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In the Wonderland of Pharma Generics: Some Steps In, Some Steps Over the Line

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To scale-up access to healthcare, especially for the marginalized population of any country, greater access to affordable generic drugs will always remain fundamental, besides improving healthcare infrastructure and its delivery mechanism.

Thus, there should be a robust mechanism across the world to facilitate quick entry of cheaper generic equivalents immediately after patent expiry of the original molecule. Any attempt to step over the line, blocking entry of generics surreptitiously by vested interests must be brought to justice sooner. Such measures assume increasing importance, as without availability of newer generics, unmet medical needs of the most vulnerable section of the society cannot be met effectively by any country.

Newer generics will play a critical role even in the Indian context. Besides many other diseases, India is already known as the diabetic capital of the world with an estimated population of 70 million diabetics by 2020.

Greater access to treatment for such chronic ailments and many other dreaded diseases with increasing trend of prevalence, like cancer, multiple sclerosis, Alzheimer and autoimmune disorders, besides common tropical diseases, would also depend on the availability of cheaper and newer generic medicines.

Global innovators stepping into generics business in emerging markets:

Sniffing the growth opportunities in the generics business in an environment of patent cliff, even many hard-nosed innovator companies have been entering into this business either through local acquisitions or through various collaborative arrangements. Examples of some of these companies are as follows:

  • Novartis entered in generic business with its Sandoz arm
  • Pfizer with collaborative arrangements in India with Aurobindo Pharmaceuticals (India) in March 2009 and with Strides Arcolab in January 2010
  • Daiichi Sankyo acquired Ranbaxy of India
  • GlaxoSmithKline acquired 16 percent stake of Aspen Pharmacare of South Africa,  Laboratorios Phoenix
in in Argentina and signed a development and commercialization license with Dr. Reddy’s Laboratories (DRL)
  • Sanofi acquired Shantha Biotechnics and Universal Medicare of India, Zentiva in Czech Republic, Laboratorios Kendrick in Mexico, Medley in Brazil and Helvepharm in Switzerland
  • Abbott Laboratories acquired the pharmaceutical formulations business of Piramal Healthcare and collaborated with Zydus Cadila

A pro-generic initiative in the west: 

Ireland’s parliament has recently passed a bill on pro-generic initiatives. Under this new law pharmacists will be permitted to substitute branded medicines, which have been designated by the Irish Medicines Board (IMB) as interchangeable.

Currently in Ireland, if a specific brand of medicine is prescribed for a patient, the pharmacist must supply only that brand.

Some steps over the line blocking entry of generics:

Interestingly, to continue marketing high priced innovative drugs even after patent expiry, attempts are still being made to block entry of cheaper generics through equally innovative means by stepping over the line.

On April 15, 2013 ‘The New York Times’ reported several such cases of the recent past in the United States. The report gives details of the players involved in each of these cases.

Prompted by these unfortunate incidents, the Federal Trade Commission (FTC) of the US investigated into the matter involving the American drug companies and charged many of them with ‘anticompetitive behavior’. These practices are no longer new and are being followed by some companies over a long period of time.

One of the latest and elegant, yet a very simple strategy reportedly works as follows:

  • Generic drug makers need samples of patented drugs to generate required regulatory data to obtain marketing approval for launch after the molecules go off patent.
  •  Some innovator companies (named in the report) refuse to sell their patented drugs to generic manufacturers for development of generic equivalents.
  • Traditionally, the generic drug makers purchase their requirements from the concerned wholesalers.
  •  However, because of safety concerns, drugs are now mostly sold with restrictions on who can buy them.
  • This compels the generic manufacturers to ask the innovator companies for samples of the patented products.
  • Unfortunately, mostly they get a negative answer.
  •  In defense, innovator companies explain that they are ensuring any possible improper use of their innovative drugs and also say that no law binds any company to do business with another.

It is alleged that the companies, which most aggressively pursue such measures are those with drugs nearing end of their patent life.

The report indicates that the federal regulators in USA do consider this strategy of creative interpretation of drug safety laws, is illegal.

The news item also indicates that most of these drugs are for serious illnesses like various types of cancers, multiple sclerosis and other rare diseases costing US$ 79,000 to US$ 229,000 a year to patients.

More instances:

Another recent report  highlights that European Union’s anti-trust regulator will fine two European pharmaceutical Company and seven other drug makers for blocking generic drugs against “pay-for-delay” deals. Ranbaxy’s name also features in this report.

The report also states that brand name companies, especially in the western world, have been defending “pay-for-delay” deals to extend patents and avoid costly litigation.

It reports that in a typical case, a generic rival may challenge the patent of a brand-name competitor, which then pays the rival a sum of money to drop its challenge. Interestingly, defenders of the practice call it a legitimate means to resolve patent litigation.

A recent debate:

Another interesting development has come up with the pain killer drug OxyContin of Purdue Pharma, which went off patent in April 2013.

Just before patent expiry, Purdue Pharma reportedly reformulated and pulled out its previous version of OxyContin, without abuse-deterrent measures, from the market giving reasons related to safety and efficacy of the drug.

In the notice to the Federal Register, US-FDA reportedly said, “Compared to original OxyContin, reformulated OxyContin has an increased ability to resist crushing, breaking, and dissolution using a variety of tools and solvents.” The regulator, consequently, barred the generic companies from making copies of the older versions of OxyContin without tamper-resistant qualities.

This development, will not allow drug manufacturers like Teva and Impax to make and launch generic equivalents of older versions of OxyContin.

This report also says that similar request has been filed with US-FDA by Endo Health Solutions Inc. for safety of its old painkiller drug Opana, which could force the generic version of the drug manufactured by Impax’s going out of the market in favor of high priced medicine.

On this development the Generic Pharmaceutical Industry in America has reportedly commented, “Blocking generic drugs could mean leaving behind the millions of patients who stand to benefit from access to lower-cost versions of OxyContin”. Some experts have also expressed apprehension that such a precedent would likely to encourage many others to work for similar safety related changes to extend patent life of a product.

Having said that, it appears to be a complex regulatory issue where the possibility of drug abuse has to be carefully weighed against the benefits of low cost generic entry for greater access to patients.

‘Disparaging’ generic drugs:

Reuters , quoting the French Competition Authority, recently reported from Paris that a global pharmaceutical major has “created a doubt over the quality and the safety of generics, without any proven basis.”

