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

Posted on September 5, 2016 by Tapan Ray

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.

Balancing IPR with Public Health Interest: Brickbats, Power Play and Bouquets

Posted on July 1, 2013 by Tapan Ray

It is now a widely accepted dictum that Intellectual Property Rights (IPR), especially pharma patents, help fostering innovation and is critical in meeting unmet needs of the patients.

However, the moot question still remains, what type pharmaceutical invention, should deserve market exclusivity or monopoly with overall freedom in pricing, keeping larger public health interest in mind.

In line with this thinking, for quite sometime a raging global debate has brought to the fore that there are quite a large number of patents on drug variants that offer not very significant value to the patients over the mother molecules, yet as expensive, if not more than the original ones. In common parlance these types of inventions are considered as ‘trivial incremental innovations’ and described as attempts to ‘evergreening’ the patents.

The terminology ‘evergreening‘ usually ‘refers to a strategy employed by many pharmaceutical companies to extend their market monopoly by slightly changing the existing molecules and obtaining new patents to continue to enjoy market exclusivity and pricing freedom, which otherwise would not have been possible.

Path breaking or jaw-drooping ‘W-O-W’ types of innovations are not so many. Thus most of the patented drugs launched globally over the last several decades are indeed some sort of ‘me-too drugs’ and generally considered as ‘low hanging fruits’ of R&D, not being able to offer significantly greater value to patients than already exiting ones. Many of these drugs have also achieved blockbuster status for the concerned companies, backed by high voltage marketing over a reasonably long period of time. It is understandable, therefore, that from pure business perspective why serious global efforts are being made to push the same contentious system in India too.

Example of some of these molecules (not necessarily in the written order), are as follows:

Cemetidine – Ranitidine – Famotidine – Nizatidine – Roxatidine (to treat Acid-peptic disease)

Simvastatin – Pravastatin – Lovastatin – Pitavastatin – Atorvastatin – Fluvastatin – Rosuvastatin (to treat blood lipid disorder)

Captopril – Enalepril – Lisinopril – Fosinopril – Benzapril – Perindopril – Ramipiril – Quinalapril – Zofenopril (Anti-hypertensives)

However, pharmaceutical companies do argue that such ‘incremental innovations’ are the bedrock for growth of the pharmaceutical industry and are essential to continue to fund pharmaceutical research and development.

An interesting paper:

A paper titled, “Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing” by Carlos M. Correa argued as follows:

Despite decline in the discovery of New Chemical Entities (NCEs) for pharmaceutical use, there has been significant proliferation of patents on products and processes that cover minor, incremental innovations.

A study conducted in five developing countries – Argentina, Brazil, Colombia, India and South Africa has:

Evidenced a significant proliferation of ‘ever-greening’ pharmaceutical patents that can block generic competition and thereby limit patients’ access to medicines.
Found that both the nature of pharmaceutical learning and innovation and the interest of public health are best served in a framework where rigorous standards of inventive step are used to grant patents.
Suggested that with the application of well-defined patentability standards, governments could avoid spending the political capital necessary to grant and sustain compulsory licenses/government use.
Commented, if patent applications were correctly scrutinized, there would be no need to have recourse to CL measures.

A remarkable similarity with the Indian Patents Act:

The findings of the above study have a striking similarity with the Indian Patents Act. As per this Act, to be eligible for grant of patents in India, the pharmaceutical products must pass the ‘two-step’ acid test of:

Following the inventive step: Defined under Section 2(ja) of the Patents Act as follows:

“Inventive step” means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art.

Passing scrutiny of Section 3(d) of the law: It categorically states, inventions that are a mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy of that substance are not patentable.

Supreme Court of India clarifies it:

The Honorable Supreme Court of India in page 90 of its its landmark Glivec judgement has clearly pronounced that all ‘incremental innovations’ may not be trivial or frivolous in nature. However, only those ‘incremental innovations’, which will satisfy the requirements of both the above Sections of the Act, wherever applicable, will be eligible for grant of patents in India.

An opposite view:

Another paper presents a different view altogether. It states that incremental improvements on existing drugs have great relevance to overall increases in the quality of healthcare.

With the progress of the pharmaceutical industry, such drugs have helped the physicians to treat diverse group of patients. They also represent advances in safety, efficacy along with newer dosing options significantly increasing patient compliance.

