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Strict Indian Patent Law Regime for Granting Pharmaceutical Patents, Boosting Our National Interest or Taming MNC’s: A Conundrum by Pratik K Chaudhary

The Author: Pratik K Chaudhary is a Law Student Studying at Sir LA Shah Law College, Ahmedabad
  1. Introduction:-

The world had to undergo the wrath of two world wars to get convinced that war is not a way to attain supremacy. Rampant usage of armaments and warheads will no longer be the means to claim the ultimate world ranking position. Rather than fighting, boosting the Countries technological and scientific development along with Industrial growth and economy would decide a countries fortune. This thought threw light on the lucrative world of Inventions and patent rights. Today countries are fighting a technological war which is all about knocking each other out with respect to new inventions and getting better than others.

These wars of technological advancements and patents have some where its grass roots attached to us, the people, the citizen, and the consumers, the one who utilize, exploit or rather say needs these technological advancements. It can be said with audacity that every country is made of its citizen and every country thinks in the interest of its own citizen.

The above contention is true with respect to several questions affecting the citizens of a country like the matter of defence from external forces or to increase the economy of the country or to decrease exploitation, protect human rights and other features. One more fable adds to the above list and it is the story of Patents and the interest of public attached to it.

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India, which is known for its democratic, republic, sovereign features of policy, puts the interest of its citizens at the top priority just like any democratic country in the rest of the world does. And nothing comes in way of it, when it comes to the interest of the people. Reason being, as said earlier, is that a country is build by its citizen, these citizens had fought to achieve freedom in past and today these citizens decide the fate of the Government which runs the country and all they expect is security and opportunity to sustain and have a sense of wellbeing along with assurance that their basic fundamental rights are not violated due to any reason. This contention is also interlinked with the aspect of protection of rights and interest of people by easy access to patented products. India being a developing country faces many challenges including the question of Health safety of its citizens, question of curbing the diseases and pandemics. Article -21 of the constitution of India contemplates the right to life, which also includes disease – free state and environment [1]. To ensure that this right is well protected, the Legislative, Executive and Judiciary had taken significant policy decisions which were properly enforced in past which helped us eradicate Polio and other diseases from our nation, also helped people to access to medicines easily and at an affordable price. And yet the job is still unfinished and many steps are yet to be taken to uplift the lives of the people and making a disease free state.

  1. Basis of Indian Patent Law regime with notable stringent provisions.

In India, the subject of Patents is governed and executed under the provisions of The Indian Patent Act, 1970. The history of patent protection dates back to even a century earlier before Britishers left India, but it is moot to discuss it here. The Indian Patent Act, 1970 was consequently amended as per the norms of TRIPS later on, notably in 1999, 2002 and 2005. [16]

The salient feature of Indian Patent Act, 1970 pertaining to the current topic of discussion was that it granted patent only on process of the inventions related to food and medicine and not the final product.

Section5. Inventions where only methods or processes of manufacture patentable. [2]

(Omitted by the Patents (Amendment) Act, 2005, (15 of 2005), section 4 (w.r.e.f 1-1-2005).

This was done amidst the situation when India was facing a huge economic crisis. The mortality rate was extremely high and public access to medicine was very tough owing to the high prices stashed by the MNCs belonging to foreign countries, who were the only makers. The Indian companies were very few and held a very less margin in producing life saving drugs. Since India had no local production of bulk drugs, the central government had to import them.

Thus to revive from this situation, GOVT entered into an agreement with UNICEF and setup a manufacturing facility for bulk production of Penicillin and other essential antibiotics. The MNCs had to reduce their prices as they had a competitor now. This lead to a significant decrease in the prices of drugs thus lives saving antibiotics were now available at affordable prices. The above mentioned facility was named Hindustan Antibiotics Limited and was established in the year 1954 [3]. This was just a footstep out of a long distance marathon that had to be run to achieve an affordable medicine industry in India. Thus Govt. Of India in order to boost drug manufacturing in India came up with the idea to revive the patent legislation. For this purpose it appointed Justice Rajagopala-Ayyangar committee in 1957 to recommend the revisions in patent law to suit industrial needs. The object of the committee was to make way for setting up a strong and developing pharmaceutical market in India. [4]

The committee gave recommendations taking into purview the aspects of Article-21 of Constitution that the Monopoly rights exercised by the MNCs are responsible for the overpricing of the drugs in India and the same is required to be corrected. Thus it was stated that provision of Compulsory Licensing and Process patenting of drugs must be introduced in the Patent legislation. The recommendations were accepted and the Act including these features was passed in the year 1970 and came into force in 1972 along with the rules.

This major step led to downtick of the monopoly enjoyed by the MNCs and led to a booster dose effect of dawn of the Indian Generic Market. As the patents were granted only on the process of manufacturing the drug and not the drug product, the generic drug makers could easily make and sell the same product by a cheap process that was not protected under the patent obtained by the MNCs hence not infringing the patent.