As a result, the report says, the French Competition Authority has fined the drug maker 40.6 million euros (US$52.7 million) for “disparaging” generic competition.

The news report further indicates that this decision followed a complaint of Teva Sante filed in 2010 against communication practices of the branded molecule discouraging the use of its generic versions by the doctors.

The innovator company may appeal against this decision.

European Commission found similar practices:

It is interesting to note that in 2009, the European Commission also reportedly found similar practices, including ‘pay-for-delay deals’ which not only adversely impacted competition, but also delayed entry of cheaper generic drugs into the EU markets.

That said, entry of generic drugs is still not speedy in all therapy areas. In this context, a study titled, “Drug patent expirations and the speed of generic entry,” concluded that the generic industry mostly target chronic drug markets with high turnover products and entry of a generic drug is also greatly influenced by the existing branded substitutes in the marketplace.

Importance of the Indian generic drugs:

According to BCC Research, the global generic drug market is expected to grow at a CAGR of 15 percent over five years registering a turnover of US$ 169 billion in 2014.

In this market, India is now the world’s biggest provider of low priced high quality generic medicines to the developing world. The experts opine in various context, the world must ensure that this vibrant hub of generic drugs does not get adversely impacted at any cost for any vested interest.

According to Pharmexcil pharma exports from India stood at an impressive US$ 14.6 billion during 2012-13 compared to US$ 13.2 billion in 2011-12. Indian Ministry of Commerce had unfolded a ‘Strategy Plan’ to take it to US$ 25 Bn by 2013-14, which currently appears to be a very ambitious objective.

Taken together, India and China now reportedly manufacture over 80 percent of the Active Pharmaceutical Ingredients (APIs) of all drugs used in the United States.

As reported by BMJ from 2003 to 2008, in various programs supported by donor organizations like the Global Fund, generic drugs from India contributed over 80 percent of the medicines used to treat AIDS, including 91 percent of pediatric antiretroviral products and 89 percent of the adult nucleoside and non-nucleoside reverse transcriptase inhibitor markets.

In addition, India is considered to be an extremely valuable source of high quality affordable generic drugs for the treatment of cancer, cardiovascular conditions, infections and other non-infectious chronic diseases and conditions.

Allegations against Indian generic drugs:

In a situation is like these, some aberrations within the Indian generic space like, what has happened currently with Ranbaxy are, at times, made universal and blown out of proportion, probably on behalf the interested players to paint the domestic pharmaceutical industry, in general, black. There is no doubt, however, all such cases of fraud on patients, wherever these take place must be brought to justice.

The issue arises when such instances are grossly generalized. For example, an American Enterprise Institute report titled, “Cheap Indian generic drugs: Not such good value after all?” quoting US-FDA, highlights that “Pharmaceutical companies in developing countries are increasingly falsifying data about the quality of their medicines.”

It further alleges, Indian producers in particular strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practices, and often patients and well-informed pharmacists alike will overlook the flaws.

The article laments, “Indian companies and regulators simply deny there is any difference in product quality between their products and those made in the West.”

Indian perspective to the allegation:

In response to such allegations a very recent FICCI –Heal 2012 publication titled “Universal Healthcare: Dream or Reality?” articulated as follows:

“Selected reporting of malpractices in healthcare has painted a poor picture of the sector. However, the instances of misconduct/corruption are miniscule compared to public perception.”

Some important campaigns in favor of generics:

However, a publication from ‘Global Pharmacy Canada’ says,

“Generic medications are just as safe and effective as their brand-name equivalents. All the drugs supplied by the pharmacies we deal with are government approved. The manufacturers they buy from follow strict World Health Organization (WHO) standards for Good Manufacturing Practices (GMP). One or several of the following agencies have approved these manufacturing facilities:

  • Food and Drug Administration (FDA), USA
  • Medicines Control Agency (MCA), UK
  • Therapeutic Goods Administration (TGA), Australia
  • Medicines Control Council (MCC), South Africa
  • National Institute of Pharmacy (NIP), Hungary
  • Pharmaceutical Inspection Convention (PIC), Germany
  • State Institute for the Control of Drugs, Slovak Republic
  • Food and Drug Administration (FDA), India”

Similarly USFDA comments on generic drugs as follows:

“Generic drugs are important options that allow greater access to health care for all Americans. They are copies of brand-name drugs and are the same as those brand name drugs in dosage form, safety, strength, and route of administration, quality, performance characteristics and intended use.”

“Health care professionals and consumers can be assured that FDA approved generic drug products have met the same rigid standards as the innovator drug. All generic drugs approved by FDA have the same high quality, strength, purity and stability as brand-name drugs. And, the generic manufacturing, packaging, and testing sites must pass the same quality standards as those of brand name drugs.”

The growth drivers:

According to a recent study, following are the key growth drivers of the global generic pharmaceutical industry:

  • Governments’ and payers’ need to contain rapidly increasing healthcare expenditures
  • A growing middle-class in emerging markets
  • Longer life expectancy
  • A large number of patent expiries for innovator drugs, many of them are mega blockbusters

All these have contributed to the growth of global generic industry from less than US$ 50 billion in 2004 to over $80 billion by 2011 improving global patient-access to medicines significantly.

The report also says, if a more general definition of off-patent medicines is used to define generics, estimates have placed the size of the industry at closer to $150 billion. In the United States alone, generic sales have more than tripled since 2000 and now exceed $51 billion in 2011.

Encourage speedy entry of generics:

Even the Federal Trade Commission (FTC) in a report titled “Generic Drug Entry Prior to Patent Expiration: An FTC Study,” stated as follows:

“Expenditures on pharmaceutical products continue to grow and often outpace expenditures for other consumer products. Pharmaceutical expenditures concern not only consumers, but government payers, private health plans, and employers as well. Generic drugs offer opportunities for significant cost savings over brand-name drug products.”

In its report FTC recommended that generic drugs should not experience delays when entering the market. The Commission also highlighted that both pharmaceutical innovation and cheaper generic drugs bring enormous benefits to patients.

Conclusion:

It is widely recognized that generic medicines play a key role to improve access to medicines to a very large section of population of the world.

Currently, important policy measures taken by the countries like, United States, United Kingdom, Canada, Holland, Denmark and Germany for increasing use of generic drug have started helping them to achieve this objective. At the same time, such policies are helping them to garner significant savings in their respective healthcare cost.