The paper claims that ‘even from an economic standpoint, expanding drug classes represent the possibility of lower drug prices as competition between manufacturers is increased’. It states that any policy aimed at curbing incremental innovation will ultimately lead to a reduction in the overall quality of existing drug classes and may ultimately curb the creation of novel drugs.

Pricing:

Experts, on the other hand, argue, if patents are granted to such ‘incremental innovations’ at all, their prices need to be determined by quantifying ‘Incremental Value’ that patients will derive out of these inventions as compared to the generic versions of respective original molecules.

Use of such drugs may lead to wasteful expenditure:

A large majority of stakeholders also highlight, though many of such drugs will have cheaper or generic alternatives, physicians are persuaded by the pharma players to prescribe higher cost patented medicines with the help of expensive avoidable marketing tools, leading to wasteful expenditure for all. The issue of affordability for these drugs is also being raised, especially, in the Indian context.

The ‘2012 Express Scripts Canada Drug Trend Report’ unfolded that the use of higher-cost medications without offering additional patient benefits resulted in waste of $3.9 billion annually in Canada.

Another recent Geneva-based study concluded as follows:

“Evergreening strategies for follow-on drugs contribute to overall healthcare costs. It also implies that policies that encourage prescription of generic drugs could induce saving on healthcare expenditure. Healthcare providers and policymakers should be aware of the impact of evergreening strategies on overall healthcare costs.”

Some other studies reportedly revealed, “Medicines sold in France are 30 times more expensive than what it costs pharmaceutical companies pay to manufacture them.” Industry observers opine, if that is happening in France what about India? Quoting experts the same report comments, “If pharmaceutical companies are forced to follow moral and human values, it could save the tax payer at least 10 billion euros, an amount which could fill up the deficit of the national health care system.”

Yet another article questioned, “What if a physician is paid speaking or consulting fees by a drug maker and then prescribes its medicine, even if there is no added benefit compared with cheaper alternatives?”

More debate:

According to a paper titled, ‘Patented Drug Extension Strategies on Healthcare Spending: A Cost-Evaluation Analysis’ published by PLOS Medicine, European public health experts estimate that pharmaceutical companies have developed “evergreening” strategies to compete with generic medication after patent termination. These are usually slightly modified versions of the existing drugs.

Following are some brands, which were taken as examples for evergreening:

S.No.	Evergreen	Medical Condition	Original Brand
1.	Levocetirizine (Vozet)	Allergies	Cetirizine (Zyrtec)
2.	Escitalopram (Lexapro)	Depression	Citalopram (Celexa)
3.	Esomeprazole (Nexium)	Acid reflux	Omeprazole (Prilosec)
4.	Desloratadine (Clarinex)	Allergies	Loratadine (Claritan)
5.	Zolpidem Extended Release (Ambien CR)	Insomnia	Zolpidem (Ambien)
6.	Pregabalin (Lyrica)	Seizures	Gabapentin (Neurotonin)

Source: Medical Daily, June 4, 2013

In this study, the researchers calculated that evergreening – where pharmaceutical companies slightly modify a drug molecule to extend its patent, had cost an extra 30 million euros to the healthcare system in Geneva between 2000 and 2008. The authors argue that ‘evergreening’ strategies, “more euphemistically called as ‘life cycle management’ are sometimes questionable benefit to society.”

As the paper highlights, in this scenario the companies concerned rely on brand equity of the original molecule with newer and more innovative marketing campaigns to generate more prescriptions and incurring in that process expenses nearly twice as much on marketing than on research and development.

Brickbats:

In this context, recently a lawmaker rom America reportedly almost lambasted India as follows:

“I’m very concerned with the deterioration in the environment for protection of US intellectual property rights and innovation in India. The government of India continues to take actions that make it very difficult for US innovative pharmaceutical companies to secure and enforce their patents in India.“

On this, the Indian experts comment, if the situation is so bad in India, why doesn’t America get this dispute sorted out by lodging a formal complaint against India in the WTO, just as what India contemplated to do, when consignments of generic drugs of Indian manufacturers were confiscated at the European ports, alleging those are counterfeit medicines.

Yet another recent news item highlighted a “concerted effort, which involves letters from US corporations and business groups to the president, testimony by Obama administration officials before Congress, and lawmakers’ own critiques, came ahead of US secretary of state John Kerry’s trip to India later this month (has already taken place by now) for the annual strategic dialogue, which will precede Prime Minister Manmohan Singh’s visit to Washington DC in September.”

