Tag Archives: Licensing

At The Indian IPR Front: ‘Ground Control, There’s No Major Storm’

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The incessant pressure of the developing countries on India, from 2005 to date, to include various restrictive conditions in the Indian Patents Act 2005, still continue. This demand spans across the inclusion of even those provisions, which many experts term as TRIPS-Plus, as these are not required by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. More interestingly, the pressure group also insists on the simultaneous deletion or dilution of some existing important provisions in the statute that guarantee public health interest of the nation.

This pressure is expected to mount in the G20 summit of September 4-5, which is now being held in China.

Refreshingly, on 30 August 2016, just ahead of this summit, the eminent economist Dr. Arvind Panagariya, who is also the incumbent Vice Chairman of Niti Aayog of India, and India’s Sherpa at the G20 summit reiterated, as follows, in an interview to a leading National English Business Daily:

“India has strongly opposed the language of the draft on Intellectual Property Protection (IPR) to be taken up at the upcoming G20 meeting in Beijing.”

In the interview, having re-emphasized the critical point that “there is a certain flexibility that we have under the TRIPS agreement and anything that dilutes that flexibility is not acceptable to India,” Dr. Panagariya clearly reaffirmed, yet again that ‘Indian IPR laws and policies are absolutely TRIPS compliant’.

This statement indeed sends a very positive signal to all on the ground, regarding the robust position maintained by the Government, to ward off any move by the overseas vested business interest to derail the flexibility that Indian well-balanced patent regime offers today, not just for public health, but also to foster innovation ecosystem in the country.

At the same time, India’s Sherpa at G20 summit also reportedly clarified that the IPR framework being proposed at the G20, in its strictest sense, cannot be construed as TRIPS-Plus. Nevertheless, some language used in the proposed G20 draft could be subject to interpretation, and India feels that it should not leave any room for ambiguity that has the potential to stretch this demand further, as we move on.

According to Dr. Panagariya: “Right now, these documents have some language where people in the Department of Industrial Policy & Promotion (DIPP) feel that it impinges a bit. We have to fight it out at the summit.”

The basis of apprehension:

There are many reasons for the recent apprehension that India may buckle under the US pressure to dilute its IP laws and policies. One of the reasons could well be a possibility that India has come to an understanding with USTR in this area.

An interesting article published in the ‘spicyip’ on March 14, 2016 also captured this scenario pretty well. I am reproducing below in verbatim a paragraph of this paper, just as an example:

“Last month, the Indian government privately assured the US-India Business Council (“USIBC’’) that it would not invoke compulsory licensing for commercial purposes, as reported in their submissions (available here) to the United States Trade Representative (“USTR”) for the 2016 Special 301 Review. The USIBIC stated that it would be “further encouraged” if the government of India were to make a public commitment, or a written declaration to only issue compulsory licenses in the event of public health emergencies, and not for commercial purposes. This, in their eyes, would “greatly enhance legal certainty for innovative industries”. While such a private assurance doesn’t give rise to any legal commitments, it may well be indicative of a policy shift.”

Prior to this, among many others, a March 3, 2016 ‘The Wire’ report captioned “India Assures the US it Will Not Issue Compulsory Licenses on Medicines”, also raised the same red flag.

The pressure continues even post engagement:

Be that as it may, America has been, repeatedly, raising its concerns over India’s patent regime, driven by its powerful pharma lobby groups.

To keep the kettle boiling, the Office of the United States Trade Representative (USTR) in its 2016 Special 301 Report released this year on April 12, continued to keep India, along with 11 countries, on the Priority Watch List (PWL) for the current year.

USTR reportedly expressed serious concern about Indian IP policies stating that the regime apparently ‘favor’ indigenous manufacturing or Indian innovators. It also alleged that such direction ‘damages’ the patent infrastructure not just in India, but across the world.

It is believed by many that the Special 301 Report is, in fact, a formal posturing of the country on their unilateral IP related business hurdles for the year, exhibiting the power to implement unilateral trade sanctions when the US demands are not met.

In that context, the 2016 Special 301 Report caught many by surprise, as the Indian ‘IPR Think Tank’ (a body of the Union Government-selected experts) was also working closely with the United States to identify and address their issues of concern, such as, patent system, copyright infringement, trademark and counterfeiting, among others.

At that time, this discussion was possibly in its final stage as, just a month after, on May 12, 2016, the Union Cabinet approved the National Intellectual Property Rights Policy (IPR) of India, as proposed by the ‘Think Tank’, in consultation with, among others, especially the United States, which reportedly expressed its overall satisfaction with the final IPR policy.

Key concerns:

From the pharma industry perspective, the key IP concerns are centered, primarily, in the following three areas, besides a few others:

  • Patentability
  • Compulsory Licensing (CL)
  • Data Exclusivity

I would, therefore, concentrate briefly on these three areas to argue how reasonable is the Indian Patents Act 2005 to create a win-win situation both for the patients and the industry while fostering pharma innovation in the country.

Patentability:

One of their key concerns on patentability, revolves round an important provision in the statute – Section 3 (d).

Pharma Multinational Corporations (MNCs), and their trade associations have been going overboard, since long, to lobby hard to make all concerned believe that section 3 (d) is a stumbling block for pharma innovation, as it does not allow patent protection on known chemical substances lacking any significant improvement in clinical efficacy.

This provision of the statute prevents ever-greening of patents with frivolous incremental innovation. Consequently, it blocks the possibility of pricing such ‘me too’ new molecules, exorbitantly, and persuading the prescribers of the existing molecule switching over to the new brand, backed by contentious marketing campaigns, adversely impacting affordability and access to the majority of the patients in India.

Notwithstanding the shrill voices of vested interests, Section 3 (d) has been upheld by the Supreme Court of India in the famous Glivec case of Novartis against Cipla.

The Submission of the Federation of Indian Chambers of Commerce and Industry (FICCI) to USTR for the Review of ‘2016 Special 301 Report’, categorically also states that the Indian Patent Act prescribes a higher threshold on inventive step for medicines, which is in keeping with the TRIPS Agreement, Paris Convention and the Doha Declaration. Hence, Section 3 (d) is sound in terms of the TRIPS, Public policy and Health policy.

Compulsory License (CL):

Besides the hard fact that India has, so far, granted just one CL in a span of more than the last ten years, the Doha Declaration on the TRIPS Agreement related public health clearly provides the flexibility to all its member states to decide on the necessary grounds for granting CL. It is noteworthy that for public health interest, TRIPS flexibilities for CL has been used even by the developed countries, such as, Canada, United States and Germany, in the not too distant past.

Data exclusivity:

The terminologies ‘Data Exclusivity’ and ‘Data Protection’ are quite often used interchangeably by many, creating a great deal of confusion on the subject. However, in a true sense these are quite different issues having a critical impact on the public health interest of a nation.

