India: pariah or pathbreaker of pharma world?

This was not the 3D of movies, games and computer graphics. But it gripped the national imagination. The Supreme Court  ruling last week dismissing Swiss drug major Novartis AG’s bid for a patent for its cancer drug Glivec hinged on the interpretation of Section 3(d) of India’s patent law which defines what are not “inventions” under Indian law, and therefore not patentable.

It was an epic finale to a tortuous seven year-old legal battle that pitted Novartis against the Indian government, the country’s leading generic drug makers and the Cancer Patients Aid Association.

The reactions to the verdict have been totally predictable. Health activists and patients’ groups worldwide are delirious with happiness. No surprises there — India’s generic drug industry makes cheaper versions of life-saving medicines that cater to the entire developing world.

Novartis is unhappy, as is Big Pharma and its advocates.

Over the past few days, a stream of analyses has parsed the Court’s verdict , especially in relation to Section 3(d) of the patent law which states that inventions that are a mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy of that substance are not patentable.

The Glivec case hinged on this provision, introduced by the Indian Parliament in the country’s patent law in 2005 as a public interest safeguard to prevent patenting of new forms of known substances unless they exhibit enhanced efficacy.

This case triggered so much interest across the world because it touched upon one of the central challenges of our times — how to balance incentives for innovation with interests of public health and access to medicine.

Most people in this country pay for medical treatment out of their pocket and, therefore, anything that promotes cheap drugs is a big deal. Glivec enjoys patent protection in 40 countries. Novartis says most of those who are prescribed Glivec in India get the medicine free of charge from Novartis’ patient assistance programme. This may be true. But the fact of the matter is that a month’s dosage of Glivec, the branded drug, costs over a lakh. The generic version in India costs less than Rs10,000. I reckon most people in this country are taking the generic medicine.

The striking feature of the Glivec saga has been the use of war imagery to tell the tale — Western pharmaceutical firms are perceived to have received a “blow” and Indian generic drug makers are portrayed as the “victors”.

But to see it as a morality play is to miss the larger point. There will be differences of opinion between lawyers. But Novartis lost the case because it could not convince the Supreme Court judges that there was enough scientific evidence to demonstrate that it was different enough and more therapeutically effective than an earlier patent relating to Glivec. There is nothing to suggest that the Indian judiciary is biased against innovators, or that in the future, other multinational or local pharma companies applying for a patent in India will necessarily be disappointed.

The future is likely to be a shade of grey, rather than black and white. Generic drug makers may appear to have triumphed this time, and with other recent judicial verdicts in the country. But there are challenges ahead. Big Pharma has to also go in for a reality check. Affordability is a big issue, and not just in India. Unless there is differential pricing, it won’t be smooth-sailing.

Big Pharma honchos predict dire consequences for India — no new life-saving drugs, no future as a research and development hub, and so on. Despite the sound and fury, I don’t’ think it is quite Apocalypse now.

Will India be a reduced to a pariah or will it continue to be seen as a path-breaker of the pharma world? Those who have been watching the Glivec saga from afar say that it is necessary to sift the rhetoric from the reality. With pharmaceutical profits decreasing in the developed world, pharma MNCs are increasingly looking to the developing world to expand profits. Everyone is banking on the emerging markets. Despite India’s slowing economic growth, the country’s pharma industry remains attractive. A 2011 report by the Confederation of Indian Industry and Pricewaterhouse Coopers says that the Indian pharma industry today is the third largest market globally in terms of volume and the 14th largest market by value. It is likely to be a $74 billion market by 2020.

Secondly, India is not the only country with public health safeguards in its patent regime. Many other developing countries have put in place such provisions into their patent law. For example, Argentina and Phillipines have something similar to India’s Section 3(d) in their patent legislation.

Or take compulsory licensing (CL), another public interest safeguard allowed by the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

India has been slammed for using it. But Indonesia, Thailand, Brazil, Malaysia, Zambia, Cameroon, Ecuador, and now even China are joining the ranks of those using CL.

Public health safeguards is a good thing. However, India should brace itself for political pressure from developed countries, home of pharma MNCs, in the coming days. One increasingly disturbing aspect of free trade agreements (FTAs), for example, is the inclusion of investor-state provisions that essentially allow companies — usually multinationals — to challenge the policies of signatory governments directly. US drug giant Eli Lilly & Co. is demanding $100 million in compensation for Canadian court decisions that stripped the company of its patent for a drug used to treat attention-deficit disorder. With India planning or negotiating a raft of free trade deals in the coming days, these are some of the issues to keep in mind.

The author is a Delhi-based writer.

@patralekha2011