Introduction
On August 6, 2007, the Madras High Court in India pronounced its judgment on a writ petition filed by Novartis AG and its subsidiary, Novartis India, challenging the legal validity of Section 3 (d) of the Indian Patents Act (IPA). The provision in Section 3 (d) aims at limiting the scope of patent protection in order to prevent the subsequent patenting of new forms or derivatives of a known substance. The objective of the section is to prevent the ‘evergreening' of patents, a practice followed by pharmaceutical industry players to extend patent monopoly even after the expiry of the original patent.
Novartis challenged this provision in the IPA when the Indian Patents Office (IPO) rejected the patent application on its blockbuster cancer drug Glivec. Many viewed this litigation as part of a strategy adopted by global pharmaceuticals to prevent WTO member countries from using the flexibilities available within the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement. In the past, pharmaceutical giants resorted to litigation to block measures that would enhance access to medicines. For instance, 37 pharmaceutical companies led by global pharmaceutical giants, including Novartis, initiated proceedings against the South African government in 2000 challenging certain provisions of the country's patent statute. The statute empowers the health minister to issue a compulsory licence to safeguard public health. An international campaign forced the pharmaceutical companies to drop the suit.
Despite national and international campaigns to drop the case, Novartis refused to give up litigation in India. The health ministers of India and Germany, members of the European Parliament, and even US Congressmen were among those who demanded the case be withdrawn. Everyone felt that a legal challenge was unwarranted and that it was an attempt to undermine the political and legal consensus reached through the adoption of the Doha Declaration. However, five years after the adoption of the Doha Declaration, pharmaceutical multinational corporations (MNCs) took the governments of two countries -- India and the Philippines -- to court, challenging the legal and policy measurers to facilitate access to medicines in these countries. This shows that the consensus reached in Doha is not shared by pharmaceutical MNCs.
Post-Doha, using TRIPS flexibilities became the dominant approach to the implementation of the TRIPS Agreement. However, there will be limited success in this strategy in the absence of a vibrant domestic pharmaceuticals industry. India is one of the few developing countries with the potential to use the TRIPS flexibilities to the fullest extent. In other words, India is one of the laboratories where the utility of TRIPS flexibilities can be tested.
The absence of product patents played a critical role in the development of the Indian pharmaceuticals industry. Over the years, it has emerged as a lifeline for the global supply of generic drugs. At present, the Indian pharmaceuticals industry supplies generic drugs to nearly 211 countries, both developing and developed.
The introduction of a product patent regime in India was termed as the beginning of the end of the generic industry. By choosing to fully utilise the transition period provided under the TRIPS Agreement, India could resist the implementation of the same till January 1, 2005. One of the best ways to safeguard operating space for the generic industry is through limiting the scope of patentability. Incorporation of Section 3 (d) in the Indian Patents Act was an attempt in this direction. Hence, the challenge to Section 3 (d) was viewed as an attempt to undermine the right to use flexibilities available within the TRIPS Agreement. The following paragraphs attempt to capture the background and implications of the high court verdict.
Glivec: Relevant facts
The litigation surrounding Section 3 (d) is part of a series of litigations initiated since 2003, as Novartis attempted to secure exclusive marketing rights for its drug Glivec (brand name for the beta crystalline form of Imatinib mesylate. The drug is marketed under the brand name Glivec in Europe/Australia and Gleevec in the US ). Glivec is being used to treat chronic myeloid leukaemia (CML), which is a variant of blood cancer. The compound is expected to be used in the treatment of other types of cancers like glioblastoma multiform, pulmonary fibroids, solid tumours, etc, in the future.
The basic research that led to the invention of Imatinib mesylate goes back to 1960, when researchers succeeded in discovering a chromosome known as “ Philadelphia ”. Subsequent research revealed that certain enzymes in the Philadelphia chromosome are responsible for the cancerous white cells. In the early 1990s, scientists synthesised a molecule which could inhibit the enzymes from causing cancer. In 1992, Novartis sought a patent for this molecule in the Swiss Patents Office, and, in the subsequent year, patent applications were filed in the US and Canada.
However, Novartis was reluctant to invest money for the further development of Imatinib mesylate as a product. It decided to invest in the development of Glivec only after the breakthrough results and pressure from cancer patients groups. According to Brain Druker, who was responsible for the identification and development of the molecule along with scientists at Novartis, Novartis' financial contribution to his laboratory was only 10%. During the course of drug development, Novartis patented both the alfa and beta crystal forms of I matinib mesylate. In 1997, Novartis filed a patent application claiming patent on the beta crystal salt form of I matinib mesylate in Switzerland. In 1998, patent applications were filed in many countries including India. The merits of this patent application initiated a series of legal actions in India.
