What can we learn from the Novartis case?

Guest Contributor 12th April 2013

By Swaraj Barooah

Last week’s decision by the Indian Supreme Court to reject Novartis’ patent application over a leading leukemia drug, Gilvec, has resonated globally. Many hail it as a victory for patients, while others denounce it as a regressive step for pharmaceutical innovation. With money on one end of the scale and lives on the other, perspectives are easily polarised. However, innovation and access are supplementary when it comes to improving health, and to chip away at either of these requires a clear understanding of the tradeoffs.

Relevant Facts and background:
Until 2005, India had only allowed ‘process patents’ which meant processes in drug making could be patented, but not the products. From 2005, in compliance with the WTO TRIPS Agreement, India started granting product patents, although it started accepting applications from 1995. These ‘patent mailbox provisions’ meant that any applications from that period would be considered against the knowledge present until the point of application.

As amended in 2005, Section 3(d) of the Indian Patent Act, 1970 prevents the patenting of new forms of known substances unless they show enhanced efficacy. Although this provision is a relatively stringent requirement for ‘non-obviousness’, it is compliant with India’s international obligations and remains unchallenged at the international level.

In 1998, Novartis applied to the Indian Patent Office for the ‘beta crystalline’ form of imatinib mesylate. One year earlier, its US patent application for the same was granted on appeal. Imatinib mesylate, which received FDA approval in 2001, is the salt form of imatinib, patented in the US in 1992.

The Supreme Court held that (i) with this history, imatinib mesylate was in fact a ‘known’ substance (ii) ‘efficacy’ referred to ‘therapeutic efficacy’ and (iii) although it presented evidence of increased bioavailability and better storage ability, Novartis did not present any evidence that the ‘beta crystalline’ form presented any ‘enhanced efficacy’ over the known substance imatinib mesylate. In its decision, the Court was not required to define the therapeutic efficacy threshold required by Section 3(d), so the case can only be viewed as limited precedence.

What about the concerns regarding drug innovation though? Doesn’t Novartis deserve a patent?
This is a misleading question. As Jamie Love has pointed out, Novartis has likely invested about $38 – 96 million dollars in Glivec. A majority of the product discovery and development costs have been paid for by public funds and non-profits. In 2012, Novartis made almost $4.7 billion on Glivec sales. So the question becomes: Considering the enormous profit margin, does Novartis deserve to exclude hundreds of thousands of patients only able to afford generics, so as to receive a small increase in revenues from the few patients in India able to afford the branded product?

Glivec is just one drug, though. What does this provision do for other drugs?
First, India is not prohibiting patents on new forms of known substances. Rather to receive patent protection, products must show enhanced efficacy. As there is little transparency regarding the costs involved in bringing drugs to the market, it is difficult to tailor laws which allow the recoupment of these costs. Given that the pharmaceutical lobby has had considerable impact in loosening patent standards in several parts of the world, it is not a bad thing to push back on these often rhetoric based claims.

Secondly, pharmaceutical companies make most of their revenues from US, EU and Japanese markets. As such, they direct their business models around these countries. It is very unlikely that sales in developing countries like India would cause net losses on the same drugs being sold as generics in poorer countries. At the same time, India’s buzzing generic industry has ensured that patients across the developing world are able to access otherwise expensive medicines.

Finally, rich countries can pay more for ‘frivolous’ medicines than poor countries can afford for life saving medicines. Stronger patent rights can increase this inequality. Given that by nature of the industry, pharmaceutical market signals are poor indicators of where limited inventive resources are to be directed, it becomes necessary to ensure that legal and policy concerns redirect it in more socially beneficial directions.

Innovation today leads to access tomorrow; the two are not necessarily in conflict. While access today is of course important, innovation today certainly does require substantial investment. What is required is for all stakeholders—Big pharma, generics, patients, academics, governments—to come together and work on providing solutions that work towards optimizing, or at least balancing, both access and innovation.

For more reading on the decision and it’s implications:

Swaraj Paul Barooah is a doctoral candidate at UC Berkeley and the Editor-in-Chief of SpicyIP.


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