INTRODUCTION
Intellectual property of any kind plays a crucial role in the success of any business, even more so in the case of the healthcare or pharmaceutical industry. Pharmaceutical companies rely heavily on patents as a means to gain and protect their competitive advantage over the other players in the industry.
The pharmaceutical industry has an undeniably significant impact on public health and disease control. The system of pharmaceutical patenting is crucial to provide safeguards of intellectual property, which acts as an incentive for companies to innovate further. However, this is not without its challenges. The grant of patents over drug compounds, formulation or technology of manufacturing, creates a monopoly. This empowers the companies to control the mode, method and manner of the manufacturing and distribution of their medicines, including the price.
In principle, the patent framework structure is meant to encourage innovation by providing suitable incentives to the patent-owner to capitalise on their intellectual asset. In addition to this, the patenting system is also meant to incentivise the process of research and development. However, in practice, the system suffers certain drawbacks in relation to public health. The major challenge arises in regards to accessibility to medicines.
CONCEPT OF EVERGREEENING OF PATENTS
Patent Evergreening is a legal strategy implemented by pharmaceutical companies to extend patent protection over their high-profit drugs before it expires. By increasing the term of patent protection, the pharma company is able to derive benefits for a considerably longer time period than normally permitted under patent laws.
Further, when evergreening occurs, the patented drug remains out of the public domain indefinitely and impedes the manufacturing of generic versions of the drug. Hence, what should be a temporary monopoly right is extended over long periods of time.
This practice of evergreening is against the principles and objectives of patent law. It is no longer about incentivising research and development, but rather about ensuring monopoly control for the pharmaceutical company. The extension of patent protection gives no therapeutic advantage to the consumers of the drug, but only an economic advantage to the manufacturer.
THE INDIAN PERSPECTIVE
Pharmaceutical patenting lies at a controversial intersection between economic and social considerations, consisting of public welfare, science, law and policy. In plain terms, pharmaceuticals or medicines are an essential public good. India, being a developing country, considerations of public health and social welfare are of great significance to the government. The Right to Health, under Article 21, importantly encompasses the right to access quality healthcare, including medicines.
Apart from the social welfare consideration, there are also significant economic consideration for India with respect to the pharmaceutical industry. Since the past three decades the Indian pharmaceutical manufacturing sector has grown exponentially. Moreover, a sizeable portion of this growth has been attributed to the boom in the generic medicines manufacturing sector. Increasing public awareness about the availability of generic alternatives to branded medicines, lower price points and better access to generic medicines are also contributing factors.
From a legal perspective, the patent legislation was appropriately amended in 2005 to specifically impose a prohibition on patent evergreening to a certain extent.
THE PATENTS (AMENDMENT) ACT OF 2005
The 2005 Amendment was enacted by the Parliament to update the Patents Act, 1970 and make it compliant with the TRIPS Agreement. This amendment introduction two important sections into the legislation to impose a restriction on patent evergreening.
- SECTION 3(d) – Non-patentability of variants of a known substance when efficacy is not improved.
One of the most commonly observed modes of patent evergreening is when pharmaceutical companies make minor, insignificant modifications to the existing drug and attempt to secure a patent on the “improved drug” although no such enhancement is made in regards to its efficacy. In order to combat this practice, Section 3(d) was implemented.
Section 3(d) of the Patents Act specifically states that “mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance” would not be deemed to be inventions and as such, cannot be patented under the Act. It also goes on to state that mere discovery of new properties, new uses or usage of an existing process or machine in a new manner, would not qualify as an invention that is eligible for patent protection. Therefore, a pharma company can only renew and extend its patent protection only if it qualifies the test of it having improved therapeutic efficiency.
- SECTION 84 – Compulsory Licensing
The most significant downside to patent evergreening is the impediment it places for public to access medications. Since it results in the conferring of monopoly power to the pharma company over the patented drug, they become the price-fixer and the supplier. Pharma companies often take advantage of this situation and charge consumers exorbitant prices for their life-saving drugs and treatments. Additionally, the drug never falls into the public domain, restricting other manufacturers from producing cheaper generic versions. Therefore, the 2005 Amendment also introduced Compulsory Licensing to overcome these issues.