Novartis obtained market approval from the US Food and Drug Administration (FDA) in 2001 for treatment of CML. Glivec does not cure CML but effectively controls it, making patients dependent on it. It is precisely for this reason that the drug has to be available at a reasonable price. Realising the market potential, Novartis charges a very high price for Glivec. The current price of Glivec (except in the US) is around $ 27,000 per person, per year.
There is little or no basis for Novartis charging such a high price for Glivec. Firstly, Glivec is termed an ‘orphan drug' under the Orphan Drug Act (ODA), which brings down the research and development (R&D) cost involved in developing the drug. A drug that qualifies as an orphan drug normally saves 50% of the development cost. For instance, clinical trials usually need to be done on more than 5,000 people; the Glivec trial was done only on 1,027 people, thereby reducing the drug development cost considerably.
Secondly, the ODA provides tax exemptions as well as fast-track marketing approval, that is, only three years as against eight years in the case of normal drugs.
Thirdly, it was also found that the pre-clinical R&D of Glivec was supported by the National Cancer Institute, the Leukaemia and Lymphoma Society, and the Oregon Health and Science University.
As expected, Glivec proved to be a commercial success and is now believed to be Novartis' second largest selling drug. In 2005, revenue from Glivec was nearly $ 2.5 billion. The total turnover of Novartis in India was only $ 110 million during the same period. This shows that India , as a market, is too insignificant for Novartis' commercial interests regarding Glivec. Still, Novartis decided to unleash a series of litigations in India.
In order to address the criticism of high price, Novartis devised a free treatment programme known as the Glivec International Patient Assistance Programme (GIPAP). According to Novartis, the GIPAP covers nearly 83 countries including India. Novartis claims to have covered nearly 5,151 people in India till March 2006. However, groups like the Cancer Patients Aid Association (CPAA) point out that strings attached to the GIPAP make it an impossible option. It was widely believed that the GIPAP is being used to promote the market for Glivec. This led Novartis to suspend its GIPAP in India immediately after introduction of a generic version of the drug. Further, there were conditions, which most applicants to the programme failed to satisfy; for instance, to qualify for the GIPAP patients must not have any insurance coverage. It was also revealed that a key component of the GIPAP, known as ‘Max Patient Advocacy Work' has been carried out with the ultimate aim of getting Novartis reimbursed for the ‘free' medicines it was distributing through the GIPAP.
Groups like the CPAA feel that “medicine should be available and accessible to patients at affordable prices. Patients should not have to depend on charitable dole-outs by pharmaceutical companies to access medicines essential to them. More so, when such a single source of supply can never be a guaranteed source of medicines”. One of the doctors filed an affidavit in the Madras High Court stating that Novartis was conducting clinical trials under the GIPAP. In India, every year, approximately 25,000 new cases of CML are reported, and nearly 18,000 people die of the disease. Thus, Glivec offers a lifesaving solution to thousands of people. However, the vast majority of people cannot access the drug due to its high price. Novartis obtained marketing approval for Glivec in India in December 2001. Natco, a generic company, launched the generic version of Glivec in January 2003, and made the drug available at one-tenth the cost, ie, $ 2,700 per person, per year.
Phase I: Exclusive Marketing Rights (EMR)
India amended its Patents Act in order to comply with the TRIPS Agreement. The TRIPS Agreement, while providing a 10-year transition period to developing countries to introduce a product patent regime, obligated those member countries to provide five years' Exclusive Marketing Rights (EMR) until the patent is granted or rejected. EMR should be allowed on satisfaction of two conditions: product patent and marketing approval in a foreign country, and marketing approval and product patent application in India . In November 2003, Novartis succeeded in securing EMR for Glivec under the then existing provisions of the IPA. Natco challenged the decision of the Patents Office's ruling on EMR, in the Delhi High Court. According to Natco, the invention is not eligible for patent protection in India and therefore the decision granting EMR is null and void.