In an article published in ‘ipHandbook’, titled “Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals”, the author Charles Clift, a former Secretary, Commission on Intellectual Property Rights, Innovation and Public Health, World Health Organization; differentiated these two terminologies as follows:

Data Protection (DP): Protection of commercially valuable data held by the drug regulator against disclosure and unfair commercial use.

Data Exclusivity (DE): A time bound form of Intellectual Property (IP) protection that seeks to allow companies recouping the cost of investment in producing data required by the regulatory authority.

According to Charles Clift, Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights, per se, for test data. Nor does it prevent outside parties from relying on the test data submitted by an originator, except in case of unfair commercial practices.

Some developed countries, such as the United States and the European Union have argued that Article 39.3 of TRIPS requires countries to create a regime of DE, which is a new form of time-limited IP protection. However, it is worth noting that in both these countries DE regime was adopted prior to the TRIPS Agreement. Hence, many experts construe such approaches and pressure, thus created for DE, as ‘TRIPS-Plus’.

In its new IPR Policy, India has successfully resisted the demands of TRIPs-Plus provisions, such as, data exclusivity, patent linkage and patent-term extension.

Even the draft IPR policy had reiterated that India accepts: “Protection of undisclosed information not extending to data exclusivity.”

Any near-term possibility of a change in the statute?

While the new IPR Policy of India focuses on consolidating institutional mechanisms to create a robust IPR ecosystem in the country, besides resolving some pressing issues, such as, expediting approval processes involving patents or trademarks, it does not indicate any possible change in the important provisions in the Patents Act 2005, including the much talked about Section 3 (d) and compulsory licensing, despite concerns expressed by the US and pharma companies.

Moreover, a May 13, 2016 Press Trust of India (PTI) report on the Union Cabinet approval of Indian IPR Policy quoted a Government official, as follows, negating the apprehensions that the government may yield to the pressure of developed countries with regard to its IR regime:

“India will never go beyond its current commitments in the TRIPS. Section 3 (d), patent linkage, data exclusivity and compulsory licensing are red lines.”

On the same day and in the same context, Union Finance Minister Arun Jaitley also reportedly stressed that India’s IPR policies are TRIPS-compliant and encourage invention of life-saving drugs, while at the same time, “we must also be conscious of the need to make it available at a reasonable cost so that drug cost does not become prohibitive as has become in some parts of the world”, he articulated, unambiguously.

Conclusion:

Despite all these developments, reiterations and interpretations, a lurking fear on India’s diluting the current patent regime of the nation was refusing to die down in the country.

Many experts were also quite apprehensive about what would be India’s stand on IP in the G 20 summit on September 4-5, currently being held in China.

Is it, then, just a storm in a tea cup on the ground?

This is not a very easy question to answer, though, as many industry watchers sense. Nonetheless, yet another emphatic statement on the subject coming from a top Government echelon and none other than Dr. Arvind Panagariya, the Vice Chairman of Niti Aayog and India’s Sherpa at G20 summit, possibly sends a clear message, at least for now, to all those holding ground in the Indian IPR front:

‘Ground Control, There’s No Major Storm’.

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion. 

Awaiting ‘The Moment of Truth’ on ‘Working of Patents’ in India

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By a letter dated October 21, 2014 addressed to the Secretary, Department of Industrial Policy and Promotion (DIPP) of India, the domestic pharma major Cipla has sought for the revocation of five patents of Novartis AG’s respiratory drug Indacaterol (Onbrez) in India, under Sections 66 and 92 of the Indian Patents Act.

Launch of a generic equivalent:

Cipla also announced its decision to launch shortly a generic equivalent of Indacaterol with the brand name Unibrez Rotacaps to satisfy the unfulfilled requirement of the new drug in India.

The Maximum Retail Price for a strip of 10 capsules of Unibrez Rotacaps 150 mcg would cost Rs.130.00 to patients against the equivalent strength of Onbrez of Novartis costing Rs.677.00, which is 420 percent more expensive than the price at which Cipla would sell this drug.

What do the Sections 66 and 92 of the Indian Patents Act say?

- Section 66 of the Indian Patents Act:

“66. Revocation of patent in public interest: Where the Central Government is of the opinion that a patent or the mode in which it is exercised is mischievous to the State of generally prejudicial to the public, if any, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.”

- Section 92 of the Indian Patents Act:

“92. Special provision for compulsory licenses: (1) If the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non- commercial use, that it is necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette, and thereupon the following provisions shall have effect, that is to say –

(i) The Controller shall on application made at any time after the notification by any person interested, grant to the applicant a license under the patent on such terms and conditions as he thinks fit;

(ii) In settling the terms and conditions of a license granted under this section, the Controller shall endeavor to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights.

(2) The provisions of sections 83, 87, 88, 89 and 90 shall apply in relation to the grant of licenses under this section as they apply in relation to the grant of licenses under section 84.

(3) Notwithstanding anything contained in sub- section (2), where the Controller is satisfied on consideration of the application referred to in clause (i) of sub- section (1) that it is necessary in –

(i) A circumstance of national emergency; or

(ii) A circumstance of extreme urgency; or

(iii) A case of public non- commercial use, which may arise or is required, as the case may be, including public health crises, relating to Acquired Immuno Deficiency Syndrome, Human Immuno Deficiency Virus, tuberculosis, malaria or other epidemics, he shall not apply any procedure specified in section 87 in relation to that application for grant of license under this section:

Provided that the Controller shall, as soon as may be practicable, inform the patentee of the patent relating to the application for such non-application of section 87.”

Two key reasons:

Anchored on the above two sections of the Indian Patents Act, the two key reasons cited by Cipla for revocation of five patents granted to Indacaterol of Novartis AG are, very briefly, as follows:

Lack of inventive steps and ‘evergreening’ of patents:

The exclusivity given to five patents of Indacaterol is contrary to law due to lack of inventive step, being obvious inventions. Novartis allegedly has indulged in ‘evergreening’ with a number of patents to extend monopoly of the drug much beyond the term of the first patent. Indian law expressly bars ‘evergreening’ as it impedes drug access to a large majority of the patients.

Lack of working of the patents:

Cipla also claimed lack of “working” of those patents in the country, as a mere 0.03 percent of the drug requirement is currently being fulfilled in India. This leaves the percentage of inadequacy in the requirement of the drug per year at a staggering number of around 99.97 percent.

With supporting details, Cipla has stated in its letter that Indacaterol under the brand name Onbrez is imported by Novartis through its licensee Lupin Pharma only. It further pointed out that the Indian law requires all patents to be “worked” within the territory of India.