In the context of the pharmaceutical industry, compulsory licencing is a legal process which enables the Controller General of Patents to grant interested parties, including the government, the right to manufacture and produce the patented medication, though its term of protection has not expired. Section 84 provides for certain condition-precedents which must be present for a compulsory license to be granted. These are:
- A minimum of three years must have been completed since the date of grant of patent.
- The reasonable requirements of the public with respect to the patented invention have not been satisfied, or
- That the patented invention is not available to the public at a reasonably affordable price, or
- That the patented invention is not worked in the territory of India.
The two considerations that arise when we analyse the patent framework through the lens of public healthcare systems are the private interests and the public interests. This provision has been implemented giving importance to both as it grants a monopoly of 3 years to the company to recover the costs incurred by it in research and development of its drug.
ROLE OF THE JUDICIARY
The Indian Courts have also been proactive on various occasions and have played a significant role in checking evergreening practices for preventing the misuse of the patent system.
- Novartis A.G. v. Union of India, (2013) 13 S.C.R. 148
This decision was of great significance to the development of the Indian patent regime in the context of Section 3(d). Novartis had filed an application for the grant of patent for its cancer drug, Glivec. Novartis claimed that the new drug for which the application had been made was more beneficial than its predecessor.
However, the patent application was rejected by the Controller General on grounds of Section 3(d) of the Patents Act, 1970. Novartis appealed against this order before the Madras High Court, and the same was transferred before the Intellectual Property Appellate Board (IPAB), where the appeal was rejected.
Finally, Novartis approached the Hon’ble Supreme Court against the rejection of their application. In its final judgement, the Hon’ble apex court emphasised on Section 3(d) and stated that the drug for which patent application had been filed, did not stand the test of patentability provided in this section. The Hon’ble court also held that mere change in the form of a substance with properties inherent to that new form could not be considered as an improvement in efficiency. Novartis had also failed to provide data in order to corroborate its claim of increased efficacy of the new drug. The patent application was also rejected by the Hon’ble Supreme Court.
- Bayer Corporation v. Union of India, 2014 (60) PTC 277 (Bom)
In this case, Bayer Corporation appealed in the Hon’ble Supreme Court against the grant of compulsory licence to Natco Pharma Limited by the Controller General of Patents. The licence permitted Natco to manufacture and sell Bayer’s anti-cancer drug for kidney and liver cancer patients.
This particular drug was not produced in India and hence, was priced very high to the patients in India as it had to be imported. This meant that access to this life-saving drug was heavily restricted. The Hon’ble apex court dismissed Bayer’s petition and affirmed the grant of compulsory licence in this case.
However, it is also important to note that despite having comprehensive procedures laid down for the grant of compulsory licence, this case is the only instance when a compulsory licence has been granted under the Patents Act, 1970 in India.
CONCLUSION
Evergreening of patents in the pharmaceutical industry presents significant challenges to balance incentivising and protecting innovations with ensuring public access to essential medications. Although patent protection is crucial to foster research and development, it is also necessary to place checks on the abuse of the patent system by pharma companies to gain monopoly control, inflate prices and restrict access to life-saving drugs.
The difference between the healthcare industry and other industries, is the direct and substantial impact that it holds on public health outcomes. As such, it is only practical and logical to afford a greater consideration to public interest in this context. On the other hand, the complete removal of the patent structure as applicable to the healthcare system and pharma industry is unsuitable and impractical. Additionally, there must also be proactive implementation of the compulsory licencing provisions available in the legislation.
The interaction between the patent framework and public health requires technical understanding of the practical outcomes on health care. Therefore, in order to arrive at a comprehensive and effective solution to patent evergreening, there is a need for the authorities and the pharmaceutical companies to cooperate so as to give due prominence to both, private and public interests.
Written by Varshika, Legal Intern at Intepat IP
