Introduction:
Indian pharmaceutical patent regime operates within a framework that seeks to balance between two crucial goals which is incentivizing innovation and ensuring affordable access to medicines. Although research and development are facilitated by granting of patents, which provides temporary competitive advantage in the market, but is also contributes to an increase in the prices and limited supply of drugs, especially essential drugs that a wide number of the population needs.
“According to interpretation the Supreme Court’s interpretation of Article 21 of the Indian Constitution, the right to health is a part of the right to life”[1]. At the same time, India is bound by TRIPS Agreement to provide at least 20-year patent rights on pharmaceutical products[2]. This dual obligation need to safeguard the health and well-being of the people and to comply with international trade laws which raises serious questions as to whether India should implement statutory measures to curtail or exclude patent monopolies on essential medicines.
Section 3 d: Restricting Unwarranted Patent Claims
Section 3 (d) of the Patents Act, 1970 is one of the major sections in the patent law of India that takes care of the issue of health in the society. This provision was added in 2005 as part of India moving into compliance with TRIPS and prohibits patenting of new formulations of existing substances when such filing leads to the achievement of improved therapeutic effects.[3] “The main purpose of this is to prevent ‘evergreening’, which is a practice where minor modifications to existing drugs are patented to extend monopoly protection without meaningful therapeutic benefit.”
In Novartis AG v. Union of India[4], the meaning of applying Section 3(d) was clarified and ruled that, “The beta crystalline form of imatinib mesylate (Glivec) was not proven to show an acceptable increase in efficiencies to warrant patent protection.” The ruling enshrined the rule that patents should not merely be businesses driven but they should be in the interest of promoting true public health.[5]
As much as the Section 3(d) has its purposes of ensuring integrity of the patent system, it can only be used as a filter at the pre-grant position. It fails to provide possible solutions to increasing the accessibility of currently available patented essential medicines in cases where affordability is a serious concern.
Compulsory Licensing: Builder and Restraint
In India the patent law has a clause of compulsory licensing under Section 84 and enables the government to mandate a third party to make a patented form of drug, without the permission of the patentee, in certain conditions, i.e. when the needs of the people remain unmet, price is too high, or the patentees are not involved in making the drug in India.
The most significant case concerning in this context is Natco Pharma Ltd. v. Bayers Corp [6], “where a compulsory license was granted by Controller of Patents to a cancer drug sorafenib tosylate (Nexavar).” The rationale given was that the drug was too expensive, its availability was limited and it was not produced locally by Bayer. [7]It led to the introduction of the drug by Natco at a much lower price which constituted a landmark decision.
But since that ruling in 2012, no further compulsory licenses have been issued, [8] not even in the COVID-19 pandemic situation,[9] when there was an unprecedented global need of supply to affordable vaccines and antivirals. A number of reasons have led to this trend:
Procedural complexity and time-consuming application processes.
Political pressure from developed countries and multinational pharmaceutical firms,
Concerns about adverse consequences under bilateral investment treaties.
Such underutilization implies that although compulsory licensing is still a legal path, it still does not have institutional and political support, which is needed for consistent implementation.
Proposals to Reform: Creating a Statutory Public Health Exception
Considering such constraints, the legal scholars and policy specialists have come up with propositions of reforms to enhance the ability of India to benefit the public health aspects, on the patent system of the country. Four statutory mechanisms, which can be considered are as follows:
- NLEM- Based Patent Exclusion:
One of them is to reform the Patents Act to bar issuance of patents to medicines in the “National List of Essential Medicines (NLEM)”. The NLEM is selected using the factors of public health need, affordability, and disease burden; thus, it gives a rational basis when it comes to selective exclusions.
- Automatic Compulsory Licensing:
The second alternative would be to impose statutory triggers (high price, non-availability or low home-based production etc.) to automatic obligatory license. It would limit the need to use single applications and enable a more structured response to access related problems.
- Differential Patent Terms:
The model of reform might include a decrease of the patent term to 10 years of approved drugs that are labelled as essential only, leaving 20 years to drugs that are non-essential. This would not undermine the incentive mechanism of patents, but this is combined with adjustments to the extent of the significance of public access.
- Public Health Impact Assessments:
Lastly, the policy makers can think of having health impact assessments prior to authorization or enforcement of pharmaceutical patents. These tests would determine the impact of patent enforcement policy that will result in access and affordability of the general population.