While adequate quantity of imports may qualify as working, the present case is one in which the patents in question have not been worked through imports of adequate quantity of the drug. Thus reasonable requirements of the public have not been fulfilled, at all.

Abysmally low drug access to Indian patients:

According to Cipla, when there has been a necessity for the availability of Indacaterol to a much larger number of patients afflicted by COPD, that has assumed magnitude of an epidemic, just a miniscule of 0.03 percent of the total drug requirement is currently being met in the country. In 2013, the import of Indacaterol, as reportedly declared in Form 27 by Novartis to the Patent office, was just 53,844 units, which could meet this drug requirement at best of only 4,500 out of 15 million patients, annually.

Despite accepted drug benefits, the doctors are unable to adequately prescribe Indacaterol in India, due to low quantity of the drug import for the public.

Thus, while announcing the launch of cheaper generic equivalents of the drug, Cipla emphasized that its Unibrez Rotacaps would fulfill the requirements of the public, meet public health interest and at the same time increase access to this medicine, with an affordable alternative, for a large number of patients.

Increasing incidence of COPD in India:

In its application to the DIPP, Cipla underscored that Indacaterol is one of the preferred medications to treat widely prevalent Chronic Obstructive Pulmonary Disease (COPD) that has reached the magnitude of an epidemic in India with about 15 million Indians afflicted with the ailment.

COPD is now among the top ten causes of disease burden in India. According to Indian Council of Medical Research (ICMR), the overall prevalence rates of COPD in India are 5.0 and 3.2 percent respectively in men and women of and over 35 years of age. The World Health Organization (WHO) also reported that COPD is the cause of death of more people than HIV-AIDS, Malaria and Tuberculosis all put together in the South East Asian Region.

Cipla quoted an Indian Study on “Epidemiology of Asthma, Respiratory Symptoms and Chronic Bronchitis in Adults (INSEARCH)”, which estimated that about 7 percent of deaths annually are a result of Chronic Respiratory Diseases in India.

Importance of Indacaterol in COPD treatment:

Cipla reiterated that Indacaterol is the preferred drug over other beta adrenoceptor agonists, as it has to be consumed only once a day. Moreover, it has a higher potency and prolonged effect as compared to other beta adrenoceptor agonists.

Strong arguments make the case interesting:

Though appropriate legal authorities would take a final call on the subject, prima facie, Cipla seems to have a strong case resting on the pillars of Sections 66 and 92 of the Indian Patents Act.

Since, Cipla has already gone ahead and announced the launch of cheaper generic equivalent of Indacaterol in India, it gives a sense about the company’s confidence in its argument against five valid patents of Novartis on this drug.

On the other hand, one may also justifiably say that Cipla should have waited for the final verdict of the court of law on the validity of five Indacaterol patents in India, before deciding to actually launch a generic version of the patented drug.

It is worth noting that in 2013, Novartis lost a legal battle related to patent grant for its anti-leukemia drug Glivec in the Supreme Court of India. The case lasted over seven years in various courts of law. Interestingly, Cipla had followed similar course of action in the Glivec case too, and had won the case decisively.

‘Form 27’ and the Indian Patent office (IPO):

At this stage it is worth noting, a ‘Public Notice’ dated December 24, 2009 was issued by the Controller General of Patents, Design & Trade Marks, directing all ‘Patentees and Licensees’ to furnish information in ‘Form No.27’ on ‘Working of Patents’ as prescribed under Section 146 of the Patents Act read with Rule 131 of the Patents Rule 2003.

The notice also drew attention to penalty provisions in the Patents Act, in case of non-submission of the aforesaid information.

The information sought by the IPO in ‘Form 27’ can be summarized as follows:

A. The reasons for not working and steps being taken for ‘working of the invention’ to be provided by the patentee.

B. In case of establishing ‘working of a patent’, the following yearly information needs to be provided:

  • The quantity and value of the invention worked; which includes both local manufacturing and importation.
  • The details to be provided, if any licenses and/or sub-licenses have been granted for the products during the year.
  • A statement as to whether the public requirements have been met partly/adequately to the fullest extent at a reasonable price.

The ‘Public Notice’ also indicated that:

• A fine of up to (US$ 25,000 may be levied for not submitting or refusing to submit the required information by the IPO.

• And providing false information is a punishable offence attracting imprisonment of up to 6 months and/or a fine.

The important point to ponder now is, if Cipla’s allegation is correct, what has been the IPO doing with the ‘Form 27’ information to uphold the spirit of Indian Patents Act 2005, thus far?

Conclusion:

For various reasons, it would now be interesting to follow, how does the IPO deal with this case right from here. In any case, information provided through ‘Form 27’ cannot remain a secret. ‘The Right to Information Act (RTI)’ will help ferret more such details out in the open.

As the ‘Moment of Truth’ unfolds in this case, one would be quite curious to fathom how the strong voices against ‘non-working of patents’ and ‘evergreening’ drive home their arguments before the court of justice.

On the other hand, the global innovator companies, their highly paid lobby groups and the USTR are expected to exert tremendous pressure on the Indian Government to protect the global pharma business interests in India, come what may. All these would indeed create a potboiler, as expected by many.

In this complex scenario, striking a right balance between rewarding genuine innovation, on the one hand, and help improving access to affordable modern medicines to a vast majority of the population in the country, on the other, would not be an enviable task for the Indian Government.

As the juggernaut of conflicting interest moves on, many would keenly await for a glimpse of ‘the moment of truth’ based on the judicial interpretation of ‘evergreening’ and ‘working of patents’, for this case in particular.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

R&D: Is Indian Pharma Moving Up the Value Chain?

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It almost went unnoticed by many, when in the post product patent regime, Ranbaxy launched its first homegrown ‘New Drug’ of India, Synriam, on April 25, 2012, coinciding with the ‘World Malaria Day’. The drug is used in the treatment of plasmodium falciparum malaria affecting adult patients.  However, the company has also announced its plans to extend the benefits of Synriam to children in the malaria endemic zones of Asia and Africa.

The new drug is highly efficacious with a cure rate of over 95 percent offering advantages of “compliance and convenience” too. The full course of treatment is one tablet a day for three days costing less than US$ 2.0 to a patient.

Synriam was developed by Ranbaxy in collaboration with the Department of Science  and Technology of the Government of India. The project received support from the Indian Council of Medical Research (ICMR) and conforms to the recommendations of the World Health Organization (WHO). The R&D cost for this drug was reported to be around US$ 30 million. After its regulatory approval in India, Synriam is now being registered in many other countries of the world.

Close on the heels of the above launch, in June 2013 another pharmaceutical major of India, Zydus Cadilla announced that the company is ready for launch in India its first New Chemical Entity (NCE) for the treatment of diabetic dyslipidemia. The NCE called Lipaglyn has been discovered and developed in India and is getting ready for launch in the global markets too.