Out of pocket expenditure towards healthcare being around 80 percent in India, un-interrupted availability of high quality affordable generic medicines will help the patients significantly. This should, no doubt, need to be ably supported by the Government by rolling-out much awaited ‘The Universal Healthcare’ proposal of the High Level Expert Group (HLEG) appointed by the Planning Commission of India, sooner.

To improve demand of generic drugs, the prescribers too need to be influenced by the regulators, as has happened in many countries of the world.

Finally, the requirement to maintain high quality standards for generic medicines should be non-negotiable and continuously be kept under careful vigil of the drug regulators.

The complex dynamics of the global generic drugs market are indeed intriguing. It is indeed a ‘Wonderland’, as it were.

Be that as it may, in this wonderland of pharma generics, as some continue to step in and some others continue to step over the line, it is also important to understand how this industry caters to the healthcare needs of billions of poor and needy.

Respective Governments across the world should facilitate speedy entry of more number of newer generic drugs in the market. Simultaneously, the drug regulators will require bringing to justice to all those forces, which will attempt blocking or delaying entry of generics, causing great harm to a vast majority of patients across 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.

Patent Conundrum: Ignoring India Will Just Not be Foolhardy, Not An Option Either

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The recent verdict of the Supreme Court against Novartis, upholding the decision of the Indian Patent Office (IPO) against grant of patent to their cancer drug Glivec, based on Section 3(d) of the Indian Patents Act, has caused a flutter and utter discontentment within the global pharmaceutical industry across the world.

However, on this verdict, the Director General of the World Trade Organization (WTO), Pascal Lamy has reportedly opined, “Recent decisions by the courts in India have led to a lot of protest by pharmaceutical companies. But decisions made by an independent judiciary have to be respected as such.”

The above decision on Glivec came close on the heels of IPO’s decision to grant its first ever Compulsory License (CL) to the Indian drug manufacturer Natco, last year, for the kidney cancer drug Nexavar of Bayer.

Interestingly, no member of the World Trade Organization has raised any concern on these issues, as the Head of WTO, Lamy recently confirmed, “No country has objected to India issuing compulsory license or refusing patent for drugs.” He further added, “TRIPS provides flexibilities that allow countries to issue compulsory licenses for patented medicines to address health urgencies.”

That said, simmering unhappiness within innovator companies on various areas of Indian patent laws is indeed quite palpable. Such discontent being expressed by many interested powerful voices is now reverberating in the corridors of power both in India and overseas.

Point and Counterpoint:

Although experts do opine that patent laws of India are well balanced, takes care of public health interest, encourage innovation and discourage evergreening, many global innovator companies think just the opposite. They feel, an appropriate ecosystem to foster innovation does not exist in India and their IP, by and large, is not safe in the country. The moot question is, therefore, ‘Could immediate fallout of this negative perception prompt them to ignore India or even play at a low key in this market?’

Looking at the issue from Indian perspective:

If we take this issue from the product patent perspective, India could probably be impacted in the following two ways:

  1. New innovative products may not be introduced in India
  2. The inflow of Foreign Direct Investments (FDI) in the pharma sector may get seriously restricted.

Let us now examine the possible outcome of each of these steps one at a time.

Will India be deprived of newer innovative drugs?

If the innovator companies decide to ignore India by not launching such products in the country, they may take either of the following two steps:

  1. Avoid filing a patent in India
  2. File a patent but do not launch the product

Keeping the emerging scenario in perspective, it will be extremely challenging for the global players to avoid the current patent regime in India, even if they do not like it. This is mainly because of the following reasons:

1. If an innovator company decides not to file a product patent in India, it will pave the way for Indian companies to introduce copy-cat versions of the same in no time, as it were, at a fractional price in the Indian market.

2. Further, there would also be a possibility of getting these copycat versions exported to the unregulated markets of the world from India at a very low price, causing potential business loss to the innovator companies.

3. If any innovator company files a product patent in India, but does not work the patent within the stipulated period of three years, as provided in the patent law of the country, in that case any Indian company can apply for CL for the same with a high probability of such a request being granted by the Patent Controller. 

A market too attractive to ignore:

India as a pharmaceutical market is quite challenging to ignore, despite its ‘warts and moles’ for various reasons. The story of increasing consumption of healthcare in India, including pharmaceuticals, especially when the country is expected to be one of the top 10 pharmaceutical markets in the world, is too enticing for any global player to ignore, despite unhappiness in various areas of business.

Increasing affordability of the fast growing middle-class population of the country will further drive the growth of this market, which is expected to register a value turnover of US$50 billion by 2020, as estimated by PwC.

PwC report also highlights that a growing and increasingly sophisticated pharmaceutical industry of India is gradually becoming a competitor of global pharma in some key areas, on the one hand and a potential partner in others, as is being witnessed today by many.

Despite urbanization, nearly 70 percent of the total population of India still lives in the rural villages. Untapped potential of the rural markets is expected to provide another boost to the growth momentum of the industry.

Too enticing to exit:

Other ‘Enticing Factors’ for India, in my views, may be considered as follows:

  • A country with 1.13 billion populations and a GDP of US$ 1.8 trillion in 2011 is expected to grow at an average of 8.2 percent in the next five-year period.
  • Public health expenditure to more than double from 1.1 percent of the GDP to 2.5 percent of GDP in the Twelfth Five Year Plan period (2012-17)
  • Government will commence rolling out ‘Universal Health Coverage’ initiative
  • Budget allocation of US$ 5.4 billion announced towards free distribution of essential medicines from government hospitals and health centers.
  • Greater plan outlay announced for NRHM, NUHM and RSBY projects.
  • Rapidly growing more prosperous middle class population of the country.
  • Fast growing domestic generic drug manufacturers who will have increasing penetration in both local and emerging markets.
  • Rising per capita income of the population and relative in-efficiency of the public healthcare systems will encourage private healthcare services of various types and scales to flourish.
  • Expected emergence of a robust health insurance model for all strata of society as the insurance sector is undergoing reform measures.
  • Fast growing Medical Tourism.
  • World-class local outsourcing opportunities for a combo-business model with both patented and branded generic drugs.

