This article is written by Ms. Srikrishna Samhita Yadati a Second Year B.A.LL. B student of ILS Law College, Pune

Abstract

The field of IPR, especially patents is gaining much importance in the domain of medical inventions of independent medical professionals as well as pharmaceutical companies. Tracing the origins from the post-independence era to the current Indian Patent Law of 1970, it addresses challenges such as evergreening, compulsory licensing, and the impact of counterfeiting. The analysis includes the landmark Novartis case, emphasizing the importance of therapeutic efficacy. Balancing innovation incentives with public health needs is crucial, especially concerning access to essential medicines. The article concludes by advocating ongoing efforts to harmonize international patent laws, enhance regulatory processes, and ensure a delicate equilibrium between rewarding pharmaceutical innovation and prioritizing global healthcare access.

Introduction

Intellectual Property Rights in the field of medicine have been dominant ever since India signed the TRIPS agreement. In the context of novel drug formulations, they are the exclusive rights granted for protection of the same for a defined period. The origin of the Indian Patent System can be traced back to the post-independence era when many multinational corporations in India governed the drugs in the medicine market. This era was characterized by the import of high-price drugs and India was known to be the highest-priced nation in the market. But things got a bit out of hand when the so-called regulations were costing the welfare of the public because of which the Bakshi Tek Chand Committee was set up to evaluate the pros and cons of the Indian Patent System. Similarly, many evaluators came into place, did their evaluation, and now what we have is the Indian Patent Law, of 1970. 

While the evolution of the patent law in India rectified a lot of flaws in our legislation, many challenges were and are still faced with patenting novel drugs in the pharmaceutical sector. It has been observed that developing a new medication is often time-consuming and may take several years. In such situations, the patent life of the drug may be significantly reduced, limiting the period during which the innovator can exclusively market and sell the product. Additionally, the process of patenting a novel drug can be rigorous. On the other hand, the issue of evergreening which is making minor modifications to the novel drug and extending its patent life has been perennial. Apart from that, compulsory licensing and exercising a monopoly on medications have hampered the public good by restricting the accessibility to life-saving drugs. Other impediments to patenting medical inventions range from generic competition to regulatory challenges. Addressing these challenges requires a combination of legal, regulatory, and business strategies to navigate the complex landscape of IPR protection for novel drug formulations. This includes ongoing efforts to improve and harmonize international patent laws, enhance regulatory processes, and strike a balance between innovation incentives and public health needs.

Problem of Evergreening

Coming up with something new the world has never seen before is tough but hinging onto something old and calling it new is relatively easier. This strategy is called evergreening. The concept pertains to the extension of the patent life of an invention, in this case, a novel drug, by administering minor modifications to it when the patent is about to expire. When a pharmaceutical company tries evergreening a medical invention, it doesn’t yield any major therapeutic benefit. However, it results in economic gain. What is the reason behind evergreening? It proves to be a leverage for the companies that successfully block all new entrants into the market even when the patent period of that new medicine is about to be over. This strategy has been criticized because it defeats the purpose of the patent system which is to protect a “novel” product and not a mere alteration of the developed patented product.

An effective bulwark against the evergreening strategy of patents is there in the provision of Section 3(d) of the Indian Patent Act, 1970 which distinguishes between “discovery” and “innovation” and defines that which is not patentable. Especially, in the recent Supreme Court judgement of the Novartis case, the issue of evergreening has emerged as a burning topic in the field of drug development. A Swiss pharmaceutical industry called Novartis filed a patent for its new drug called ‘Gleevec’ under section 3 of the Indian Patent Act, 1970. This drug is famously used for treating cancer. However, its application was rejected by the Madras Patent Office which reasoned that it failed to satisfy the ground of novelty and non-obviousness. Finally, when Novartis filed an SLP before the Supreme Court of India, after a 7- year long battle, the Supreme Court (comprised bench of Aftab Alam and Ranjana Prakash Desai) upheld the decision of the previous authorities listing out the following reasons – Firstly, the company had failed to satiate the condition of invention, as mere discovery of an existing drug would not amount to an invention. Secondly, the Supreme Court held that apart from the 3 traditional conditions of invention, novelty, and application, a 4th test called the ‘therapeutic efficacy’ especially in the case of medicine is also significant. It essentially meant that there must be incremental changes to the existing medicine. This is a landmark judgement because it prevents the companies from evergreening their products at high prices and gives relief to those who can’t afford these life-saving medicines at skyrocketed rates.

The understanding of the problem of evergreening can have a lot of complexities on a case-to-case basis. On one hand, it is an unfair means to extend monopolization of the medicine in the market, on the other it can claim to improve patient’s health, reduce adverse effects and increase adherence, potentially outweighing its negatives. A pertinent question remains: Should the drug get patent protection after evergreening? The answer to this depends on the intricacies of a particular drug. If the tweak is just to get monopoly protection without any medical improvement, then it doesn’t deserve a patent. But if it makes a breakthrough in medical science, then it should get a patent.