The key highlights of Lipaglyn are reportedly as follows:

  • The first Glitazar to be approved in the world.
  • The Drug Controller General of India (DCGI) has already approved the drug for launch in India.
  • Over 80% of all diabetic patients are estimated to be suffering from diabetic dyslipidemia. There are more than 350 million diabetics globally – so the people suffering from diabetic dyslipidemia could be around 300 million.

With 20 discovery research programs under various stages of clinical development, Zydus Cadilla reportedly invests over 7 percent of its turnover in R&D.  At the company’s state-of-the-art research facility, the Zydus Research Centre, over 400 research scientists are currently engaged in NCE research alone.

Prior to this in May 14, 2013, the Government of India’s Department of Biotechnology (DBT) and Indian vaccine company Bharat Biotech jointly announced positive results, having excellent safety and efficacy profile in Phase III clinical trials, of an indigenously developed rotavirus vaccine.

The vaccine name Rotavac is considered to be an important scientific breakthrough against rotavirus infections, the most severe and lethal cause of childhood diarrhea, responsible for approximately 100,000 deaths of small children in India each year.

Bharat Biotech has announced a price of US$ 1.00/dose for Rotavac. When approved by the Drug Controller General of India, Rotavac will be a more affordable alternative to the rotavirus vaccines currently available in the Indian market. 

It is indeed interesting to note, a number of local Indian companies have started investing in pharmaceutical R&D to move up the industry value chain and are making rapid strides in this direction.

Indian Pharma poised to move-up the value-chain:

Over the past decade or so, India has acquired capabilities and honed skills in several important areas of pharma R&D, like for example:

  • Cost effective process development
  • Custom synthesis
  • Physical and chemical characterization of molecules
  • Genomics
  • Bio-pharmaceutics
  • Toxicology studies
  • Execution of phase 2 and phase 3 studies

According to a paper titled, “The R&D Scenario in Indian Pharmaceutical Industry” published by Research and Information System for Developing Countries, over 50 NCEs/NMEs of the Indian Companies are currently at different stages of development, as follows:

Company Compounds Therapy Areas Status
Biocon 7 Oncology, Inflammation, Diabetes Pre-clinical, phase II, III
Wockhardt 2 Anti-infective Phase I, II
Piramal Healthcare 21 Oncology, Inflammation, Diabetes Lead selection, Pre-clinical, Phase I, II
Lupin 6 Migraine, TB, Psoriasis, Diabetes, Rheumatoid Arthritis Pre-clinical, Phase I, II, III
Torrent 1 Diabetic heart failure Phase I
Dr. Reddy’s Lab 6 Metabolic/Cardiovascular disorders, Psoriasis, migraine On going, Phase I, II
Glenmark 8 Metabolic/Cardiovascular /Respiratory/Inflammatory /Skin disorders, Anti-platelet, Adjunct to PCI/Acute Coronary Syndrome, Anti-diarrheal, Neuropathic Pain, Skin Disorders, Multiple Sclerosis, Ongoing, Pre-clinical, Phase I, II, III

R&D collaboration and partnership:

Some of these domestic companies are also entering into licensing agreements with the global players in the R&D space. Some examples are reportedly as follows:

  • Glenmark has inked licensing deals with Sanofi of France and Forest Laboratories of the United States to develop three of its own patented molecules.
  • Domestic drug major Biocon has signed an agreement with Bristol Myers Squibb (BMS) for new drug candidates.
  • Piramal Life Sciences too entered into two risk-reward sharing deals in 2007 with Merck and Eli Lilly, to enrich its research pipeline of drugs.
  • Jubilant Group partnered with Janssen Pharma of Belgium and AstraZeneca of the United Kingdom for pharma R&D in India, last year.

All these are just indicative collaborative R&D initiatives in the Indian pharmaceutical industry towards harnessing immense growth potential of this area for a win-win business outcome.

The critical mass:

An international study estimated that out of 10,000 molecules synthesized, only 20 reach the preclinical stage, 10 the clinical trials stage and ultimately only one gets regulatory approval for marketing. If one takes this estimate into consideration, the research pipeline of the Indian companies would require to have at least 20 molecules at the pre-clinical stage to be able to launch one innovative product in the market.

Though pharmaceutical R&D investments in India are increasing, still these are not good enough. The Annual Report for 2011-12 of the Department of Pharmaceuticals indicates that investments made by the domestic pharmaceutical companies in R&D registered an increase from 1.34 per cent of sales in 1995 to 4.5 percent in 2010. Similarly, the R&D expenditure for the MNCs in India has increased from 0.77 percent of their net sales in 1995 to 4.01 percent in 2010.

Thus, it is quite clear, both the domestic companies and the MNCs are not spending enough on R&D in India. As a result, at the individual company level, India is yet to garner the critical mass in this important area.

No major R&D investments in India by large MNCs:

According to a report, major foreign players with noteworthy commercial operations in India have spent either nothing or very small amount towards pharmaceutical R&D in the country. The report also mentions that Swiss multinational Novartis, which spent $ 9 billion on R&D in 2012 globally, does not do any R&D in India.

Analogue R&D strategy could throw greater challenges:

For adopting the analogue research strategy, by and large, the Indian pharma players appear to run the additional challenge of proving enhanced clinical efficacy over the known substance to pass the acid test of the Section 3(d) of the Patents Act of India.

Public sector R&D:

In addition to the private sector, research laboratories in the public sector under the Council for Scientific and Industrial Research (CSIR) like, Central Drug Research Institute (CDRI), Indian Institute of Chemical Technology (IICT) and National Chemical Laboratory (NCL) have also started contributing to the growth of the Indian pharmaceutical industry.

As McKinsey & company estimated, given adequate thrust, the R&D costs in India could be much lower, only 40 to 60 per cent of the costs incurred in the US. However, in reality R&D investments of the largest global pharma R&D spenders in India are still insignificant, although they have been expressing keenness for Foreign Direct Investments (FDI) mostly in the brownfield pharma sector.

Cost-arbitrage:

Based on available information, global pharma R&D spending is estimated to be over US$ 60 billion. Taking the cost arbitrage of India into account, the global R&D spend at Indian prices comes to around US$ 24 billion. To achieve even 5 percent of this total expenditure, India should have invested by now around US$ 1.2 billion on the pharmaceutical R&D alone. Unfortunately that has not been achieved just yet, as discussed above.