Core issues in patent conundrum:

I reckon, besides others, there are three core issues in the patent conundrum in India as follows, other issues can be sorted out by following:

1. ‘Pricing’ strategy of patented products: A large population across the globe believes that high prices of patented products severely restrict their access to many and at the same time increases the cost of healthcare even for the Governments very significantly.

2. To obtain a drug patent in India, passing the test of inventive steps will not just be enough, the invention should also pass the acid test of patentability criteria, to prevent evergreening, as enshrined in the laws of the land. Many other countries are expected to follow India in this area, in course of time. For example, after Philippines and Argentina, South Africa now reportedly plans to overhaul its patent laws by “closing a loophole known as ‘ever-greening’ used by drug companies to extend patent protection and profits”. Moreover, there does not seem to be any possibility to get this law amended by the Indian Parliament now or after the next general election.

3. Probably due to some legal loopholes, already granted patents are often violated without following the prescribed processes of law in terms of pre or post – grant challenges before and after launch of such products. There is a need for the government to plug all such legal loopholes, after taking full stock of the prevailing situation in this area, without further delay.

Some Global CEOs spoke on this issue:

In this context the Global CEO of GSK commented in October 18, 2012 that while intellectual property protection is an important aspect of ensuring that innovation is rewarded, the period of exclusivity in a country should not determine the price of the product. Witty said, ‘At GSK we will continuously strive to defend intellectual property, but more importantly, defend tier pricing to make sure that we have appropriate pricing for the affordability of the country and that’s why, in my personal view, our business in India has been so successful for so long.’

Does all in the global pharma industry share this view? 

Not really. All in the global pharmaceutical industry does not necessarily seem to share the above views of Andrew Witty and believe that to meet the unmet needs of patients, the Intellectual Property Rights (IPR) of innovative products must be strongly protected by the governments of all countries putting in place a robust product patent regime and the pricing of such products should not come in the way at all.

The industry also argues that to recover high costs of R&D and manufacturing of such products together with making a modest profit, the innovator companies set a product price, which at times may be perceived as too high for the marginalized section of the society, where government intervention is required more than the innovator companies. Aggressive marketing activities, the industry considers, during the patent life of a product, are essential to gain market access for such drugs to the patients.

In support of the pharmaceutical industry the following argument was put forth in a recent article:

“The underlying goal of every single business is to make money. People single out pharmaceutical companies for making profits, but it’s important to remember that they also create products that save millions of lives.”

How much then to charge for a patented drug? 

While there is no single or only right way to arrive at the price of an IPR protected medicine, how much the pharmaceutical manufacturers will charge for such drugs still remains an important, yet complex and difficult issue to resolve, both locally and globally.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the US Department of Commerce after examining the drug price regulatory systems of 11 OECD countries concluded that all of them enforce some form of price controls to limit spending on pharmaceuticals. The report also indicated that the reimbursement prices in these countries are often treated as de facto market price. Moreover, some OECD governments regularly cut prices of even those drugs, which are already in the market. 

Should India address ‘Patented Products’ Pricing’ issue with HTA model?

Though some people hate the mechanism of Health Technology Assessment (HTA) to determine price of a patented drug, I reckon, it could be a justifiable and logical answer to price related pharmaceutical patent conundrum in India.

Health Technology Assessment, as many will know, examines the medical, economic, social and ethical implications of the incremental value of a medical technology or a drug in healthcare.

HTA, in that process, will analyze the costs of inputs and the output in terms of their consequences or outcomes. With in-depth understanding of these components, the policy makers decide the value of an intervention much more precisely.

Companies like, Merck, Pfizer and GSK have reportedly imbibed this mechanism to arrive at a value of the invention. National Pharmaceutical Pricing Authorities (NPPA) may well consider this approach for a well judged, scientific and transparent pricing decision mechanism in India, especially for innovative new drugs.

Could local manufacturing be an option?

Considering relatively higher volume sales in India, to bring down the price, the global companies may consider manufacturing their patented products in India with appropriate technology transfer agreements being in place and could even make India as one of their export hubs, as a couple of their counterparts have already initiated.

Accepting the reality responsibly:

In view of the above, the global pharmaceutical players, as experts believe, should take note of the following factors. All these could help, while formulating their India-specific game plan to be successful in the country, without worrying much about invocation of Compulsory License (CL) for not meeting ‘Reasonably Affordable Price’ criterion, as provided in the Patents Act of the country:

  • While respecting IPR and following Doha declaration, the government focus on ‘reasonably affordable drug prices’ will be even sharper due to increasing pressure from the Civil Society, Indian Parliament and also from the Courts of the country triggered by ‘Public Interest Litigations (PIL)’
  • India will continue to remain within the ‘modest-margin’ range for the pharmaceutical business with marketing excellence driven volume turnover.
  • Although innovation will continue to be encouraged with IPR protection, the amended Patents Act of India is ‘Public Health Interest’ oriented, including restrictions on patentability, which, based on early signals, many other countries are expected to follow as we move on.
  • This situation though very challenging for many innovator companies, is unlikely to change in the foreseeable future, even under pressure of various “Free Trade Agreements (FTA)”.  

Sectors Attracting Highest FDI Equity inflows:

When one looks at the FDI equity inflow from April 2000 to March 2013 period as follows, it does not appear that FDI inflow in Drugs and Pharmaceuticals had any unusual impact due to ‘Patent Conundrums’ in the country at any time:

Ranks Sector

US$ Million

1. Service Sector

37,151
2. Construction Development:(Township, Housing, Built-up infrastructure)

22,008
3 Telecommunication(Radio paging, Cellular mobile,Basic telephone services)

12,660
4 Computer Software &Hardware

11,671
5 Drugs & Pharmaceuticals

10,309
6 Chemical

8,861
7 Automobile Industry

8,061
8 Power

7,828
9 Metallurgical Industries

7,434
10 Hotel & Tourism

6,589

Further, if we look at the FDI trend of the last three years, the conclusion probably will be similar.

Year

US$ Million.
2010-11

177.96
2011-12

2,704.63
2012-13

1,103.70

(Source: Fact Sheet on Foreign Investments, DIPP, Government of India)

Conclusion:

In search of excellence in India, global pharmaceutical companies will need to find out innovative win-win strategies adapting themselves to the legal requirements for business in the country, instead of trying to get the laws changed.

India, at the same time, should expeditiously address the issue of blatant patent infringements by some Indian players exploiting the legal loopholes and set up fast track courts to resolve all IP related disputes without inordinate delay.