These proposals are potentially relevant to TRIPS agreement, especially Articles 30 and 31 that entitles the members of the agreement to make exceptions and other compulsory licensing arrangements towards health outcomes of the populations. This flexibility is confirmed in the “Doha Declaration on TRIPS and Public Health (2001)” which asks countries to implement such measures which can strike a balance between intellectual property rights and health requirements.[10]
International Practices: TRIPS Compliance and Policy Space
The possible reforms in India are not the first in history. Various nations have implemented TRIPS interpretations (public health related), in Brazil, they made a licensing of an HIV/AIDs drug compulsory in 2007, reducing public procurement costs.[11] International trade pressure could not drive Thailand to grant license on drugs treating HIV and cancer between 2006 08.[12] The Bayh-Dole Act gives the United States retention of march-in rights to publicly funded innovations in which access is restricted but the rights have not been invoked so far.[13] The EU nations use voluntary licensing, centralized procurement, and public-private alliance as strategies to enhance affordability.[14] The above cases indicate that TRIPS leave a lot of room on balance between intellectual property and health. What is required is legal clarity, the ability of the administration and policy willingness.
Addressing Key Concerns
- Impact of Innovation
The usual objection is that restricting the patents covering vital medicines or reducing patent term will reduce development. But India is primarily known for it’s generic production rather than discovery of originator drugs. Besides, a majority of innovative medicines are researched and discovered in high-income nations and often with substantial public funding.[15] Reasonably crafted exceptions to core drugs are unlikely to become an important factor in executing global investment in research and development decisions.
- TRIPS Compatibility
Although the article 27 of TRIPS makes it an obligation that patents are granted without discrimination based upon the field of technology. Articles 30 and 31 expressly grant exceptions, such as compulsory licensing. The Doha declaration stipulates that the interest of the population comes first when needed.[16]
- Alternatives to Reform
The other tools, such as the “Drug Price Control Order (DPCO)” or the voluntary licensing agreements are helpful, yet not sufficient. Voluntary licenses are subject to the will of patent holders, and price caps do not combat the existence of monopoly. A more structured statutory model based on clear public health that would offer a more structured and enforceable mechanism.
The current patent system of India involves progressive protection measures, which consist of Section 3(d) and the compulsory license provision. Nevertheless, they have such limitations as their scope and their implementation, which require further reformation. Since India is currently playing a strategic role in healthcare supply chains around the world, its legal framework must be updated to the requirements of the current global healthcare policy.
Implementing some type of public health exception to either restrict the patent protection of essential medicines or automatically license them under defined circumstances would also comply with both constitutional requirements and WTO requirements but specifically meet the demands of public health. This would enhance credibility, effectiveness, and fairness of patent system in India in meeting the current and emerging health problems.
[1] Paschim Banga Khet Mazdoor Samity v. State of W.B., (1996) 4 SCC 37.
[2] Agreement on Trade-Related Aspects of Intellectual Property Rights art. 27(1), Apr. 15, 1994, 1869 U.N.T.S. 299.
[3] The Patents Act, No. 39 of 1970, § 3(d), India Code (1970), https://legislative.gov.in.
[4] Novartis AG v. Union of India, (2013) 6 SCC 1.
[5] Shamnad Basheer, The “Efficacy” of Indian Patent Law: Ironing Out the Creases, 5 NUJS L. Rev. 1 (2012).
[6] Natco Pharma Ltd. v. Bayer Corp., Compulsory License Application No. 1 of 2011, C.L.A. No. 1 of 2011, Order No. 37/2012, Controller of Patents, Mumbai, Mar. 9, 2012.
[7] Id.
[8] K.M. Gopakumar, Compulsory Licensing in India: Past, Present and Future, 3 J. L. & Pub. Pol’y 85 (2020).
[9] Anurag Kotoky & Ari Altstedter, India’s Vaccine Patents Were Untouched During the Pandemic, Bloomberg (May 2021).
[10] World Trade Organization, Declaration on the TRIPS Agreement and Public Health, WTO Doc. WT/MIN(01)/DEC/2 (Nov. 14, 2001).
[11] Ellen ’t Hoen, Medicine Procurement and the Use of Flexibilities in the Agreement on TRIPS, WHO Policy Brief (2016).
[12] Frederick M. Abbott & Jerome H. Reichman, The Doha Round’s Public Health Legacy, 10 J. Int’l Econ. L. 921 (2007).
[13] 35 U.S.C. §§ 200–212 (Bayh-Dole Act); see also Christopher Morten & Amy Kapczynski, March-in Rights under Bayh-Dole, 109 Calif. L. Rev. 1527 (2021).
[14] European Comm’n, Compulsory Licensing in the EU Context (2021).
[15] Bhaven Sampat & Kenneth C. Shadlen, Patents and Access to Medicines in Developing Countries, 39 Ann. Rev. Pub. Health 16.1 (2018).
[16] WTO, supra note 10, at ¶¶ 4–5.