Areas of cost-arbitrage:

A survey done by the Boston Consulting Group (BCG) in 2011 with the senior executives from the American and European pharmaceutical companies, highlights the following areas of perceived R&D cost arbitrage in India:

Areas % Respondents
Low overall cost 73
Access to patient pool 70
Data management/Informatics 55
Infrastructure set up 52
Talent 48
Capabilities in new TA 15

That said, India should realize that the current cost arbitrage of the country is not sustainable on a longer-term basis. Thus, to ‘make hay while the sun shines’ and harness its competitive edge in this part of the world, the country should take proactive steps to attract both domestic as well as Foreign Direct Investments (FDI) in R&D with appropriate policy measures and fiscal incentives.

Simultaneously, aggressive capacity building initiatives in the R&D space, regulatory reforms based on the longer term need of the country and intensive scientific education and training would play critical role to establish India as an attractive global hub in this part of the world to discover and develop newer medicines for all.

Funding:

Accessing the world markets is the greatest opportunity in the entire process of globalization and the funds available abroad could play an important role to boost R&D in India. Inadequacy of funds in the Indian pharmaceutical R&D space is now one of the greatest concerns for the country.

The various ways of funding R&D could be considered as follows:

  • Self-financing Research: This is based on:
  1. “CSIR Model”: Recover research costs through commercialization/ collaboration with industries to fund research projects.
  2. “Dr Reddy’s Lab / Glenmark Model”: Recover research costs by selling lead compounds without taking through to development.
  • Overseas Funding:  By way of joint R&D ventures with overseas collaborators, seeking grants from overseas health foundations, earnings from contract research as also from clinical development and transfer of aborted leads and collaborative projects on ‘Orphan Drugs’.
  • Venture Capital & Equity Market:  This could be both via ‘Private Venture Capital Funds’ and ‘Special Government Institutions’.  If regulations permit, foreign venture funds may also wish to participate in such initiatives. Venture Capital and Equity Financing could emerge as important sources of finance once track record is demonstrated and ‘early wins’ are recorded.
  • Fiscal & Non-Fiscal Support: Should also be valuable in early stages of R&D, for which a variety of schemes are possible as follows:
  1. Customs Duty Concessions: For Imports of specialized equipment, e.g. high throughput screening equipment, equipment for combinatorial chemistry, special analytical tools, specialized pilot plants, etc.
  2. Income tax concessions (weighted tax deductibility): For both in-house and sponsored research programs.
  3. Soft loans: For financing approved R&D projects from the Government financial institutions / banks.
  4. Tax holidays: Deferrals, loans on earnings from R&D.
  5. Government funding: Government grants though available, tend to be small and typically targeted to government institutions or research bodies. There is very little government support for private sector R&D as on date.

All these schemes need to be simple and hassle free and the eligibility criteria must be stringent to prevent any possible misuse.

Patent infrastructure:

Overall Indian patent infrastructure needs to be strengthened, among others, in the following areas:

  • Enhancement of patent literacy both in legal and scientific communities, who must be taught how to read, write and file a probe.
  • Making available appropriate ‘Search Engines’ to Indian scientists to facilitate worldwide patent searches.
  • Creating world class Indian Patent Offices (IPOs) where the examination skills and resources will need considerable enhancement.
  • ‘Advisory Services’ on patents to Indian scientists to help filing patents in other countries could play an important role.

Creating R&D ecosystem:

  • Knowledge and learning need to be upgraded through the universities and specialist centers of learning within India.
  • Science and Technological achievements should be recognized and rewarded through financial grants and future funding should be linked to scientific achievements.
  • Indian scientists working abroad are now inclined to return to India or network with laboratories in India. This trend should be effectively leveraged.

Universities to play a critical role:

Most of Indian raw scientific talents go abroad to pursue higher studies.  International Schools of Science like Stanford or Rutgers should be encouraged to set up schools in India, just like Kellogg’s and Wharton who have set up Business Schools. It has, however, been reported that the Government of India is actively looking into this matter.

‘Open Innovation’ Model:

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

Council of Scientific and Industrial Research (CSIR) of India has adopted OSDD to discover more effective anti-tubercular medicines.

Insignificant R&D investment in Asia-Pacific Region:

Available data indicate that 85 percent of the medicines produced by the global pharmaceutical industry originate from North America, Europe, Japan and some from Latin America and the developed nations hold 97 percent of the total pharmaceutical patents worldwide.

MedTRACK reveals that just 15 percent of all new drug development is taking place in Asia-Pacific region, including China, despite the largest global growth potential of the region.

This situation is not expected to change significantly in the near future for obvious reasons. The head start that the western world and Japan enjoy in this space of the global pharmaceutical industry would continue to benefit those countries for some more time.

Some points to ponder:

  • It is essential to have balanced laws and policies, offering equitable advantage for innovation to all stakeholders, including patients.
  • Trade policy is another important ingredient, any imbalance of which can either reinforce or retard R&D efforts.
  • Empirical evidence across the globe has demonstrated that a well-balanced patent regime would encourage the inflow of technology, stimulate R&D, benefit both the national and the global pharmaceutical sectors and most importantly improve the healthcare system, in the long run.
  • The Government, academia, scientific fraternity and the pharmaceutical Industry need to get engaged in various relevant Public Private Partnership (PPP) arrangements for R&D to ensure wider access to newer and better medicines in the country, providing much needed stimulus to the public health interest of the nation.

Conclusion:

R&D initiatives, though very important for most of the industries, are the lifeblood for the pharmaceutical sector, across the globe, to meet the unmet needs of the patients. Thus, quite rightly, the pharmaceutical Industry is considered to be the ‘lifeline’ for any nation in the battle against diseases of all types.

While the common man expects newer and better medicines at affordable prices, the pharmaceutical industry has to battle with burgeoning R&D costs, high risks and increasingly long period of time to take a drug from the ‘mind to market’, mainly due to stringent regulatory requirements. There is an urgent need to strike a right balance between the two.

In this context, it is indeed a proud moment for India, when with the launch of its home grown new products, Synriam of Ranbaxy and Lipaglyn of Zydus Cadilla or Rotavac Vaccine of Bharat Biotech translate a common man’s dream of affordable new medicines into reality and set examples for others to emulate.

Thus, just within seven years from the beginning of the new product patent regime in India, stories like Synriam, Lipaglyn, Rotavac or the R&D pipeline of over 50 NCEs/NMEs prompt resurfacing the key unavoidable query yet again:

Has Indian pharma started catching-up with the process of new drug discovery, after decades of hibernation, to move up the industry ‘Value Chain’?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

India-like New Broader Compulsory Licensing Provisions in China Could Make the Global Pharma Players Edgy

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Quite close on the heel of grant of Compulsory License (CL) to Bayer AG’s expensive Kidney and Liver cancer drug Sorafenib to the domestic Indian manufacturer Natco by the Indian Patent Office, as provided in the Indian Patent Law, China amended its own Patent Law allowing Chinese pharmaceutical manufacturers to make cheaper generic equivalent of patented medicines in the country not only during ‘state emergencies’, but also in ‘unusual circumstances’ or ‘in the interests of the public’.