Compulsory Licensing: Striking a Balance

A compulsory license is issued by any government or other established authorities which permits any third party other than the owner to use a patented product with or without the owner’s consent. In the medical field, a patented novel drug can be put up for licensing for larger public interest and for furthering research and innovation. To retaliate against the monopolization in the pharmaceutical industry, certain provisions in the Indian patent system grant CL to the interested parties after the expiration of 3 years of a patented product. On the face of it, this strategy gives benefits to medical academicians and people in general, however, for the patentee, it is an interference with the exclusive rights of their medical inventions. Granting a compulsory license can diminish their commercial success as well as the incentive to innovate. To a certain extent, the royalties incorporated by the state cannot seem to accommodate the potential financial benefit that the patent holder could have received exclusively. 

It is essential to note that research and development of a new medicine involves huge amounts of investment and granting compulsory licenses can prevent them from recouping substantial profit. This is the reason why many developed countries try to avoid granting compulsory licenses. Additionally, compulsory licensing can raise safety issues for medicines manufactured by generic pharmaceutical companies. In the fit for cheap manufacturing, certain counterfeit products may contain impurities that can potentially harm the consumers’ health. So, it’s not only the patent holder who is deprived of economic gains but the people in general who can be affected. In third-world countries, patent protection can foster research and development of effective drugs to cure inimitable diseases that would otherwise dissuade the multinationals from indulging in the development of drugs in the absence of financial gains offered by patents. There can be an emergence of uncertainty of patent protection which can impede the innovation of lifesaving drugs in poor countries.

In India, according to the licensing provisions, granting a CL for lifesaving medicine is justified on the grounds of national emergencies and public interest. Even though the patent holder is subjected to full compensation equivalent to the economic value, in life-and-death situations, the owner can be compelled to pay heed to the larger public interest at the detriment of his/her profitable gains. Third-world countries are the ones who are the most affected by compulsory licensing, unlike developed and developing countries. In short, there is a need to strike a balance between the public interest and the economic benefit of the patent holder for which taxing questions like setting reasonable royalty rates and deciding the duration of a compulsory license must be answered.

Counterfeiting and Piracy

Another challenge faced by the patent holders of medical inventions is illegitimate and unauthorized counterfeiting. The fast growth of this problem leading to IPR infringement has resulted in great peril for the pharmaceutical industry all around the world. The loss inflicted upon these companies varies from loss of income and brand value to reduction in productive capacity. The most disadvantaged stakeholders in such situations are the inventors of such novel medicines who are deprived of reasonable reward in the form of patents and profit. In addition to that, counterfeiting can also cause many social problems like tax rises and market destabilization. Even people, in general, can be harmed by such falsified medicines that are possibly composed of unsafe ingredients. Typically, innovative pharmaceutical and biopharmaceutical firms allocate approximately 15-17% of their yearly earnings to research and development. This investment is crucial for maintaining the quality, safety, and efficacy of their products, ensuring optimal outcomes for patients while minimizing health risks. Counterfeiting medicines, constituting unauthorized use of the pharmaceutical industry’s intellectual property, diminishes incentives for innovation, resulting in adverse impacts on the economy, society, and the environment.

Combating counterfeiting and piracy of medicines can be cumbersome and may not be 100% successful with isolated measures. A comprehensive and collaborative strategy is essential, necessitating coordination among diverse authorities, including public health agencies, medicine regulatory bodies, as well as national, regional, and international customs and law enforcement agencies. Combatting the counterfeiting of medicines should also engage pharmaceutical manufacturers, distributors, healthcare professionals, consumers, and the broader public.

Conclusion

The evolution of Intellectual Property Rights (IPR) in the field of medicine, particularly with novel drug formulations, has been a dynamic journey marked by challenges and necessary adaptations. Since India’s commitment to the TRIPS agreement, the Indian Patent System has undergone significant transformations to balance innovation incentives, public health needs, and accessibility to medicines. The emergence of the Indian Patent Law in 1970 addressed the issues of monopolization by multinational corporations, leading to a more equitable distribution of medicines. However, challenges persist in the contemporary landscape of pharmaceutical innovation. Evergreening, the practice of extending patent life through minor modifications, has raised concerns about the true essence of innovation. The landmark Supreme Court judgment in the Novartis case, upholding the significance of therapeutic efficacy, has been pivotal in curbing such practices. Compulsory licensing, while a tool for promoting public interest, poses dilemmas regarding the infringement of exclusive rights and potential impacts on innovation incentives. Striking a delicate balance between public interest and the economic benefits of patent holders becomes crucial, especially in life-threatening situations where access to essential medicines is paramount. Counterfeiting and piracy add another layer of complexity, threatening not only the financial interests of pharmaceutical companies but also public health and safety. 

A lot of other challenges are also there in the arena of patent rights for novel drugs that put the patent holders in great jeopardy. In navigating the intricate landscape of IPR protection for novel drug formulations, ongoing efforts should focus on improving and harmonizing international patent laws, enhancing regulatory processes, and fostering innovation without compromising public health. The pharmaceutical industry’s dedication to research and development should be duly rewarded, but mechanisms must ensure that accessibility to life-saving medicines remains a global priority.

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