MacroScan (Printable Version) - The Novartis Case

At last, some good news! In today’s world, intellectual property disputes only too often are settled in ways that benefit large corporate bodies and harm both smaller producers and consumers by granting monopolies and causing prices to rise. Despite the pious claims of the WTO declaration on TRIPS and public health, this has even been true for many drugs that have life-saving implications, as multinational pharmaceutical companies have been the most active and aggressive in securing and protecting their patent rights and forcing patients to pay very high prices for essential drugs.

The TRIPS Agreement was designed to contain safeguards to such a process of concentration and control, but even the subsequent clarifications issued by the WTO have not really worked to prevent this process. The Indian patent law that was introduced to make the laws WTO-compatible do contain safeguards that were put in after intense pressure from activist groups, concerned citizens and the Left parties, but this law has not really been put to the test until now.

That is why a recent judgment in an Indian case is so significant, since it was the first major instance when a major multinational company has challenged the terms on which a patent is granted. It is also likely to have far-reaching implications not only in this case but also across the world, where many thousands of people depend upon the cheaper life-saving medicines produced in India.

On August 5, the Madras High Court rejected the claim of the multinational drug company Novartis, for a patent on a life-saving drug for leukaemia. This chemical compound (imatinib mesylate) is marketed by Novartis as Gleevec in Europe and Glivec in India, and is used to treat chronic myeloid leukemia. Novartis has already patented the drug in 35 countries.

At the heart of the case was the question of whether this drug is actually a new invention or simply a minor modification of an older, off-patent drug. TRIPS requires that patentable inventions be new and involve an "inventive step." The Indian Patent Act also contains provisions ensure that only truly innovative advances will be patented. For example, Section 3(d) of the Act forbids the patenting of derivative forms of known substances unless they are substantially more effective than the known substance.

These provisions are intended as safeguards against well-known anti-competitive practices of patent holders. The exploitation of minor and insignificant changes to ask for a new patent is a very common practice among large drug companies, who frequently use this as a method of prolonging monopoly control over products that would otherwise move off the patent list, in a practice known as "evergreening" or "spurious patenting".

It was this provision in the Indian Patent Act which was challenged by Novartis. Indian drug companies, NGOs and other stakeholders have been arguing that the drug Glivec is a simply another version of an old drug invented before 1995, which cannot be patented any more and is now made generically in India. However, Novartis had argued that Gleevec is a major improvement on the older version and therefore "new" because it is supposedly more easily absorbed by the body.

A huge difference in price (and therefore profits) was at stake in this. Novartis sells Gleevec in India and similar countries at a price of $26,000 per year per patient. Indian generic drug manufacturers offer the drug at less than one tenth of that price – and even that is considered far too expensive for the majority of leukemia patients in a poor country.

Fortunately, the Madras High Court has rejected Novartis’ claim to novelty, and thereby validated the decision of the Indian Patent Office not to grant a patent for Gleevec. So this is a significant victory for leukemia patients in India, hospitals treating the poor with this drug, and other stakeholders.
But the positive effects of this judgment may well extend beyond that. Apparently Novartis has already declared that it will not appeal to the Supreme Court against this decision. And the Swiss government (Novartis is a Swiss-based multinational company) has also announced that it does not intend to pursue the matter with the TRIPS tribunal at the WTO.

This means that this particular instance can become an important precedent for the Indian drug industry and for millions of patients worldwide who are able to use cheaper Indian generic drugs to treat life-threatening diseases. The Indian drug industry grew up and flourished under a laxer patent regime from the 1970s, which allowed only process patents in pharmaceuticals and thereby opened up the possibility of "reverse engineering" in drugs. This created a vibrant domestic industry for producing generic drugs at very cheap prices by international standards.

In particular, low-cost anti-retrovirals (used to treat AIDS patients) are being widely used in Africa and other low-income countries. This too was the subject of fierce legal battles between groups of multinational drug companies and African governments, who were ultimately able to allow for parallel import of these drugs from India. Having lost the legal battle, drug companies then started questioning the quality and efficacy of Indian drugs, arguing that they were cheap because they were sub-standard.

However, the World Health Organisation, on the basis of systematic study, has declared that it has no concerns about the quality and efficacy of Indian drugs. As a result, they are now widely preferred not only by developing country governments but also by international aid agencies, especially those dealing with HIV-AIDS.

The attempt by Novartis to curb the production of this generic drug in India has to be seen in this context. Fortunately, its lack of success suggests that other generic production can continue to provide cheaper alternatives for life-saving drugs in poor countries.

However, this does not mean that there is any reason for complacency. Novartis and other multinationals are likely to continue to challenge provisions of the Indian patent law in the grounds of being incompatible with the TRIPS, even though that is "patently" not the case. It should be noted that Section 3(d) of India's patent law does not necessarily impose stricter requirements than are used elsewhere – indeed, even the US Patent Law (which is widely recognized to be the strictest of all) allows for the rejection of patents on drugs that have structural similarities to existing chemical combinations.

So this is likely to be only the first battle in what may turn out to be a long war. All the same, the victory is sweet.