As reported earlier, Natco Pharma promised to sell its generic version of Sorafenib in India for US$ 176 for a month’s treatment as compared to Bayer’s US$ 5,600, for the same time period.

Let me now very briefly touch upon some WTO related and other facts on CL, in general.

Compulsory Licensing (CL) – A perspective:

World Trade Organization (WTO) defines CL as follows:

“Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner. It is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement”.

These flexibilities for CL are not new and exist in the TRIPS Agreement since its inception in January 1995.

However, November 2001 Doha Ministerial Declaration on ‘TRIPS and Public Health’ included two new provisions of CL, one for the Least-Developed Countries (LDC) and the other for countries that do not have production capacity.

The key purpose of CL: 

CL is generally considered as an excellent provision in the Patent Law of a country to protect public health interest by the respective governments and also the intelligentsia of the civil society. The key purpose of CL is to:

  • Rectify any type of market failure
  • Discourage abuse of a patent in any form by the patent holder

Can CL be granted only in an Emergency situation?

This is a common misunderstanding and the WTO clarifies the situation as follows:

“The TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing. However, the Doha Declaration on TRIPS and Public Health confirms that countries are free to determine the grounds for granting compulsory licenses”.

Keeping all these in view, now let me go back to the China CL story.

China was preparing for it since 2008-09: 

Aljazeera in its June 9, 2012 edition reported that China was toying with this idea since 2008-2009.

In fact, during this time, the State Intellectual Property Office (SIPO) of China had invited experts from other countries to train their officials on how to create robust legal grounds for the grant of CL in the country.

Chinese Patent Law amendment for CL has already been made effective:

The State Intellectual Property Office (SIPO) has reported that a revised version of ‘Measures for the Compulsory Licensing for Patent Implementation’ has already been made operational in China effective May 1, 2012.

Interestingly, for “reasons of public health”, such medicines can also be exported under ‘Compulsory License’ to other countries, including those members of the World Trade Organization, where life-saving treatments are unaffordable.

In tandem, China, reportedly, is in the process of further strengthening its legal framework for local manufacturing of generic equivalents of patented drugs in the country.

Some other countries have already issued CL:

In the emerging markets, India, Brazil, Indonesia, Malaysia and Thailand have already granted CLs in their respective countries. It is worth noting that USA and the member countries of the European Union (EU) have also issued CL in more than one occasion.

China also encourages domestic innovation being world’s top patent filer in 2011:

All these happened, when ‘Thomson Reuters’ research report highlighted that ‘China became the world’s top patent filer in 2011, surpassing the United States and Japan as it steps up local  innovation to improve its intellectual property rights track record.’

Thus China’s intention in maintaining a right balance between encouraging domestic innovation and protecting public health interest is indeed very clear.

A key Chinese concern:

Reuters also reported that the Chinese government is now concerned with the increasing trend of HIV- AIDS in the country and wants to have ‘Viread (Tenofovir)’ of Gilead Sciences, which according to Reuters, is recommended by WHO as part of a first-line cocktail treatment for this disease condition.

Quoting ‘Medecins Sans Frontieres’, Reuters reported that as a result of recent expansion of CL provisions in the Chinese Patent Law, the country compels Gilead Sciences to extend significant concessions on the supply of Viread, which includes a generous donation package for the drug, provided the Chinese government continues to buy the same quantity of the medicine from them.

Many would interpret this development as a clever use of CL by the Chinese government to compel Gilead to extend a better deal for Viread for the country.

Will China use the CL provisions for hard price negotiation for patented drugs?

Like Brazil whether China will also use CL as a potent tool to drive down patented drug prices through hard negotiation or actually make the innovator companies to extend voluntary licenses to Chinese manufactures to produce and sell equivalent generics in the country is something which needs to be very closely watched in due course of time.

Increased patent protection and its impact on drug prices in low-income countries:

On this raging debate, in a July 2011 paper titled, “China and India as Suppliers of Affordable Medicines to Developing Countries”, published by National Bureau of Economic research, USA, the authors articulated as follows:

“As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicament from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely”.

Thus, this is also an area worth keeping tab in the years ahead, both in India and China.

A subtle difference: 

The difference between the Indian and Chinese move on CL, I reckon, is that the Indian Patent Office limited the CL of Sorafenib for domestic use only and not for export in any way to any other country.

However, it is interesting to note that Chinese amendment of the CL provisions will now enable the CL holders in China to apply for permissions for export of the same drug in other countries, as well. This could probably point to the direction of future ambitions of China to pave the way for rapid growth of their generic drug industry by invoking CL measures not only for use within the country, but way beyond the shores of China.

Conclusion:

It is worth noting that despite clear provisions of CL in TRIPS and especially even after Doha Declaration, the world had not seen many CL being granted by any country, as yet.

In this context, ‘Business Insider’ in its June 11, 2012 edition stated as follows:

“We haven’t seen a deluge of compulsory licenses over the years, and the drug companies (along with the U.S. government) have done what they can to slow down or halt this process. In China, every time a government official opens his mouth and even talks about compulsory licensing, the lobbyists are sent in, the Op/Ed columns are written, and things quiet down for another couple years.”

However, now with such broad provisions for CL in their respective patent laws to protect public health interest effectively, both India and China can, at least theoretically, allow introductions of low priced generic equivalents of patented medicines in their domestic markets, well before those drugs go off-patent. This development will certainly make the innovator companies edgy…very edgy!

It will be interesting to watch, whether global pharma majors consider such broad CL provisions both in India and now in China as serious business impediments or not.

Most probably, the worry will be more intense for much larger and faster growing Chinese Pharmaceutical market, which is now widely being considered as the emerging ‘Eldorado’ of the world.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

From Cross-Licensing to ‘Patent Pools’ and… India: Will there be a ground swell?

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Since many years, the global pharmaceutical industry has been making effective commercial use of cross-licensing, however, by and large, the industry still does not seem to be quite in favor of  ‘Patent Pools’ for various reasons.

The ‘Patent Pool’, as I understand is defined as, “an agreement between different owners, including companies, governments and academic bodies to make available patent rights on non-exclusive basis to manufacturers and distributor of drugs against payment of royalties.”

Thus one of the often repeated key benefits of the ‘Patent Pools’, as considered by its proponents, is that the system enables the use of innovation against payment of royalties, without the risk of patent infringement. Many believe that the concept of ‘Patent Pool’ can play an immensely useful role for productive use of Intellectual Property (IP) in the global pharmaceutical industry.