Generic Drugs [5]

A generic drug is a pharmaceutical product, usually intended to be interchangeable with an innovator product that is manufactured without a licence from the innovator company and marketed after the expiry date of the patent or other exclusive rights.

The Indian Pharmaceutical industry rose from rags to riches and sat with the Global Generic manufacturer lobby like China, Ukraine and Japan. India arose as one of the major exporters of generic drugs across the world.

Past Incidences of Shamming by developed nations and International bodies.

India being a signatory to TRIPS was under the obligation to comply with the provisions of the treaty. Article -27 of the TRIPs states that patent protection must be provided to all the inventions including Process and Product both [6]. The countries were given a time scale of 10 years to introduce an effective product patent legislation by the year 2005. By the time such a legislation is framed and enacted, the countries had to make an interim arrangement of setting up a mailbox mechanism for granting exclusive marketing rights to the patent holder for five years until the product patent regime is established and the protection to be continued in case the product is granted a patent under the new legislation. India had to comply with the interim provision by the year 1995, which it failed to. This gave a chance to already furious developed nations like U.S to enforce India to comply with the provision so as to make a way for the MNCs from these countries to acquire the market again in India. Thus U.S raised the dispute in the year 1996 in WTO and requested to setup Dispute Settlement Body. The body ruled against India and held that India being a signatory of TRIPs was under the obligation to comply with the Interim system of Mailbox mechanism immediately and without having to wait for 5 years. In the appeal filed before the appellate board, again India had to compromise on setting up the mechanism as per the demand of U.S and the treaty. Thus in order to avoid sanctions from the developed countries India was forced to amend its patent law and thus amendment of 1999 came into action. [7]

By the amendment of 2002 in the Patent Act, the provision relating to compulsory license was amended and it was made in accordance with public interest at the same time not violating TRIPS guidelines on compulsory licensing.

Section84. Compulsory licences. – [8]

Subsection (1) states that “ At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of compulsory license on patent on any of the following grounds namely:-

(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

(b) that the patented invention is not available to the public at a reasonably affordable price, or

(c) that the patented invention is not worked in the territory of India.”

 In order to grant the compulsory license the Controller shall have to take the following conditions into consideration. Subsection (6)

Subsection (6). In considering the application filed under this section, the Controller shall take into account,—

(i) the nature of the invention, the time which has elapsed since the sealing of the patent

and the measures already taken by the patentee or any licensee to make full use of the invention;

(ii) the ability of the applicant to work the invention to the public advantage;

(iii) the capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted;

(iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit: PROVIDED that this clause shall not be applicable in case of national emergency or other circumstances of extreme urgency or in case of public non-commercial use or on establishment of a ground of anti-competitive practices adopted by the patentee, but shall not be required to take into account matters subsequent to the making of the application.

1[Explanation: For the purposes of clause (iv), “reasonable period” shall be construed as a period not ordinarily exceeding a period of six months.]

Subsection 7 contemplates the Grounds for not meeting with the public interest and demands.

 (a) if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms,—

(i) an existing trade or industry or the development thereof or the establishment of any new trade or industry in India or the trade or industry in India or the trade or industry of any person or class of persons trading or manufacturing in India is prejudiced; or

(ii) the demand for the patented article has not been met to an adequate extent or on reasonable terms; or

(iii) a market for export of the patented article manufactured in India is not being supplied or developed; or

(iv) the establishment or development of commercial activities in India is prejudiced; or

(b) if, by reason of conditions imposed by the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented article or process, the manufacture, use or sale of materials not protected by the patent, or the establishment or development of any trade or industry in India, is prejudiced; or

 (c) if the patentee imposes a condition upon the grant of licences under the patent to provide exclusive grant back, prevention to challenges to the validity of patent or coercive package licensing; or

(d) if the patented invention is not being worked in the territory of India on a commercial

scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable; or

(e) if the working of the patented invention in the territory of India on a commercial

scale is being prevented or hindered by the importation from abroad of the patented article by—

(i) the patentee or persons claiming under him; or

(ii) persons directly or indirectly purchasing from him; or

(iii) other persons against whom the patentee is not taking or has not taken proceedings for infringement.”

Thus the above excerpts from the provisions of Indian Patent Act, gives an idea as to the National Interest that comes in the top priority in our country.

Notable amendments in the Patent Act in 2005

Complying with the needs of TRIPS, India had to make amendment in the act, and thereby inserted the provision of Product Patent for the inventions relating to medicine and food and thereby the Mailbox mechanism that was inserted earlier was repealed under this amendment.

Under section 3 which enlists non-patentable inventions, a new provision was added [9]

 “a mere new use of known substance “which is not patentable.

