August 07, 2007

Novartis loses battle against Indian patent law

In a much-awaited judgement, the Madras High Court has held as valid a legal provision unique to India, which stipulates that modifications of known medicines cannot be patented unless they make the drug significantly more effective.

On Monday, the court dismissed a petition by Swiss pharmaceutical giant Novartis challenging the constitutionality of Section 3(d) of the new Indian patent law. Novartis has filed another case, an appeal against the rejection of patent for its anti-cancer blockbuster drug Glivec, which is still pending.

The Basel-based drugmaker had filed a petition with the high court last year, after the Glivec patent rejection, pleading that incremental innovation should be patented in India. While India’s patent law does allow patents for modifications of already-known medicines, Section 3(d) stipulates that these modifications must improve drug efficacy to qualify.

A division bench comprising justice R Balasubramanian and justice Prabha Sridevan, ruled that the Section 3(d) of the Act, as amended in 2005 (along with its explanation), is valid and could not be termed vague, ambitious or unconstitutional.

“The discovery should result in the enhancement of the known efficacy of the substance and the derivatives are significantly differing in properties, with regards to efficacy,” the bench ruled.

In its petition, Novartis had prayed to declare the provision as being non-compliant with TRIPS agreement, vague, arbitrary and in violation of Article 14 of Indian Constitution.

“It is a sad day for innovation,” said Novartis’s vice-chairman and managing director Ranjit Shahani. “Incremental innovation has value not just in improving therapeutic efficacy, but also in providing significant benefits in terms of drug delivery, patient safety and compliance,” he said.

Novartis has also noted that in order to compare the efficacy of the new version of a drug with the old one, clinical trials need to be conducted. But, such trials can start only after the drug is protected by a patent.

However, the court decision should not have any significant impact on the company’s financial performance, said analysts. Drugmakers such as Ranbaxy, Sun Pharmaceuticals, Cipla, Natco Pharma and Camlin Pharma were already selling generic versions of Glivec in India. Even an eventual denial of patent on Glivec would not change the current situation.

Novartis said that while it disagreed with the Madras HC’s judgement, it won’t appeal its decision to the Supreme Court. “However, we have opened an important debate on the value of incremental innovation and the World Trade Organisation may take up the issue. We feel that there are great inadequacies in the Indian patent law,” said Mr Shahani.

The now-famous Glivec case has kept alive the debate over the patentability of pharmaceutical substances. Product patenting was introduced in India two years ago through the third amendment to Patent Act. The question is about ascribing a commercial value (by way of grant of patent or its denial) to new forms, derivatives and delivery systems of existing drugs.

The domestic pharmaceutical industry welcomed the Madras HC judgement. “If Section 3(d) had been removed, a large number of frivolous patents would have been granted, denying patients access to affordable generic medicines,” said secretary general of Indian Pharmaceutical Alliance (IPA), Dilip G Shah. “At least 2,000 out of the 10,000-odd patent applications in India will be disqualified under Section 3(d),” he added.

Ranbaxy echoed IPA’s view. “Ranbaxy has consistently been of the view that the TRIPS agreement can and should be interpreted and implemented in a manner supportive of the rights of the WTO members, to protect public health, and in particular, to promote access to medicines for all,” said executive director - global corporate affairs of Ranbaxy Laboratories, Ramesh Adige.

While Section 3(d) remains unique to the Indian patent law, other countries are considering incorporating a similar provision in their patent law. “Philippines adopted a similar provision a few month ago, and more Asia-Pacific countries such as Malaysia, Bangladesh and Indonesia were waiting for this ruling to amend their patent law,” said Mr Shah.

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