The difference between cross-licensing and ‘Patent Pools’:

The basic purposes of both Cross-Licensing and patent pools may appear to be similar, however the key difference is that in ‘Patent Pool’ system the patent owners usually agree to license to third parties who may not even contribute any patents to the pool. Moreover, ‘Patent Pools’ involve a large number of parties with its scope being narrow and well standardized.

“Patent Pools”- still a contentious issue:

The concept of ‘Patent Pools’ has become a contentious issue within the global pharmaceutical industry. Some opinion leaders vehemently argue that creation of a ‘patent pool’ will bring down the cost of any innovation significantly and save huge time, ensuring speedier and improved access to such medicines to a vast majority of ailing population across the world. This section of the experts also feels, “in the case of blocking patents as a commercial strategy, it would only be a reasonable method for making the innovation publicly available.”
In the midst of this high decibel debate, on February 13, 2009, ‘The Guardian’ reported the following comment of Andrew Witty, CEO of GlaxoSmithKline (GSK) on the same issue:
“GSK will put any chemicals or processes over which it has intellectual property rights that are relevant to finding drugs for neglected diseases into a patent pool, so they can be explored by other researchers”.
Andrew Witty in that interview also commented, “I think it’s the first time anybody’s really come out and said we’re prepared to start talking to people about pooling our patents to try to facilitate innovation in areas where, so far, there hasn’t been much progress… I think the shareholders understand this and it’s my job to make sure I can explain it. I think we can. I think it’s absolutely the kind of thing large global companies need to be demonstrating, that they’ve got a more balanced view of the world than short-term returns.”
Quoting Andrew Witty, ‘The Guardian’ reported, “his stance may not win him friends in other drug companies, but he is inviting them to join him in an attempt to make a significant difference to the health of people in poor countries”.
Yet another ‘out of box’ comment:
As if to prove ‘The Guardian’ right on their above comment, during his visit to India on March 2010, though in a slightly different context, Witty made the following comments, while answering a question of “The Economic Times”:
“I am relatively relaxed with the Indian regulatory environment. The government has made it clear about the direction to have an Intellectual Property (IP) mechanism and to be TRIPS compliant. Some people are unrealistic and want everything to change overnight. But we should be absolutely realistic about pricing to keep it affordable for India. If someone has the IP right, it does not mean that it should make it inaccessible for lower income people. Over the next 10-15 years India will become increasingly IP defined market.”
The rationale for ‘Patent Pools’ system:
Many experts in this area feel that the conventional patent system does not really work for the diseases of the poor, all over the world. Though the concept of ‘Patent Pools’ is quite new in the global pharmaceutical industry, this system is being very successfully and widely practiced within the Information Technology (IT) industry. ‘Patent Pool’ system, if effectively used, as stated earlier, can also help the global pharmaceutical companies to improve access of such medicines to many more developing countries of the world.

Key requirements for the ‘Patent Pools’:
Careful identification of various patents, which will be essential for the pool, will be one of the key requirements to initiate a ‘Patent Pool’ system. It makes the need to obtain individual patents, required in the process of a drug discovery, less important.

National Institute of Health (NIH), USA initiated the process:
On September 30, 2010, NIH became the first patent-holder to share its intellectual property with the Medicines Patent Pool, supported by UNITAID, by licensing a patent for ‘Darunavir’ to increase access of HIV and AIDS medicines to the suffering patients in the developing countries of the world.

UNITAID, an innovative global health financing mechanism is funded by a levy on airline tickets. This initiative was co-founded by the U.K, France, Norway, Brazil and Chile at the United Nations General Assembly in 2006 and buys drugs against HIV/AIDS, malaria and tuberculosis.
The above move of NIH towards the noble cause was appreciated by many all over the world, urging the global pharmaceutical industry, in general, to take a leaf out of it.

India was kept out of UNITAID “Patent Pool”:

In 2009-10, UNITAID reportedly had opposed the move to include countries like, India, China and Brazil from the proposed patent pool for AIDS drugs. At least seven civil society groups from India like, the Centre for Trade and Development, the National Working Group on Patent Laws, the All India Peoples Science Network openly stated that UNITAID does not intend to share the patent pool implementation plan with these civil society groups of India. They also alleged that this development in UNITAID will have a significant impact on the ability of Indian Pharmaceutical industry to manufacture low-cost versions of patented HIV/AIDS medicines for the developing countries of the world.

At that time, it was also reported that large global pharmaceutical players had indicated to UNITAID that they could contribute to the ‘patent pool’ on a selective basis, however, over 100 middle income countries such as India, Brazil and China should not have rights to manufacture generic versions of these HIV/AIDS medicines. They felt that ‘patent pool’ will be meaningless if poor countries, who do not have the capability to manufacture these medicines, are included in the process.

However, according to UNITAID, “the patent pool in no way a means to replace or override other provisions contained in the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement or the Doha Declaration on TRIPS and Public Health. The patent pool represents an additional tool to increase access to HIV treatment, and an opportunity for patent holders to voluntarily contribute to the attainment of crucial health-related goals endorsed by the international community.”

GSK kick-started the process:

Andrew Witty of GSK is undoubtedly the first CEO of a global pharmaceutical company to announce a ‘Patent Pool’ system for research on 16 neglected tropical diseases like, tuberculosis, malaria, filariasis, leprosy and leishmaniasis. GSK has, in a real sense, kick started the process by putting more than 500 granted pharmaceuticals patents and over 300 pending applications in the ‘Patent Pool’.

J&J followed suit:

Johnson and Johnson (J&J) in January 2011 expressed its willingness to assist ‘Medicines Patent Pool Foundation (MPPF)’ to implement ‘Medicines Patent Pool (MPP)’, which aims to improve access to affordable and appropriate HIV medicines in developing countries. MPPF works through voluntary licensing of patents for public health interest, at the same time extending compensation to the innovator pharmaceutical companies.

‘Medicines Patent Pools’:

On April 7, 2011. ‘Intellectual Property Watch’ reported that the ‘Medicines Patent Pools’, an initiative to improve access to HIV drugs through voluntary licenses of patented drugs, have launched a new database of patent information on HIV medicines in developing countries. The database has been developed with the support of the World Intellectual Property Organization (WIPO) and Regional Patent Offices across the world. Intellectual Property Watch

Key issues with the ‘Patent Pools’ concept:
The report from a WHO conference held in April, 2006 ‘Innovation Strategy Today’ indicates that the start-up cost of a ‘Patent Pools’ for vaccines will be economically viable only if more than 25 participants holding relevant patents join the initiative.
Moreover, various types of litigation related to patents, which are being currently witnessed within the global pharmaceutical industry, could also be an impediment in getting more patents in the pool.

