and in the ensuing 10 years till date, globally as well
as in the country, diverse contentions have emerged about the impact of TRIPS compliant
Patent Laws on domestic industry – especially in developing countries. There is, however, a
wide consensus that domestic laws, while being TRIPS compliant, need to make full use of
“flexibilities” available in the TRIPS agreement. This was reiterated in unequivocal terms by
the WTO Doha Declaration on TRIPS Agreement and Public Health (2001), which, inter alia,
commented that countries have the sovereign right to enact laws that safeguard domestic
interests. It recognised the gravity of public health problems in developing countries and
clearly provided that the member countries had the right to protect public health and to
promote access to medicines for all.

REGULATORY FRAMEWORK

BEFORE THE TRIPS AGREEMENT

The focus of the intellectual property regime that India has had to adopt since it took
Commitments under the Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS) have remained on the ability of the country to provide mechanisms which can ensure
that the country is able to provide access to medicines to its citizens at affordable prices.
India has had a unique position among the countries in the developing world for it has a
strong generic pharmaceutical industry, which has been able to provide medicines at prices
that were among the lowest in the world. Much of the credit for this development goes to the
Patents Act that India enacted in 1970. Two key provisions facilitated this process.

The first was introduction of a process patent regime for chemicals and,

The second, shortening of the life of patents granted for pharmaceuticals.

The Patent Act 1970 stated objective was to foster the development of an indigenous Indian
pharmaceutical industry and to guarantee that the Indian public had access to low-cost drugs.
The Act replaced intellectual property rights laws left over from the British colonial era and
ended India’s recognition of Western-style “product” patent protection for pharmaceuticals,
agricultural products, and atomic energy. Product-specific patents were disregarded in favor
of manufacturing “process” patents that allowed Indian companies’ to reverse engineer or
copy foreign patented drugs without paying a licensing fee. This allowed the domestic
industry build up considerable competencies and offer a large number of cheaper “copycat”
generic versions legally in India at a fraction of the cost of the drug in the West, as long as
they employed a production process that differed from that used by the patent owner. The Act
protected process patents for 7 years instead of the usual 15 years needed to develop and test
new drugs.

Indian Patent (Amendment) Act, 2005 (In consensus with TRIPS Agreement):

On March 23, 2005, the Indian Parliament passed the Patent (Amendment) Bill 2005 (Bill
No. 32-C of 2005). It was the third amendment to the Indian Patent Act (1970). The amended
Patent Act conforms to requirements set forth by the World Trade Organization’s (WTO)
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Since the new
law came into effect on January 1, 2005, there have been serious concerns regarding the role
of the domestic Indian generic industry in the new product patents regime, and the continued
availability of essential medicines at affordable prices.
To meet its TRIPs obligations, India amended its patent law on March 22, 2005, abolishing
its “process” patents law and reintroduced Western style “product” patents for
pharmaceuticals, food, and chemicals. This action effectively ended 36 years of protection for
Indian pharmaceutical companies and stipulated that Indian companies selling copycat drugs
must pay foreign patent holders a “reasonable” royalty for copies sold in the Indian market.
The amendment made reverse engineering or copying of patented drugs illegal after January
1, 1995.
The Act allowed for only two types of generic drugs in the Indian market:

• Off-patent generic drugs and,

• Generic versions of drugs patented before 1995.

At present, nearly 97 percent of all drugs manufactured in India are off patent and therefore
will not be affected by this Act. It also introduced a provision establishing compulsory
licenses for exports to least developed countries with insufficient pharmaceutical
manufacturing capacities. The Amendment grants new patent holders a 20-year monopoly
starting on the date the patent was filed and, without a compulsory license, no generic copies
can be sold during the duration of the patent.

PHARMACEUTICAL PATENT UNDER TRIPS AGREEMENT AND ACCESS

TO MEDICINES

The World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights
Agreement (TRIPS or “Agreement”), which sets out the minimum standards for the
protection of intellectual property, including patents for pharmaceuticals, has come under
fierce criticism because of the effects that increased levels of patent protection will have on
drug prices. While TRIPS does offer safeguards to remedy negative effects of patent
protection or patent abuse, in practice it is unclear whether and how countries can make use
of these safeguards when patents increasingly present barriers to medicine access.