Responsible drug pricing, public health oriented patent regime, technology transfer/local manufacturing of patented products and stringent regulatory requirements in all pharmaceutical industry related areas taking care of patients’ interest, are expected to be the key areas to address in the business models of global pharmaceutical companies for India.

Moreover,it is worth noting that any meaningful and long term FDI in the pharmaceutical industry of India will come mostly through investments in R&D and manufacturing. Such FDI may not be forthcoming without any policy compulsions, like in China. Hence, many believe, the orchestrated bogey of FDI for the pharmaceutical industry in India, other than brownfield acquisitions in the generics space, is just like dangling a carrot, as it were, besides being blatantly illusive.

Even with all these, India will continue to remain too lucrative a pharmaceutical market to ignore by any. Thus, I reckon, despite a high decibel patent conundrum, any thought to ignore or even be indifferent to Indian pharmaceutical market by any global player could well be foolhardy.

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.

 

More Glivec Like Deals in China and Mounting Global Challenges: Innovators poised Joining Biosimilar Bandwagon

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Pressure from the emerging markets on pricing of patented products is mounting fast. This time the country involved is China.

Recently, the Health Minister of China who stepped down last month after a seven-year stint in the top health job reportedly commented that western drugmakers will require to give hefty subsidies and forgo significant amount of profit on expensive cancer drugs, if they want access to huge market of China. He further voiced as follows:

“If the cost (of patented drugs) is too high, maybe only a few percent of patients can benefit. If we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.”

‘Glivec deal’ in China: 

In the same report, it was indicated that in China Novartis ultimately agreed to donate three doses of its leukemia drug Glivec for every one sold to the government.

It is expected that many more such deals will take place in China.

The situation to get more challenging in the emerging markets: 

Many experts believe that due to high cost of patented drugs, especially biologics, negotiating hefty discounts with the Governments may be the best alternative for the innovator companies to avoid any possibilities of Compulsory Licensing (CL), like what happened to Bayer’s cancer drug Nexavar in India.

An opportunity in biosimilar drugs: 

Biologic drugs came to the international market slightly more than three decades ago, in 1980s. Growing at a scorching pace, the value turnover of these products exceeded US$ 138 billion in 2010 (IMS Health).

Launch of biologics like, Recombinant Insulin, Human Growth Hormone (HGH), Alteplase, Erythropoietin (EPOs), Granulocyte Colony Stimulating Factors (G-CSFs) and Monoclonal Antibodies (MAbs) kept fueling the market growth further.

Patent expiry of a number of biologic drugs over a period of next five years, especially in areas like, various types of cancer, diabetes and rheumatoid arthritis, besides many others, will help opening a huge window of opportunity for the global biosimilar players, including from India, to reap a rich harvest.

Global innovators joining the bandwagon: 

After a dream-run with high priced patented drugs for a reasonably long time, now stung by the current reality in various developed and emerging markets and factoring-in the width/depth/robustness of their own research pipeline, many global players have started taking a hard look at the emerging opportunities offered by biosimilar drugs.

Moreover, high price of original biologic drugs, cost containment pressure by various Governments, encouragement of generic prescriptions, large number of such drugs going off patent and growing demand of their low cost alternatives across the world, are making biosimilar market more and more lucrative from the global business perspective to all interested players, including from India.

According to Bloomberg Industries (2013), during the next six years biologic drugs with a total annual sales turnover of US$ 47 billion in 2012, will go off patent.

Sniffing opportunities for business growth, as stated above, many hard-nosed large research-based global pharmaceutical companies, currently fighting a challenging battle also in the ground of a tougher ‘patent cliff’, have started venturing into the biosimilar market, that too in a mega scale.

Some of them have already initiated developing biosimilar versions of blockbuster biologics, as reported below:

Originator Product Indication Biosimilar development by:
Roche/Genentech Rituxan Rheumatoid arthritis Boehringer Ingelheim
Roche/Genentech Herceptin, Rituxan Breast Cancer, Rheumatoid arthritis Pfizer
Roche/Genentech Rituxan Non-Hodgkin’s lymphoma Novartis
Johnson & Johnson Remicade Rheumatoid arthritis Hospira

Source: Bloomberg BusinessWeek

Thus, I reckon, continuous quest for development of cost-effective alternatives to high-priced biologic medicines would keep on propelling the growth of biosimilar drugs, across the world.

Glivec maker Novartis fought a court battle to launch the first ‘Biosimilar drug’ in America: 

In mid-2006, US FDA approved its first ‘biosimilar drug’-Omnitrope of Sandoz, the generic arm of the Glivec maker Novartis, following a Court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone Genotropin. Interestingly, Novartis had also taken the US FDA to court for keeping its regulatory approval pending for a while in the absence of a well-defined regulatory pathway for ‘biosimilar drugs’ in the USA at that time.

More interestingly, having received the US-FDA approval, the CEO of Sandoz (Novartis) had then commented as follows:

“The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like, Omnitrope available for healthcare providers and patients worldwide”.

Biosimilar market started shaping-up:

Internationally most known companies in the biosimilar drugs space are Teva, Stada, Hospira and Sandoz. Other large research based global innovator pharmaceutical companies, which so far have expressed interest in the field of biosimilar drugs, are Pfizer, Astra Zeneca, Merck and Eli Lilly.

Following are examples of some biosimilar drug related initiatives of the global players as the market started developing:

  • Merck announced its entry into the biosimilar drugs business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million. The company also paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen.
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.
  • Some leading global innovator biotech companies also like, Biogen Idec and Amgen have reportedly been mulling entry into biosimilar market.

According to Reuter (June 22, 2011), Merck, Sandoz, Teva and Pfizer are expected to emerge stronger in the global biosimilar market, in the years ahead. 

Why is still so low penetration of lower cost biosimilar drugs?

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as time passes by.

It has been widely reported that the cost of treatment with patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalent of the respective biologics would not only reduce the cost of treatment, but would also improve access to such drugs significantly for the patients across the globe. (Source: Chow, S. and Liu, J. 2010, Statistical assessment of biosimilar products, Journal of Biopharmaceutical Statistics 20.1:10-30)

Now with the entry of global pharma majors, the biosimilar market is expected to get further heated up and develop at a much faster pace with artificial barriers created by vested interests, if any, being removed.