These notable amendments relating to compulsory licensing and non patentability issues set a mark for upholding the Public interest of the citizens which will be clearly shown by discussing the cases that relied on these provisions and also the expeditious steps taken by Judiciary in the interest of people.

  1. Doha declaration on Compulsory Licensing & Hypocrisy of U.S:

Doha declaration was a great step in the direction of understanding the basic morale of living and ethics. It showed the feeling of compassion and created a sense of assurance amongst the developing and underdeveloped nations that life of humans are more precious than any legislation and the provisions of TRIPS may not come in between the plight of the patients who suffer from deadly disease and the duty of the Governments of respected countries to extend their hands to revive their nation from the pandemics. [10]

Thus the Governments can take any measures or stop with respect to licensing of patents in the national interest. Such a noble thought which was full of humane understanding was put forward for the first time may be.

But it was not easy to come to terms with these compassionate declarations as Capitalist supportive developed nations like America were against it initially, but due to rapid overturning of events it was forced to give accent to it and didn’t stand against it.

The matter started when South African parliament enacted a law for granting compulsory licences relating to the medication on AIDS. This made U.S furious that such legislation was against TRIPS and it was against it. The South African government did this to make the costly anti viral medicines affordable to protect the health of public. America also complained before WTO when Brazil granted compulsory licences similarly to curb the national emergency. But in both the cases U.S had to step back owing to the bad image created in the world of being a Pro-Capitalist and also having bilateral ties. [11]

Later, the wrath of national emergency had to be faced by U.S itself when the Anthrax crisis struck the country as the aftermath of attack of 9/11. U.S department of Health and Human Services threatened Bayer AG Corporation that if it doesn’t lower down the price of a drug called Ciprofloxacin which was a likely medication for treatment of Anthrax infection, it would issue compulsory license for the drug. Thus submersing to the orders of Government, the company had to lower down its prices. Thus even a developed nation like U.S was forced to utilize the weapon of compulsory licensing to tame the MNCs in the interest of its people. This showed the hypocrite feature of U.S to the entire world, wherein the same country was applying the legislation against which it was arguing before the International Authority. [12] 

Thus Doha declaration was truly a triumphant win for developing nations against the Capitalist thought of developed nations.

  1. Head butting on MNCs by the Interest of people owing to court rulings: Notable Cases.

Quite a few cases have occurred recently that can clearly exemplify how the MNCs were forced to take a new recourse and had to change their strategies relating to the fate of the patents, which they own and the crystal clear vision of the judiciary and the Executive that better not trespass the public interest for the private interests.

As the aftermath of inserting provision for Product Patent in India by the Amendment Act, 2005, the local Pharma Industry went weary that now the monopoly will be re-exercised by the MNCs, which will lead to clear degrading fortune of Generic drug makers. But the provisions of compulsory licensing and the Strict and Stringent provisions relating to the subject matter of Non-patentable inventions gave assurance to the Local Manufacturers that the interest of the citizens and Local Markets will not be sabotaged only because the MNCs have power of money and influence.

      Following are the cases that implicate this thought:

  • Bayer Corporation v. Natco Pharma Limited and others. ( Case relating to Compulsory licensing) [13]

In this case the issue of Compulsory License granted on the product of Bayer, which was a drug for treatment of Renal Cell Carcinoma i.e. Kidney Cancer was raised by the company. The Controller of Patents had granted the License to manufacture the drug to NATCO Pharma which is a company of Indian origin. Whereas Bayer Corporation had patent on the drug product which was granted to it in the year 2001, the application for grant of compulsory license was submitted by the respondent company in the year 2011. Prior to making the application before the controller, the respondents tried to negotiate with the petitioner company for granting the License to the respondents, however the petitioner denied these offers and kept the subject open to be discussed in future if possible.

Facts relating to the Price of drug and treatment of Renal Cell Carcinoma:

The Patented product Nexavar owned by petitioner costs around 2, 00,000 INR for a month therapy to a patient, which is way too big for an average Indian whose per capita income is very low. The Respondents offered to manufacture the same drug which would be affordable by the Indians and would cost as low as around 8000 INR, which is way less than the cost of patented product.

The controller in the interest of public ordered to grant the compulsory license under section 84(1) of the Indian Patent Act, 1970 with amendments 2005. The appeal was preferred by the petitioner before the Tribunal, which upheld the order of Controller but also directed to increase the royalty of 6% per annum sales passed by the controller to 7% of per annum sales.

Being aggrieved with the above order the petitioners preferred the appeal before honourable Bombay High Court which again held the decision of Tribunal valid and in the interest of public. The court gave a message that if MNCs wish to stay in the business with India, the bullying owing to its reputation will not be entertained and all the requisite steps will be taken so that no harm is caused to the citizens.