The Fourth WTO Ministerial Conference, held in 2001 in Doha, Qatar, adopted a Declaration
on TRIPS and Public Health (“Doha Declaration” or” Declaration”) which affirmed the
sovereign right of governments to take measures to protect public health. Public health
advocates welcomed the Doha Declaration as an important achievement because it gave
primacy to public health over private intellectual property, and clarified WTO Members’
rights to use TRIPS safeguards. Although the Doha Declaration broke new ground in
guaranteeing Members’ access to medical products, it did not solve all of the problems
associated with intellectual property protection and public health. The recent failure at the
WTO to resolve the outstanding issue to ensure production and export of generic medicines
to countries that do not produce may even indicate that the optimism felt at Doha was
premature.
Indian generic drug manufacturers have been manufacturing generic versions of branded
drugs. Under the Act, such generic drug manufacturers that had made significant investment
and were marketing the product before January 2005 can continue marketing the product in
the new regime. The Act grants them immunity from infringement suits from patent holders.
They would only have to pay a reasonable royalty to the patentee. Indian generics makers still
retain significant scope for copycatting patented Western drugs, legally or illegally, without
penalty. And Western companies have seen relatively few of their patent applications
approved. Industry observers who expected India’s IPR climate to suddenly change after the
2005 Act may have been overly optimistic in their estimate of how fast things can change in
this industry.

India is one of the few developing countries that decided to use the full ten-year transitional
period (1995-2004) under the TRIPS Agreement. During this period from 1995 to 2004, India
received numerous product patent applications that the Indian Patent Office started
examining in 2005. These applications are at various stages of examination and whether they
are granted or not will have a significant impact on continued access to generic medicines.

FLEXIBILITIES AVAILABLE UNDER TRIPS AND ITS USE BY THE INDIAN

GOVERNMENT TO SECURE ACCESS TO ESSENTIAL MEDICINES.

The introduction of pharmaceutical patents in India has been particularly controversial. Indian producers
have long been suppliers of low-cost medicines (including key HIV/AIDS treatments), domestically and
also to other low- and middle-income countries. In amending its patent law to meet new international
obligations, India, like many developing countries, attempted to take advantage of flexibilities in TRIPS to
ameliorate potentially negative effects that pharmaceutical patents might have on the supply of medicines.
India used its full transition period, waiting to introduce pharmaceutical product patents until 2005
(pharmaceutical process patents were already available prior to TRIPS). Applications dating from 1995
onward were received but were not examined on HIV/AIDS (UNAIDS) and civil society groups, defend
3(d) and point to India as a model for developing countries attempting to use TRIPS flexibilities to
promote public health.
In 2005, when India was compelled to re-introduce the product patent regime, the Indian Parliament, aware
of its responsibility not only to Indians but to patients across the world adopted the only pragmatic solution
available — to utilize flexibilities available under TRIPS in an attempt to secure the availability,
affordability and accessibility of medicines. According to this approach, TRIPS does not set any universal
common standard for the substantial aspects of the patent law. Thus, as the Doha Declaration on the TRIPS
Agreement and Public Health (Doha Declaration), clearly states every WTO member has the right “to use,
to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”. Thus the
TRIPS implementation strategy was “to find the means within the patent system and outside it, to generate
the competitive environment that will help to offset the adverse price effect of patents on developing
country consumers. The cautious approach suggests the implementation of TRIPS should be done with
minimum damage”.
As noted above, the various amendments to India’s patents law introduced flexibilities at both the pre- and
post-grant stage of a patent application. This study explores the potential of three of these key flexibilities
in allowing continued generic production of medicines.
• The first relates to medicines invented prior to 1995. Under TRIPS there is no obligation to provide
patent protection to products invented prior to 1 January 1995.
• The second is one of the most important flexibilities employed by India which is the restriction of the
scope of patentability in relation to known substances. Thus, section 3(d) of the Patents Act, 1970 prohibits
the patenting of known medicines unless the patent applicant can demonstrate increased therapeutic
efficacy. It must be borne in mind that section 3(d) is not a blanket prohibition on such patents. However,
the Indian Patent Office is expected to apply this provision strictly while examining the applications before
it. It is also expected to apply the provisions of section 3(e) that prohibits the patenting of mere admixtures
and section 3(i) which excludes from patenting any process of “medical or surgical, curative, prophylactic
or other treatment of human beings…”
• Finally, section 11A(7) of India’s patents Act, 1970 provides that where a company was already
producing and marketing a product before 1 January 2005 on which a patent application was made in the
mailbox, should that patent be granted, the company may continue manufacturing that product on the
payment of a reasonable royalty. These are only some of the flexibilities available under the Indian law.
However, if applied strictly they offer a significant space for generic production.