Recent removal of regulatory hurdles for the marketing approval of such drugs in the US  will indeed be the key growth driver.

Other growth drivers:

According to a study (2011) conducted by Global Industry Analysts Inc., besides recent establishment of the above regulatory guidelines for biosimilars in the US, the key growth drivers for global biosimilar market, will be as follows:

▪   Patent expiries of blockbuster biologic drugs

▪   Cost containment measures of various governments

▪   Aging population

▪   Supporting legislation in increasing number of countries

The business potential in India:

The size of biotech industry in India is estimated to be around US$ 4 billion by 2015 with a scorching pace of growth driven by both local and global demands (E&Y Report 2011).

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies like, Biocon, Panacea Biotech, Wockhardt, Emcure, Bharat Biotech, Serum Institute of India and Dr. Reddy’s Laboratories (DRL), besides others.

DRL is the largest biosimilar player in India with an impressive product portfolio. Reditux of DRL is the world’s first Biosimilar monoclonal antibody, which is a copy version of Mabthera/ Rituxan of Roche and costs almost 50 percent less than the original brands.

Some of the Biosimilar products of the Indian Companies are as follows:

Indian Company

Biosimilar Product
Dr Reddy’s Lab Grafeel, Reditux, Cresp
Intas Neukine, Neupeg, Intalfa, Epofit
Shantha Biotech/Merieux Alliance Shanferon,Shankinase,Shanpoietin
Reliance Life Sciences ReliPoietin, ReliGrast, ReliFeron, MIRel
Wockhardt Wepox, Wosulin
Biocon Eripro, Biomab, Nufil, Myokinase, Insugen

(Source: Stellarix Consultancy Services)

The cost of development of Biosimilars in India is around US$ 10-20 million, which is expected to go up, as “Biosimilar Guidelines” are now in place for marketing approval of such products in India.

The ultimate objective of all these Indian companies will be to get regulatory approval of their respective biosimilar products in the US and the EU, either on their own or through collaborative initiatives.

Indian players making rapid strides:

As stated above, biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. It also has developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India.

Similarly Ranbaxy has collaborated with Zenotech Laboratories to manufacture G-CSF.

On the other hand Glenmark reportedly is planning to come out with its first biotech product soon from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested around US$ 60 million in 2010 to acquire stakes of MabPharm in India and BioMab in China and is planning to launch a biosimilar drug in the field of oncology by 2013.

Another large pharmaceutical company of India, Lupin signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly will use this technology for developing biosimilar drugs in the field of oncology, the first one of which, will reportedly be launched in India by 2013.

The global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health report, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion. The report also states that this market has the potential to be the single fastest-growing biologics sector in the next five years.

Cost of biosimilar development in the developed markets:

The process of developing a biosimilar drug is complex and requires significantly more investment, technical capabilities and clinical trial expertise than any small molecule generic drug. As per industry sources, average product developmental cost ranges between US$ 100 and 250 million in the developed markets, which is several times higher than the same associated with development of small molecule generics, ranging around US$ 1to 4 million.

All these factors create a significant market entry barrier for many smaller players with similar intent but less than adequate wherewithal.

Even higher market entry barrier with ‘second generation’ biosimilar drugs:

Emergence of second generation branded biosimilar products such as PEGylated products and PegIntron (peginterferon alpha), Neulasta (pegfilgrastim) and insulin analogs have the potential to reduce the market size for first generation biosimilar drugs creating significant entry barrier.

Negotiating the entry barriers:

As stated above, the barriers to market entry for biosimilar drugs are, in general, are much higher than any small molecule generic drugs. In various markets within EU, many companies face the challenge of higher development costs for biosimilar drugs due to stringent regulatory requirements and greater lead-time for product development.

Navigating through such tough regulatory environment will demand different type of skill sets, especially for the generic companies not only in areas of clinical trials and pharmacovigilance, but also in manufacturing and marketing. Consequently, the investment needed to take biosimilar drugs from clinical trials to launch in the developed markets will indeed be quite significant.

The future potential:

According to an IMS Health study, the emerging markets will drive biosimilar market growth with significantly more number of patients. The report estimates that over a period of time US will emerge as the number one global biosimilars market.

By 2020, emerging markets and the US are expected to register a turnover of US$11 billion and US$ 25 billion representing a share of 4 percent to 10 percent of the total global biologics market, respectively.

The report estimates that overall penetration of biosimilars within the off-patent biological market will reach up to 50 percent by 2020, assuming a price discount in the range of 20 to 30 percent.

Is 12 years exclusivity in the US a significant entry barrier?

In the US, the innovator companies get 12 years exclusivity for their original biologic drugs from the date of respective marketing approvals by the USFDA.

The BPCI Act clearly specifies that applications for ‘biosimilar drugs’ to the USFDA will not be made effective by the regulator before 12 years from the date of approval of the innovators’ products. In addition, if the original product is for pediatric indications, the 12-years exclusivity may get an extension for another six months.

The key point to note here is, if the USFDA starts its review process for the ‘biosimilar drugs’ only after the ’12 year period’, the innovator companies will effectively get, at least, one additional year of exclusivity over and above the ’12 year period’, keeping applicants for ‘biosimilar drugs’ waiting for that longer.

Conclusion:

As stated above, with around 40 percent cost arbitrage and without compromising on the required stringent international regulatory standards, the domestic ‘biosimilar’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for such drugs, just as small molecule generic medicines.

With experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in the country. Now with significant improvement in conformance to Good Clinical Practices (GCP) and honed skill sets in the field of biologics, Indian biosimilar players are clearly poised to catapult themselves to even a higher growth trajectory, either on their own or with appropriate collaborative arrangements with the international partners.

Thus, the initiatives of joining the biosimilar bandwagon by the hard-nosed research based global players, I reckon, will ultimately get translated into a win-win advantage for India in the rapidly evolving pharmaceutical space of the world.

Besides, like what they had to do in China, working with the Government to put in place a robust and win-win mechanism of ‘Price Negotiation for Patented Drugs’ in India could augur well for the global players of pharmaceutical and biologic drugs. This mechanism may also help putting forth even a stronger argument against any Government initiative to grant CL on the pricing ground for expensive patented drugs in India.

With all these developments, patients will be the ultimate winners having much greater access to both innovative medicines and biosimilar drugs than what they have today, fetching a huge relief to all right thinking population in the country.