The petitioners contended before the Honourable High court that the cost of developing a drug from its very inception to the market is in Billions and thus the companies are forced to keep the drug prices high or else they would suffer a huge monetary loss. The court was of the view that there is no point of exercising a patent that is not affordable by the citizens and nothing is more important than the lives of people. By the order of compulsory licensing, there is no injustice to the petitioners as they would be getting a royalty of as high as 7% of annual sale of drug manufactured by the license holder.

  • In re Novartis: Revocation of patent that was non-patentable under section 3(d) of the Indian Patent Act. [14]

Here the appellants  patent on an Anticancer drug molecule named “Imitanib mesylate“ which was sold by the brand name of Glivec was revoked by the Controller of Patents and later on by the tribunal and was upheld ultimately by the Supreme Court of India .

As discussed before under the provision of section 3(d) [9], it is stated that a new form of a known substance if does not increase the efficacy that substance then a patent may not be granted to the same unless it is more effective than the earlier version.

The appellant company Novartis owned a patent on the drug product called Glivec and the same patent was about to be expired as the term of protection of 20 years granted under the act was going to lapse. The appellant filed a new patent application claiming that it is pertaining to the new salt form of the former patent and its efficacy is much higher than the earlier version of the drug. The drug was granted patent and the mission of appellant to evergreen the patent was achieved.

Later on a petition was filed by a Voluntary Organisation that the new patented drug molecule is just another salt of the former drug and does not significantly increases the efficacy to act on Cancer. It was found that in order to acquire Evergreening of the patents (to increase the term of patent frivolously) and earn huge amount of royalty under the pretext of new invention, the petitioners had obtained the patent frivously and the same was required to be revoked. The Hon’ble Supreme court held that Evergreening of the patents will not be taken up easily as it violates the public interest that is because if the Generic versions are not made available to people after the expiry of patents then it will be almost impossible to avail the treatment at affordable prices.

Thus again the Vigilant Judiciary and Strong Patent Law saved the interest of citizens of India and tamed the MNC giants.

  1. Conclusion:

The aforesaid aspects clearly signify the stand of our legislations and the Judiciary as to what is important to it, the ruthless approach of MNCs and their investments in our country or the public lives, their morale and the ethics of human life. The current change in the Central Government as a result of great electoral power exercised by the citizens of our country in the recent polls, has given high hopes to the people that the new Government will be an action making Government. The tag of “Make in India” emphasised by our Hon’ble Prime Minister is good for the Industrial Development and boosting the economy, but at the same time it must be seen that in order to achieve development, the Government mustn’t walk upon the path of U.S and become a Pro-capitalist. Interests of its citizen must not be put at stake and the development must be sustainable development. As per the recent news in media, MNCs are trying to conduct lobbying in U.S and are in the process to bring down pressure upon India to loosen its strong Pro-citizen Patent Law regime [15]. India has been a role model till now in matters of Intellectual Property Law Protection which is in consonance with the public interest. Brazil, Argentina and Philippines are in a mood to amend their patent laws keeping our Patent Law as a model. Thus much has been achieved already and yet marathon is still unfinished, India is in need of a Longest and Fastest sprint run ever to achieve the dream of Shining India or the Golden Bird.

References:

  • J N Pandey, the Constitutional Law of India, Art. 21 (49th ed. 2012)
  • The Patents Act, 1970, 39, s.5, (1970)
  • K. Sinha, The chemical industries in India with Map, Your Article library.
  • Rajagopal Ayyangar Committee, Report on the Revision of the Patent Law, September (1959)
  • Glossary, Generic Drugs, World Heard Organisation, WHO.int.
  • Agreement on trade-related aspects of Intellectual property rights (TRIPS), Apr. 15, 1994, s. 5 art. 27.
  • S Raghavan, Patenting in India, Nalsar pro, 2012.
  • The Patents Act, 1970, 39, s.84, (1970), (amend 2002).
  • The Patents Act, 1970, 39, s.3, (1970), (amend 2005)
  • John S. Odell and Susan K. Sell, Reframing the issue: the WTO coalition on Intellectual property

And public health, Chapter 3 (2001).

      [11] Prof. William W. Fisher III, Dr. Cyrill P. Rigamonti, The South Africa AIDS Controversy A Case

             Study in Patent Law and Policy, The Law and Business of Patents, Feb 10 (2005).

  • Matthew Herper, Cipro, Anthrax and Perils of Patents, Forbes Magazine, Oct (2001).
  • Bayer Corporation        Union of India & others, BOM,WP-1323-Jud- 2013
  • Novartis AG    Union of India & others, SC, 1-108, 2013.
  • Reuters, Big Pharma pushes for US action against India over patent worries: report, Feb (2014).
  • Office of the Controller general of patents, designs and trademark, Guidelines for Examination of Patent Applications in the field of Pharmaceuticals, 2, 1-51, (2014)

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