Recommended ‘General Principles’ for “Patent Pools”:
International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), Switzerland, suggested the following guidelines for the ‘Patent Pool’ initiatives:
1. Patent pools should be voluntary associations of entities formed without coercion 2. Objectives of any patent pool should be clearly defined 3. Patent pools should complement rather than replace elements of existing intellectual property regimes 4. Rights and obligations of contributors and licensees of contributed rights should be clear 5. Patent pools should reduce transaction costs, and not increase administrative costs, relative to other options such as direct licensing
Conclusion:
There is certainly an urgent need to communicate more on how innovation and IPR could help rather than hinder public health. At the same time all stakeholders of the pharmaceutical industry need to come out with a robust solution to ever increasing problem of improving access to innovative medicines to the ailing population of the world, in the best possible way.
However, these are still very early days, before such a disrupting idea get widely accepted by the global innovators and implemented religiously not just for the ‘public health interest’, across the world, but also to create a sustainable business model to harvest ‘Fortune at the Bottom of the Pyramid’.

Only future will tell us whether or not the ‘Patent Pools’ initiatives become the footprints on the sands of time as the global pharmaceutical industry keeps  navigating through the challenges of change.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Provision for Compulsory Licensing (CL) in India – some issues still need to be addressed.

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Patent law systems provide for a provision for granting of compulsory licenses in a number of circumstances. Article 5A(2) of The Paris Convention, 1883 indicates that each contracting State may take legislative measures for the grant of compulsory licenses and reads as follows:“Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.”TRIPS agreement also contains important public health safeguards provisions to allow countries to override TRIPS requirements by engaging in compulsory licensing under certain situations and circumstances. Globally all patent systems comply with the requirements of TRIPS.

Doha declaration:

Doha Declaration gives WTO member-countries the right to grant compulsory licences (CL) and the right to decide on the reasons upon which such licences are to be granted. The declaration also states that the TRIPS Agreement should be interpreted and implemented by the member-countries in a manner to protect public health and to promote access to medicines for all.

“Safeguards provision” in India:

The Indian Patent Act 2005 bestows enough power to the Controller General of Patents, Trademarks and Designs of India to issue compulsory licenses (CL) under following different sections of the Act:

1. Section 84:

This section prevents the abuse of patent as a monopoly and states that at any time after the expiration of three years from the date of grant of a patent, any interested person may make an application to the Indian Patent Office (IPO) for grant of compulsory licence on any of the following grounds:

(a) That the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

(b) That the patented invention is not available to the public at a reasonably affordable price, or

(c) That the patented invention is not worked in the territory of India

Section 6 of section 84 states that in considering the application filed under this section, the controller shall take into account the following:

(i) The nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patent or licensee to make full use of the invention;

(ii) The ability of the applicant to work the invention to the public advantage;

(iii) The capacity of the applicant to undertake the risk in providing capital and working the invention, if the application is granted;

(iv) Whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit:

Provided that this clause shall not be applicable in case of national emergencies or other circumstances of extreme urgency or in case of public non-commercial use or on establishment of a ground of anti-competitive practices adopted by the patentee.

Terms and conditions of CL will be determined by the Controller under section 90.

2. Sections 92 (1) and 92 (3):

These sections enable the Central Government to deal with circumstances of national emergency or circumstance of extreme urgency or in case of public non-commercial use by issuing CL.

3. Section 92 A:

This part enables grant of CL for export of patented pharmaceutical products in certain exceptional circumstances to any country having insufficient or no manufacturing capacity for the concerned product to address public health problems.

Some loose knots:

Some believe that there are still some loose knots in the CL provisions in India, which need to be tightened, immediately.

Granting CL for a Biopharmaceutical product could be an issue:

It will not be very easy to grant CL for a biopharmaceutical product as the conditions in which biopharmaceuticals are produced largely define the final product and its manufacturing process defines the product quality. Any alteration to the manufacturing process may result in a completely different product.

Therefore following are the main issues, which need to be urgently addressed:

• Small changes in the manufacture of biopharmaceutical and biosimilar medicinal products can dramatically affect the safety and efficacy of the therapeutic molecule.

• The very nature of a biologic means that it is practically impossible for two different manufacturers to manufacture two identical biopharmaceuticals if identical host expression systems, processes and equivalent technologies are not used. This has to be demonstrated in an extensive comparability program. Therefore a generic biopharmaceutical cannot possibly exist.

• Substitution issues:

By contrasts with the situation applicable for generic chemical entities, biosimilar medicines can be “similar” but not “identical” to the innovator reference products. The “similar, but not identical” nature of biosimilar medicines means that substitution of the innovator product with a biosimilar product could have clinical consequences as patients could respond differently to the two products. To guarantee the efficacy and safety of biosimilar products, these products should only be approved following the submission of appropriate data generated with the biosimilar drug.

• Currently there are no published clear Indian guidelines for the approval of biosimilar drugs which will ensure the approval of efficacious and safe biosimilar drugs.

Some apprehensions on CL in India need to be addressed:

Some apprehensions have been expressed on possible misuse of CL and representations made to the government to address the following issues urgently. Tarceva and Stutent cases involving Nepal will probably justify such apprehensions:

o As the entire concept is based on “Working of Patents” in India, the term “Working of Patents” needs to be defined explicitly.

o Issuance of CL to be restricted to national emergency, extreme urgency and public non-commercial use

o Provisions in (Sec. 84 [7]) needs to be suitably amended that provide grounds for triggering CL by competitors for commercial benefits.

o Safeguards enshrined in the Aug 30 decision (Motta-Menon text) is to be provided for exports under Section 92A of the Indian Patents Act 2005, corresponding to Para 6 of the declaration on the TRIPS Agreement

Is paying royalty to patent holder an acceptable solution to this issue?

Many feel that this question totally ignores the right of an innovator to protect his/her innovation, which is the outcome of a painstaking, long, costly and risky R&D process. Such protection is granted to an innovator against disclosure of the data generated for the innovation to the patent office for public knowledge at large through grant of a patent for a specific time period. During this period the innovator is the exclusive owner of the innovation. The provision of CL can be invoked during this period, as stated above, for some very specific and extra-ordinary situation.

Such extra-ordinary situation, as and when will arise be addressed by the government based purely on the merits of the cases. Carte blanche permission by any authority allowing use of an innovator’s product during its patent life against a royalty payment, without innovators wish, is believed to be against the letter and spirit of Indian Patents Act 2005.

Conclusion:

In Indian Patents Act 2005, the provisions of CL should maintain a fine balance between the critical need of innovation by the pharmaceutical companies and its reach to the users to meet their unmet needs. For a country like India, CL is probably the most appropriate safeguard against potential abuse of monopoly by the patentees in case of national emergencies and to address critical public health issues.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.