Meanwhile, Novartis approached the Madras High Court (situated in the state of Tamil Nadu) and secured a preliminary injunction against six potential generic manufacturers, preventing them from producing a generic version of Glivec. A division bench of the same court affirmed the injunction against the six manufacturers upon appeal. Indulging in forum shopping, Novartis moved another petition before the Bombay High Court (situated in the state of Maharashtra) against Natco, the sole generic manufacturer of Glivec. (According to the Indian Constitution, every state has a high court enjoying equal judicial powers. The decision of one high court is not binding on the other.) However, the Bombay High Court refused to issue a preliminary injunction against Natco. In April 2004, the Delhi High Court rejected Natco's petition challenging EMR on jurisdictional grounds. Natco moved the Supreme Court against this decision. In August 2004, the CPAA also moved the Supreme Court challenging EMR. While these actions were pending in various courts, India amended its Patents Act in 2005 to introduce product patents.
Among the range of flexibilities incorporated in the Patents Act, the following are relevant in the current context:
- Section 3 (d) of the Patents Act which limits the scope of patents.
- Pre-grant opposition which permits the opposition of patents by any person prior to the grant of the patent.
Section 3 of the Patents Act excludes certain inventions from the scope of patent protection. Section 3 (d) reads: ‘ 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 the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.'
Use of the phrase ‘which does not result in the enhancement of the known efficacy' was critiqued by public interest groups and scholars. Further, the explanation provided in the Bill, which supports Section 3 (d), reads: ‘ Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.'
The phrase ‘unless they differ significantly in properties with regard to efficacy' has also been criticised. According to critics, both phrases serve the purpose of qualification on exclusion from patentability and offer an entry point in favour of the patentee to claim patents if enhancement of known efficacy, or significant difference in properties with regard to efficacy, can be proved. Thus, it was felt that Section 3 (d) allows patenting of known substance when enhancement of efficacy can be proved. It was also felt that the ambiguity would lead to excessive litigation because it suggests case-by-case consideration of patent applications. Public interest groups suggested that the Patents Act should have explicitly limited patents to new chemical entities without any qualifications.
Phase II: Pre-grant opposition
Utilising the pre-grant opposition procedure, public interest groups (like the CPAA) and generic companies challenged the patent application on Glivec. The patent application has been opposed mainly on five grounds.
First, that there is prior publication of the invention through patent applications filed in many countries, including Canada and the US, in 1993, by taking priority from the Swiss applications filed in 1992. Claims in the patent applications show that the patent is granted not on the compound in its free state but also for the salt form of Imatinib mesylate . In fact, the patent specification filed in the US states: ‘Owing to the close relationship between the novel compounds in free form and in the form of their salts, including those salts that can be used as intermediates, for example in the purification of the novel compounds or for the identification thereof, here before and hereinafter any reference to the free compounds should be understood as including the corresponding salts, where appropriate and expedient.'
Second, it was stated that there is no inventive step involved in the making of the beta crystal form of I matinib mesylate . According to the opposition, it was stated that specification does not disclose any technical advancement for making the beta crystal form, and the process disclosed in the specification is too obvious to the person skilled in the art. Hence, the patent applications fail to satisfy the inventive step.
Third, it was argued that the crystal salt form does not amount to invention, since there are well-known methods of making salt from the free base of I matinib mesylate . The specification describes the same methods and therefore it does not amount to an invention.
Fourth, it was pleaded that the patent application does not claim any added therapeutic efficacy either from the free base or from the alpha crystal form disclosed in the earlier applications. Hence, the patent application cannot satisfy the scrutiny of Section 3 (d) of the Patents Act.
Fifth, it was contended that at the time of filing the patent application in 1998, Switzerland was not recognised as a convention country in India . Therefore, a patent application from Switzerland is not eligible for the one-year priority available to applications from convention countries. However, Novartis filed the patent application one year from the date of the initial filing in Switzerland ; it therefore was no longer novel.
Accepting these objections, the Patents Office rejected Novartis' patent application on beta crystaline salt of I matinib mesylate in January 2006. Challenging the decision, Novartis filed two writ petitions: one challenging the order of the Patents Office refusing to grant a patent for beta crystalline salt of I matinib mesylate, and the other challenging the constitutional validity of Section 3 (d) of the Indian Patents Act. Subsequently, the first petition challenging the decision of the Controller of Patents was transferred to the Intellectual Property Appellate Board (IPAB) by the Madras High Court. This is still pending with the IPAB. The second petition is known as the Section 3 (d) petition.
Phase III: Section 3 (d) petition
Novartis challenged the constitutional validity of Section 3 (d) on two grounds:
First, Novartis argued that Section 3 (d) denies its rights under Article 27 of the TRIPS Agreement, which obligates WTO member states to provide patent protection to all fields of technology without discrimination, and therefore violates the obligations under the TRIPS Agreement.
