Novartis: do Indian patent laws stifle research?

FEROZ ALI K
Novartis failed to show the enhancement of efficacy

Imatinib as a free base molecule was patented in 1993

Section 3(d) does not encourage ever-greening of patents

— File Photo 

 
Patients protest: Cancer patients protesting in front of Novartis India Ltd office in Mumbai.

The story of Novartis’ challenge to a particular provision of the Indian Patents Act 1970 goes much beyond
its interest in the patent application for its life-saving cancer drug ‘Gleevec’ (imatinib mesylate). It is a story
involving many powerful players each trying to wrest the initiative and many conflicting interests each trying
to influence the development of patent law in this country.

India’s unique pharmaceutical past and the growth of a vibrant generic pharmaceutical industry can be
attributed to the privileges enjoyed by the industry. Many decades ago, India took the conscious decision of
confining monopoly rights in the field of pharmaceuticals by granting ‘process patents’.Under the Patents Act
1970, pharmaceutical companies were free to devise a non-infringing process to manufacture a drug even if
the same was protected by a process patent in India.

This situation changed when India agreed to switch over to the product patent regime. By being a founding
member of the WTO, India had to bring into effect the obligations under the TRIPS Agreement which
required every member country to provide product patent protection for pharmaceuticals. Though India
became a member of the WTO in 1995, it was given a 10-year transition period to bring into effect the
change in regime from granting process patents to product patents for drugs.

At the heart of the matter is the issue of the standard of patentability under the Indian Patents Act. The
TRIPS Agreement being a minimum standard agreement requires its members to grant patents for
inventions in all fields of technology for a period of 20 years if it satisfies the universally accepted criterion of
patentability.

The first notable external interference into the Indian patent law came in when U.S. and EU filed a complaint
against India before the WTO dispute settlement panel alleging that it had not complied with its obligation
under the TRIPS.That case was decided against India and the Patents Act had to be amended to introduce
provisions for accepting patent applications through a ‘mail-box’ and for granting a patent-like right known
as the Exclusive Marketing Rights (EMR) pending consideration of the patent application in certain cases.
Caught in transition

The time that Novartis chose to enter India was the one in which rampant changes were made to the Indian
law. It filed its application in 1998 before three critical amendments were made in 1999, 2002 and 2005.The
Novartis case (the patent application for its anti-cancer drug Gleevec) had many firsts to its credit. It
signified the first instance of grant of a patent-like right known as the Exclusive Marketing Right (EMR),
which led to the world’s first contentious case of EMR. It was also the first time a foreign multinational
questioned the constitutional validity of a provision of the Indian Patents Act.As soon as the law changed in
India, Novartis preferred an application for beta crystalline form of imatinib mesylate (Gleevec) in 1998.
Gleevec offers cure to life threatening form of cancer, chronic myeloid leukaemia. Imatinib as a free base
molecule was invented by Novartis in 1992 and patented in the U.S. and other countries in 1993. Novartis
however chose not to apply for a patent for the imatinib free base in India as India did not offer product
patent protection in 1993. It is pertinent to note that the 1993 U.S. patent of imatinib disclosed the salt
imatinib mesylate.

But in 1998, Novartis came up with an application for a beta crystalline form of imatinib mesylate which
was, in the terms of section 3(d) of the Patents Act 1970, a new form of a known substance. Section 3(d) of
the Act states that “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” shall not be treated as an invention within the
meaning of the Act.

Phrased differently, it meant that the new form of a known substance will be entitled for a patent if it results
in the enhancement of the known efficacy of that substance. Knowing full well about this requirement of the
Indian law, Novartis tried to demonstrate before the Controller how there was an enhancement of efficacy
and submitted that there was an enhanced bioavailability of 30 per cent in studies conducted on rats.
Bioavailability is one of the indicators of efficacy of a drug.

The Controller rejected this submission and held that Novartis had failed to demonstrate the enhancement in
efficacy as required under the Act.

Efficacy enhancement

The case failed as Novartis failed to discharge the burden of showing the enhancement of efficacy. Section
3(d) has an in-built guideline for determining the enhancement of efficacy. It states that with ‘known
efficacy’ as the benchmark, the person seeking patent has to show the enhancement of efficacy. The
explanation to section 3(d) requires such enhancement to be significant. Novartis’ case suffered as they had
produced a bioavailability study conducted on rats while the drug was admittedly in the market for many
years and was consumed by humans. Then again, it was not shown how the 30 per cent increase was critical
in the performance of the drug and how the increase in enhancement of efficacy made a difference when
compared to known efficacy.

Aggrieved by the order of the Controller, Novartis approached the Madras High Court with two batches of
writ petitions: one challenging the constitutional validity of section 3(d) and the other challenging the order
of the Controller with the request for quashing the same as the appeal mechanism (appeal from a
Controller’s order to the Intellectual Property Appellate Board — IPAB) under the Patents Act has not come
into force by then.

In the writ petition challenging the constitutional propriety of section 3(d), Novartis took a contradicting plea
that the provisions section 3(d) was vague and arbitrary despite trying its best to plead its case on the lines
of section 3(d) before the Controller.

Though the Madras High Court had dismissed the writ petitions filed by Novartis challenging section 3(d),
the High Court had directed the transfer of the other batch to the IPAB questioning the order of the
Controller after converting the same into a statutory appeal.
Impact of decision

Though the prophets of doom had signalled the end of research activities and innovation in this country, the
judgment of the Madras High Court and the impact of section 3(d) must be understood better by knowing
what it permits and what it prohibits.

Patents for pharmaceutical substances today fall into two broad categories: Original inventions and
incremental innovation.

Incremental innovation is a grey area; what actually amounts to incremental innovation and the extent to
which such innovations should be protected is debatable. In any case, the language of section 3(d) permits
incremental innovation. But it is for the applicant to demonstrate why a fresh patent should be granted to a
known substance. For this the applicant has to demonstrate an increase in efficacy of the substance over the
known efficacy. It would be misleading to state that section 3(d) stifles innovation.

What section 3(d) actually does is to allow genuine improvements and at the same time bar frivolous
‘tweaking’ which are passed under the garb of incremental innovation.

In this regard, section 3(d) is trendsetting provision as it is the first legal provision in the world not to be
found in the patent legislation of any country, which provides a check on frivolous patenting.

Any country whose laws are in the state of transition will see casualties who run the risk of testing it for the
first time.

But then, Novartis took a calculated risk of not applying for an Indian patent in 1993 and did so when the
laws did change to permit the grant of product patents.

Having taken this route, which is without doubt a risky one, it will not be proper to denigrate the laws of this
country merely because it could not achieve what it wanted.

(The author is a Chennai-based advocate and the author of the recent book “The Law of Patents – With a
Special Focus on Pharmaceuticals in India”)