The report stated, the above letter complained that over the last year, “courts and policymakers in India have engaged in a persistent pattern of discrimination designed to benefit India’s business community at the expense of American jobs … Administrative and court rulings have repeatedly ignored internationally recognized rights — imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications.”  

At a recent Congressional hearing of the United States, a Congressman reportedly expressed his anger and called for taking actions against India by saying,  “Like all of you, my blood boils, when I hear that India is revoking and denying patents and granting compulsory licenses for cancer treatments or adopting local content requirements.”

Indian experts respond to these allegations by saying, patent disputes, patent challenges, revocation of patents, compulsory licensing etc. are all following a well-articulated judicial process of the country, where Indian government has hardly any role to play or intervene. American government and lawmakers are also expected to respect the rule of law in all such cases instead of trying to denigrate the Indian system.

The Power Play:

This short video clipping captures the Power Play in America on this matter.

The Government of India responds:

Ministry of Commerce and Industries of India reportedly countered the allegations of the United States over patents to the US Trade Representive arguing that the Indian IPR regime is fully TRIPS-compliant and Indian Patents Act “encourages genuine innovation by discouraging trivial, frivolous innovation, which leads to evergreening”.

Countries adopting the Indian model:

The above report also highlighted as follows:

Argentina has issued guidelines to reject ‘frivolous’ patents.
Peru, Columbia, other South American countries have placed curbs.
Philippines has similar provisions.
Australia is contemplating making the law tougher.

Revised report of Dr. R. A. Mashelkar Committee:

Even the revised (March 2009) ‘Report of the Technical Expert Group (TEG) on Patent Law Issues’, the TEG, chaired by the well-known scientist Dr. R.A. Mashelkar, in point number 5.30 of their report recommended as follows:

“Every effort must be made to prevent the practice of ‘evergreening’ often used by some of the pharma companies to unreasonably extend the life of the patent by making claims based sometimes on ‘trivial’ changes to the original patented product. The Indian patent office has the full authority under law and practice to determine what is patentable and what would constitute only a trivial change with no significant additional improvements or inventive steps involving benefits. Such authority should be used to prevent ‘evergreening’, rather than to introduce an arguable concept of ‘statutory exclusion’ of incremental innovations from the scope of patentability.”

Bouquets:

As stated above, many experts across the world believe, the criticism that Section 3 (d) is not TRIPS Agreement compliant is unfounded, as no such complaint has been lodged with the World Trade Organization (WTO) in this matter, thus far. The safeguards provided in the patent law of India will help the country to avoid similar issues now being faced by many countries. Importantly, neither does the section 3(d) stop all ‘incremental innovations’ in India.

Quoting a special adviser for health and development at South Centre, a think tank based in Geneva, Switzerland, a recent report indicated, “Many developing countries will follow India’s example to protect the rights of their populations to have access to essential medicines”.

Yet another report quoting an expert articulates, “India’s top court’s decision affirms India’s position and policy on defining how it defines inventions from a patenting point of view for its development needs. It challenges the patenting standards and practices of the developed countries which are the ones really in much need of reform.”

The Honorable Supreme Court in its Glivec judgment has also confirmed that such safeguard provisions in the statute are expected to withstand the test of time to protect public health interest in India and do not introduce any form of unreasonable restrictions on patentability of drug inventions.

Conclusion:

Not withstanding the report of the US-India Business Council (USIBC) titled ‘The Value of Incremental Innovation: Benefits for Indian Patients and Indian Business’, arguing for abolition of section 3(d) of the Indian Patents Act to pave the way for patentability for all types of incremental innovations in pharmaceuticals, realistically it appears extremely challenging.

As the paper quoted first in this article suggests, denial of patents for inventions of dubious value extending effective patent period through additional patents, is a significant safeguard to protect public health interest. This statutory provision will also pave the way for quick introduction of generics on expiry of the original patent.

Taking all these developments into active consideration, keen industry watchers do believe, for every effort towards balancing IPR with Public Health Interest, both brickbats and bouquets will continue to be showered in varying proportion together with the mounting pressure of power play, especially from the developed world and still for some more time.

However, in India this critical balancing factor seems to have taken its root not just deep and strong, but in all probabilities - both politically and realistically, the law is now virtually irreversible, come what may.