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.

Does the Landmark Glivec Judgment Discourage Innovation in India?

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No, I do not think so. The 112 pages well articulated judgment of the Supreme Court of India delivered on April 1, 2013, does not even remotely discourage innovation in India, including much talked about ‘incremental innovation’. This landmark judgment reconfirms the rules of the game for pharmaceutical innovation, as captured in the Indian Patents Act 2005.

When one reads the judgment, point 191 in page number 95 very clearly states as follows:

“191. We have held that the subject product, the beta crystalline form of Imatinib Mesylate, does not qualify the test of Section 3(d) of the Act but that is not to say that Section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances. It will be a grave mistake to read this judgment to mean that section 3(d) was amended with the intent to undo the fundamental change brought in the patent regime by deletion of section 5 from the Parent Act. That is not said in this judgment.”

Thus all ‘incremental innovations’, which some people always paint with a general broad brush of ‘evergreening’, should no longer be a taboo in India. The judgment just says that Glivec is not patentable as per Section 3(d) of Indian Patents Act based on the data provided and arguments of Novartis.

To me, the judgment does also not signal that no more Glivec like case will come to the Supreme Court in future. It vindicated inclusion of Section 3(d) in the amended Indian Patents Act 2005.

It is interesting to note that honorable Supreme Court itself used the terminology of ‘incremental innovation’ for such cases.

That said, I find it extremely complex to imagine what would have happened, if the judgment had gone the opposite way.

A critical point to ponder:

The judgment will also mean that all those products, having valid product patents abroad, if fail to meet the requirements of Section 3(d), will not be patentable in India, enabling introduction of their generic equivalents much sooner in the country and at the same time causing a nightmarish situation for their innovators.

However, this again, in no way, is an outcome of this judgement or a new development, as stated above. It is just vindication of the intent behind inclusion of Section 3(d) in the amended Indian Patents Act, when it was enacted by the Parliament of India in 2005.

Patentability of ‘Incremental Innovations’ in India:

Patentability criteria for any ‘incremental innovations’ has been defined in the Section 3(d) of the Indian statute as follows:

“The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”

Supreme Court interpretation of the term “Efficacy” in Section 3(d): 

The Honorable Supreme Court in page 90 of its above order under point 180 stated that in case of medicines, efficacy can only be “therapeutic efficacy”, which must be judged strictly and narrowly. The interpretation goes as follows:

180. “What is “efficacy”? Efficacy means ‘the ability to produce a desired or intended result’. Hence, the test of efficacy in the context of section 3(d) would be different, depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be “therapeutic efficacy”.

The Honorable Court under the same point 180 further elaborated:

“With regard to the genesis of section 3(d), and more particularly the circumstances in which section 3(d) was amended to make it even more constrictive than before, we have no doubt that the “therapeutic efficacy” of a medicine must be judged strictly and narrowly…Further, the explanation requires the derivative to ‘differ significantly in properties with regard to efficacy’. What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.” 

Based on this interpretation of Section 3(d), the Honorable Supreme Court of India ordered that Glivec does not fulfill the required criteria of the statute.

The rationale behind Section 3(d):

A report on ‘Patentability of the incremental innovation’ indicates that the policy makers keeping the following points in mind formulated the Indian Patents Act 2005:

  • The strict standards of patentability as envisaged by TRIPS pose a challenge to India’s pharmaceutical industry, whose success depended on the ability to produce generic drugs at much cheaper prices than their patented equivalents.
  • A stringent patent system would severely curtail access to expensive life saving drugs to a large number of populations in India.
  • Grant of a product patents should be restricted only to “genuine innovations” and those “incremental innovations” on existing medicines, which will be able to demonstrate significantly increased efficacy over the original drug.

IPA challenges: 86 pharmaceutical patents granted by IPO fall under Section 3(d):

A study by the ‘Indian Pharmaceutical Alliance (IPA)’ indicates that 86 pharmaceutical patents granted by the IPO post 2005 are not breakthrough inventions but only minor variations of existing pharmaceutical products and demanded re-examination of them.

Possible implications to IPA challenge:

If the argument, as expressed above in the IPA study, is true by any stretch of imagination, in that case, there exists a theoretical possibility of at least 86 already granted product patents to get revoked. This will invite again another nightmarish situation for innovators.

Examples of revocation of patents in India:

On November 26, 2012, the Intellectual Property Appellate Board (IPAB) reportedly denied patent protection for AstraZeneca’s anti-cancer drug Gefitinib on the ground that the molecule lacked invention.

The report also states that AstraZeneca suffered its first setback on Gefitinib in June 2006, when the Indian generic company Natco Pharma opposed the initial patent application filed by the global major in a pre-grant opposition. Later on, another local company, GM Pharma, joined Natco in November 2006.

After accepting the pre-grant opposition by the two Indian companies, the Indian Patent office (IPO) in March 2007 rejected the patent application for Gefitinib citing ‘known prior use’ of the drug. AstraZeneca contested the order through a review petition, which was dismissed in May 2011.

Prior to this, on November 2, 2012 the IPAB revoked the patent of Pegasys (Peginterferon alfa-2a) – the hepatitis C drug of the global pharmaceutical giant Roche.

Though Roche was granted a patent for Pegasys by the Indian Patent Office (IPO) in 2006, this was subsequently contested by a post-grant challenge by the large Indian pharma player – Wockhardt and the NGO Sankalp Rehabilitation Trust (SRT) on the ground that Pegasys is neither a “novel” product nor did it demonstrate ‘inventiveness’, as required by Section 3(d) of Patents Act of India 2005.

It is worth noting, although the IPO had rejected the patent challenges by Wockhardt and SRT in 2009, IPAB reversed IPO’s decision revoking the patent of Pegasys.

Similarly the patent for liver and kidney cancer drug of Pfizer – Sutent (Sunitinib) granted by IPO in 2007, was revoked by the IPAB in October, 2012 after a post grant challenge by Cipla and Natco Pharma on the ground that the claimed ‘invention’ does not involve inventive steps.

Patent challenges under section 3(d) may come up even more frequently in future:

Some observers in this field have expressed, although ‘public health interest’ is the primary objective for having Section 3(d) in the Indian Patents Act 2005, many generic companies, both local and global, have already started exploiting this provision as a part of their ‘business strategy’ to improve business performance in India, especially when an  injunction is usually not being granted by the honorable Courts for such cases on public health interest ground.