Themes > Current Issues	08.10.2007


The Novartis Case

Jayati Ghosh

At last, some good news! In today’s world, intellectual property disputes only too often are settled in ways that benefit large corporate bodies and harm both smaller producers and consumers by granting monopolies and causing prices to rise. Despite the pious claims of the WTO declaration on TRIPS and public health, this has even been true for many drugs that have life-saving implications, as multinational pharmaceutical companies have been the most active and aggressive in securing and protecting their patent rights and forcing patients to pay very high prices for essential drugs. The TRIPS Agreement was designed to contain safeguards to such a process of concentration and control, but even the subsequent clarifications issued by the WTO have not really worked to prevent this process. The Indian patent law that was introduced to make the laws WTO-compatible do contain safeguards that were put in after intense pressure from activist groups, concerned citizens and the Left parties, but this law has not really been put to the test until now. That is why a recent judgment in an Indian case is so significant, since it was the first major instance when a major multinational company has challenged the terms on which a patent is granted. It is also likely to have far-reaching implications not only in this case but also across the world, where many thousands of people depend upon the cheaper life-saving medicines produced in India. On August 5, the Madras High Court rejected the claim of the multinational drug company Novartis, for a patent on a life-saving drug for leukaemia. This chemical compound (imatinib mesylate) is marketed by Novartis as Gleevec in Europe and Glivec in India, and is used to treat chronic myeloid leukemia. Novartis has already patented the drug in 35 countries. At the heart of the case was the question of whether this drug is actually a new invention or simply a minor modification of an older, off-patent drug. TRIPS requires that patentable inventions be new and involve an "inventive step." The Indian Patent Act also contains provisions ensure that only truly innovative advances will be patented. For example, Section 3(d) of the Act forbids the patenting of derivative forms of known substances unless they are substantially more effective than the known substance. These provisions are intended as safeguards against well-known anti-competitive practices of patent holders. The exploitation of minor and insignificant changes to ask for a new patent is a very common practice among large drug companies, who frequently use this as a method of prolonging monopoly control over products that would otherwise move off the patent list, in a practice known as "evergreening" or "spurious patenting". It was this provision in the Indian Patent Act which was challenged by Novartis. Indian drug companies, NGOs and other stakeholders have been arguing that the drug Glivec is a simply another version of an old drug invented before 1995, which cannot be patented any more and is now made generically in India. However, Novartis had argued that Gleevec is a major improvement on the older version and therefore "new" because it is supposedly more easily absorbed by the body. A huge difference in price (and therefore profits) was at stake in this. Novartis sells Gleevec in India and similar countries at a price of $26,000 per year per patient. Indian generic drug manufacturers offer the drug at less than one tenth of that price – and even that is considered far too expensive for the majority of leukemia patients in a poor country. Fortunately, the Madras High Court has rejected Novartis’ claim to novelty, and thereby validated the decision of the Indian Patent Office not to grant a patent for Gleevec. So this is a significant victory for leukemia patients in India, hospitals treating the poor with this drug, and other stakeholders. But the positive effects of this judgment may well extend beyond that. Apparently Novartis has already declared that it will not appeal to the Supreme Court against this decision. And the Swiss government (Novartis is a Swiss-based multinational company) has also announced that it does not intend to pursue the matter with the TRIPS tribunal at the WTO. This means that this particular instance can become an important precedent for the Indian drug industry and for millions of patients worldwide who are able to use cheaper Indian generic drugs to treat life-threatening diseases. The Indian drug industry grew up and flourished under a laxer patent regime from the 1970s, which allowed only process patents in pharmaceuticals and thereby opened up the possibility of "reverse engineering" in drugs. This created a vibrant domestic industry for producing generic drugs at very cheap prices by international standards. In particular, low-cost anti-retrovirals (used to treat AIDS patients) are being widely used in Africa and other low-income countries. This too was the subject of fierce legal battles between groups of multinational drug companies and African governments, who were ultimately able to allow for parallel import of these drugs from India. Having lost the legal battle, drug companies then started questioning the quality and efficacy of Indian drugs, arguing that they were cheap because they were sub-standard. However, the World Health Organisation, on the basis of systematic study, has declared that it has no concerns about the quality and efficacy of Indian drugs. As a result, they are now widely preferred not only by developing country governments but also by international aid agencies, especially those dealing with HIV-AIDS. The attempt by Novartis to curb the production of this generic drug in India has to be seen in this context. Fortunately, its lack of success suggests that other generic production can continue to provide cheaper alternatives for life-saving drugs in poor countries. However, this does not mean that there is any reason for complacency. Novartis and other multinationals are likely to continue to challenge provisions of the Indian patent law in the grounds of being incompatible with the TRIPS, even though that is "patently" not the case. It should be noted that Section 3(d) of India's patent law does not necessarily impose stricter requirements than are used elsewhere – indeed, even the US Patent Law (which is widely recognized to be the strictest of all) allows for the rejection of patents on drugs that have structural similarities to existing chemical combinations. So this is likely to be only the first battle in what may turn out to be a long war. All the same, the victory is sweet.



© MACROSCAN 2007