JUDICIAL OPINION

Supreme Court on: Access to Medicines (Novartis Case)

The Indian Supreme Court has refused to allow one of the world’s leading pharmaceutical companies to
patent a new version of a cancer drug, a decision campaigner hailed as a major step forward in enabling
poor people to access medicines in the developing world.
Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug
Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies
in India to manufacture and sell cheap copies of the drug in the developing world and has implications for
HIV and other modern drugs too.
Campaigners were jubilant. A ruling in Novartis’s favour would have reduced poor people’s access to the
drug, said Jennifer Cohn, of Médecins Sans Frontières (MSF). “The fact that India says patents is to
reward innovation as opposed to small changes does stay true to the concept of what a patent should be.”
F. Hoffman-La Roche Ltd., v. Cipla Ltd. (Delhi High Court):
The Court, while rejecting the application from Roche for a temporary injunction preventing Cipla from
manufacturing and selling at very low price the generic version of the cancer drug erlotinib, observed:
“therefore, this Court is of the opinion that as between the two competing public interests, that is, the
public interest in granting injunction to affirm a patent during the pendency of an infringement action, as
opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in
favour of the latter. The damage or injury that would occur to the plaintiff in such case is capable of
assessment in monetary terms. However, the injury to the public which would be deprived of the
defendant’s product which may lead to shortening of lives of several unknown persons, who are not parties
to the suit, and which damage cannot be restituted in monetary terms, is not only uncompensatable, it is
irreparable. Thus irreparable injury would be caused if the injunction sought for is granted.”

Problem of Data Exclusivity in Access to Medicine in India:

Pharmaceutical companies have to submit test and clinical data to the national health authorities to obtain
marketing approval for a new drug. The national health authorities keep the innovator data confidential
against “unfair commercial use” for ascertain time period, thus barring generic manufacturers from using
the submitted innovator data for the stipulated period.
The US and EU grant “data exclusivity” for five years and eleven years, respectively. Most often,
companies use data exclusivity provisions to seek a period of monopoly in a country even if it does not
have any patents on the product in the country. As such, data exclusivity provisions have considerable
implications for developing countries like India.
So far, India has not introduced provisions pertaining to data exclusivity in the three amendments to the
Patents Act, 1970. India is now considering amendments to the Drugs & Cosmetics Act, 1940 and the
Indian Insecticides Act, 1968 incorporating provisions for data protection.
Once data exclusivity is introduced, generic companies would have to do their own safety and efficacy
tests. The huge cost involved in this exercise could result in generic companies being barred from
producing a generic version of a product for a period extending effectively beyond 20 years. It may also
result in the ineffective use of compulsory license due to data exclusivity provisions, were such a license
issued to a generic manufacturer.

CONCLUSION

Since 1970, India’s Patent Act has allowed Indian manufacturers to legally produce generic
versions of medicines patented in other countries. India’s expertise in reverse drug
engineering and the efficiency of its pharmaceutical manufacturing industry fast established it
as the prime source of generic medicines in the world. 2005 marks a fundamental and
potentially dramatic change in access to medicines in developing countries: countries which
do not yet grant patents on medicines, such as India, now have to implement patent laws in
compliance with the World Trade Organization (WTO) Trade-Related Aspects of Intellectual
Property Rights (TRIPS) Agreement. The Act has some clear provisions to protect the
interests of the domestic generic manufacturers. It has achieved a reasonably fine balance
among stringent IP measures, while making use of some of the flexibilities that TRIPS offers.
The amended Patents Act has an effective opposition system for challenging frivolous
patents, limited patentability exceptions, elaborate provisions pertaining to compulsory
licensing, and parallel importation.

The changes to the new Patents Act could enable India to continue playing the pioneer role
that it played in the pre-TRIPS period, making drugs available at cheap prices to consumers
both domestically, and around the world.