Thus, as stated above, there is likely to be many more cases like, Glivec coming before the Supreme Court in the years ahead.

Another related development of the last week:

It has been reported that American pharma major MSD has last week filed a suit in the Delhi High Court against Indian pharma major – Glenmark for alleged patent violation of its leading anti-diabetic drugs Januvia and Janumet. In this case also no interim injunction has reportedly been granted to MSD by the Honorable Delhi High Court.

Glenmark has stated through a media report, “It is a responsible company and has launched the products after due diligence and research.” The company has also announced that their version of the molecule named Zita and Zita Met will be available to patients at a 20 percent discount to MSD’s price.

Hence, once again, the Indian court to decide, the balance of justice would now point to which direction.

Government has no role to play – patent challenge is a legal process across the world:

The proponents of ‘no change required in the Section 3(d)’ argue, ‘Patent Challenge’ is a legal process all over the world, the Government has hardly got any role to play in settling such disputes. The law should be allowed to take its own course for all disputes related to the Patents Act of the country, including Section 3(d).

They also opine that India must be allowed to follow the law of justice without casting aspersions on the knowledge and biases of the Indian judiciary for vested interests.

That said, there is certainly an urgent need to add speed to this legal process by setting up ‘Fast-track Courts’ for resolving all Intellectual Property (IP) related disputes in a time bound manner.

Arguments against Section 3(d):

Opposition to the Section 3(d) counter-argues by saying, this is a critical period for India to help fostering an appropriate ecosystem for innovation in the country. This group emphasizes, “Providing the right incentives for incremental pharmaceutical innovation can move India forward on this path and encourage the development of drug products that meet the needs of Indian patients. Reforming Section 3(d) to encourage and protect incremental pharmaceutical innovation would create such incentives and help India become a true powerhouse of innovation.”

Another group says that the main reason in favor of Section 3(d) being the provision will prevent grant of frivolous patents, the ultimate fallout of which will result in limited access to these drugs due to high price, is rather irrelevant today. This, they point out, is mainly because the Government is now actively mulling a structured mechanism of price negotiation for all patented drugs to improve their access to patients in India.

Importance of ‘Incremental Innovation’ in India:

Incremental innovations are indeed very important for the country and have been benefiting the patients immensely over decades, across the world.

A report titled, “The Value Of Incremental Pharmaceutical Innovation” highlighted as follows:

  • As per the National Knowledge Commission, while 37.3% of Indian companies introduced breakthrough innovations in recent years, no fewer than 76.4% introduced incremental innovations.
  • 60 percent of the drugs on the World health Organization’s essential Drug list reflect incremental improvements over older drugs.

The report indicates some of the benefits of ‘Incremental Pharmaceutical Innovation’ for India as follows:

  1. Improved quality of drug products, including products that are better suited to India’s climate.
  2. Development of treatments for diseases that are prevalent in India for which new drug discovery is currently limited or otherwise inadequate.
  3. Increasing likelihood that for every therapeutic class, there is a treatment to which an Indian patient will respond.
  4. Development of the R&D capacity and expertise
 of Indian pharmaceutical companies.
  5. Reduction of healthcare and other social costs in India through improved drug quality and selection.
  6. Increased access to medicine as a result of price competition.

The study concluded by saying that Section 3(d) potentially precludes the patenting of hundreds of incremental pharmaceutical innovations that Indian companies are attempting to patent and commercialize outside India.

There are umpteen numbers of examples that can ably demonstrate, ‘incremental innovation’ of the pharmaceutical innovators help significantly improving the efficacy and safety of existing drugs. All such innovations should in no way be considered “frivolous” as they have very substantial and positive impact in improving conditions of the ailing patients.

Be that as it may, the Supreme Court judgment has categorically mentioned that all ‘Incremental innovations’ should conform to the requirement of the Section 3(d) of the statute.

“West should learn from India’s high patent standards”

An article appeared just yesterday written by a well-regarded Indian economist recommended, “West should learn from India’s high patent standards”. It observed that    over-liberal patent system of the West is now broken and it should learn from India’s much tougher patent system.

Patent monopolies needs to be given only for genuine innovations, as defined in the Indian Patents Act 2005, where the public benefits clearly exceed the monopoly cost.

The author concluded by saying, “This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.”

View of the Glivec inventor: 

In another interview titled, “If you erode patents, where will innovations come from?” Dr Brian Druker, whose work resulted in the development of Glivec, re-emphasizing the need for R&D by the pharmaceutical industry, commented,  “I’m going to stay away from the legal judgment … but as a physician, I do recognize that the advances will come from new products, not modifications.”

Are discordant voices out of step with time?

The interpretation of the Section 3(d) of the statute by the Honorable Supreme Court of India is the last word for all, despite a few voices of discord from within and mostly outside India. These voices, many would reckon, could well be out of step with time, especially in relatively fast growing, modern, independent, thinking and assertive young  India.

Conclusion:

In my view, nothing materially has changed on the ground before and after the Supreme Court judgment on the Glivec case so far as the Indian Patents Act is concerned and also in its interpretation.

While encouraging all types of innovations, including incremental ones and protecting them with an effective IPR regime are very important for any country. No nation can afford to just wish away various socioeconomic expectations, demands and requirements not just of the poor, but also of the growing middle class intelligentsia, as gradually getting unfolded in many parts of the globe.

Available indicators do point out that the civil society would continue to expect in return, just, fair, responsible and reasonably affordable prices for the innovative medicines, based on the overall socioeconomic status of the local population.

This critical balancing factor is essential not only for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population of the country, effectively.

For arguments sake, in an ideal scenario, if the Central and State Governments in India decide to buy such drugs to supply to all patients free of cost, just like any ‘welfare state’, will even the Government be able to afford these prices and fund such schemes in India?

It is, therefore, now widely expected that innovator pharmaceutical companies, which play a pivotal role in keeping population of any nation healthy and disease free to the extent possible, should also proactively find out ways to help resolving this critical issue in India, working closely with the Government of 1.2 billion Indians, including other concerned stakeholders.

In that context, the landmark Supreme Court judgment on the Glivec case has vindicated the need of striking a right balance between encouraging and protecting innovation, including incremental ones and the public health interest of India.

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.