Second, it argued that in the absence of a definition or guideline, phrases like ‘enhancement of the known efficacy' or ‘differ significantly in properties with regard to efficacy' give uncontrolled as well as unguided powers to the Controller of Patents. The same would result in an arbitrary exercise of power, and violates the right to equality under Article 14 of the Constitution of India. A challenge to the constitutional validity of a statute is maintainable only on two grounds in India : legislative competency and violation of fundamental rights. However, during the course of the proceedings, Novartis mainly relied on the second ground.
The court refused to examine whether Section 3 (d) violates the obligations under the TRIPS Agreement and held that “ …this court has no jurisdiction to decide the validity of the amended section, being in violation of Article 27 of TRIPS, we are not going into the question (of) whether any individual is conferred with an enforceable right under TRIPS or not. For the same reason, we also hold that we are deciding the issue namely, whether the amended section is compatible (with) Article 27 of TRIPS or not”.
In fact, the court urged Novartis AG (Switzerland) to resort to the disputes settlement mechanism provided under the WTO framework. The very next day, the Federal Councillor, Department of Economic Affairs for the Swiss Confederation, stated: “We must have a reliable TRIPS system and the one in India is good enough. The Swiss government never gets involved in any judicial pronouncements of other countries.” This effectively ruled out the possibility of approaching the WTO disputes settlement body.
On the issue of Section 3 (d) being violative of right to equality owing to the arbitrariness and vagueness of the phraseology, the court held that “… in sum and substance what the amended section with the explanation prescribes is the test to decide whether the discovery is an invention or not is that the patent applicant should show the discovery has resulted in the enhancement of the known efficacy of that substance and if the discovery is nothing other than the derivative of a known substance, then, it must be shown that the properties in the derivatives differ significantly with regard to efficacy”.
The court also clarified the meaning of the term ‘efficacy'. According to the court “…the meaning of the word efficacy and therapeutic effect… what the patent applicant is expected to show is, how effective the new discovery made would be in healing a disease/having a good effect on the body ”. Thus the court equated the meaning of efficacy with a therapeutic effect on the body. While doing so, the court also accepted the argument of the respondents that “… petitioner is not a novice to the pharmacology field but it being pharmaceutical giant in the whole of the world, cannot plead that they don't know what is meant by enhancement of a known efficacy and they cannot show the derivatives differ significantly in properties with regard to efficacy ”. Hence it was held that a patent applicant has to show enhanced therapeutic effect in order to obtain a patent for a new form of a known substance or for its derivatives. Therefore the court held that Section 3 (d) is not violative of Article 14 of the Constitution of India.
Conclusion
The judgment was welcomed globally by treatment activists and public interest groups. While disagreeing with the judgment, Novartis stated that it may not appeal to the Supreme Court of India, whose judgment is the law of the land. However, Novartis warned that the court ruling would discourage much required investments in drug innovation. Along the same lines, the US-India Business Council (USIBC) demanded changes in the Indian law to encourage investments. The empirical evidence suggests there is no need to take these threats seriously.
As far as the implication of the judgment is concerned, it suggests that the meaning of the term ‘efficacy' should be judged in light of the therapeutic effect of the new form on the body. Hence, the burden of proof is on the applicant to show the enhanced efficacy. However, the application of therapeutic effect as a benchmark for efficacy does not shut out the possibility of evergreening of patents. For instance, a combination of two drugs may offer substantial improvement in therapeutic effect and may be held patentable. Further, this judgment is still a high court decision, and is yet to gain the status of the law of the land. Nevertheless, it will have a persuasive effect as far as high courts are concerned.
In the light of this judgment, a substantial number of mailbox applications currently under examination will attract Section 3 (d) scrutiny. There are approximately 9,000 applications in the mailbox. Further, a majority of New Molecular Entities (NME) approved during 1995-2005 by the US FDA will also attract Section 3 (d).
Incidentally, there are 327 NMEs that have been approved during this period. In the normal course, it takes 8-10 years for marketing approval from the date of invention. Therefore, the vast majority of NMEs approved during this period were invented prior to 1995. Therefore, the onus of proof is on the patent applications related to these NMEs to prove enhanced efficacy. The present judgment only upholds the constitutional validity of Section 3 (d) 1. However, the real success of this judgment can be measured only when the Patents Office and the courts apply it on a case-by-case basis.
(The author is grateful to Adithya Krishna Chintapanti for comments, suggestions and editorial assistance. This article was first published in Third World Resurgence of the Third World Network) |
