India's patent laws are under pressure from legal challenges by pharmaceutical companies Bayer and Novartis. Bayer is appealing India's first compulsory license granted for the anti-cancer drug Nexavar. Novartis' long legal challenge against India's rejection of its patent application for the leukemia drug Glivec may be heard by the Indian Supreme Court in September. Critics argue these challenges threaten India's ability to prioritize public health in its patent laws and misinterpret provisions of international intellectual property agreements that aim to promote access to medicines. Supporters counter that India's laws are fully compliant with its international obligations. The outcome of these cases will impact public health in developing countries.

1. Special Report
India’s patent laws under pressure
Pending cases against India’s patent laws threaten public health and misinterpret international
intellectual property agreements, say Peter Roderick and Allyson M Pollock.
The effect of the international protection for patents and other forms consent “to make, construct, use or sell Published Online
harmonisation of patent laws is in of intellectual property and general the patented invention solely for uses September 10, 2012
http://dx.doi.org/10.1016/
the spotlight this month as global principles for domestic enforcement reasonably related to the development S0140-6736(12)61513-X
pharmaceutical giants Bayer and procedures, as well as making disputes and submission of information Peter Roderick is a barrister and a
Novartis’ legal challenges to key required” for marketing approval. Senior Research Fellow at the
provisions of India’s Patents Act come If a patent has been lawfully gran- Centre for Primary Care and
“In theory, several lawful Public Health, Queen Mary,
to a head. opportunities exist for ted, Article 31 of the TRIPS Agreement University of London, working
India’s Intellectual Property Appellate allows countries to authorise non- on the Accessing Medicines in
developing countries to
Board is reported to have reserved its exclusive, non-assignable use of Africa and South Asia (AMASA)
minimise the impact of TRIPS the subject matter of a patent, research project funded by the
decision last week after hearing Bayer’s European Union’s Framework
appeal, backed by the USA, against on access to medicines. Taking predominantly for the supply of Programme 7,
the first compulsory licence granted advantage of them in practice, the domestic market, subject to www.amasa-project.eu
in India earlier this year to the generic however, requires political will, adequately remunerating the holder. Prof Allyson M Pollock, Centre
for Primary Care and Public
producer Natco (panel 1). The Obama legal expertise, and Authorisation is subject to several
Health, Queen Mary, University
Administration has been consistent in administrative effort.” further conditions, including scope of London, is a co-principal
its efforts to stop compulsory licences, and duration, and is also subject to investigator on AMASA
with the Deputy Director of the US between countries over intellectual prior negotiation attempts to get For the UNDP report see http://
www.undp.org/content/india/
Patent and Trademark Office describing property subject to the WTO’s dispute a voluntary licence. However, the
en/home/library/poverty/five_
the granting of this licence as the settlement procedures. One of its most grounds for such authorisations are years_into_theproductpatent
“most egregious” example of anti- far-reaching requirements for many not set out in Article 31. regimeindiasresponse.html
TRIPS (Agreement on Trade-Related countries was mandatory patentability Use by governments or by third
Aspects of Intellectual Property Rights) of pharmaceutical products. India, parties authorised by governments,
behaviour. Meanwhile, the Indian which had previously only allowed
Supreme Court is due on Sept 11 to patents for pharmaceutical processes,
finally hear Novartis’ sustained legal amended its 1970 Patents Act three Panel 1: The battle over sorafenib
challenge to India’s rejection in 2006 times—in 1999, 2002, and 2005—to Sorafenib tosylate (Nexavar) was invented by Bayer in the 1990s
of the company’s patent application comply with its TRIPS obligations. and launched in 2005 for the treatment of advanced kidney and
for Glivec. In theory, several lawful oppor- liver cancer. By 2008, Bayer had obtained an Indian patent, as well
Also in September, chief nego- tunities exist for developing countries as import and marketing approval, and launched the drug. In early
tiators from the European Union (EU) to minimise the impact of TRIPS on 2010, Cipla began selling a generic version of the drug in India. In
and India are due to meet to “take access to medicines. Taking advantage December, 2010, Natco, another Indian generic producer, wrote to
stock” of talks which have dragged of them in practice, however, requires Bayer requesting a voluntary licence to sell the drug. It seems that
on for 5 years to finalise a Free Trade political will, legal expertise, and Bayer did not reply to Natco’s request. In April, 2011, Natco
Agreement, which would reportedly administrative effort. For example, received a licence from the Drug Controller General of India to
extend patent protection in the countries are entitled to pay close manufacture the drug in bulk and for marketing it in tablet form,
country beyond that agreed at the attention to the preconditions for and in July, 2011, applied for a compulsory licence. The licence was
World Trade Organization (WTO). patent availability; to the permitted granted in March, 2012, with a 6% royalty awarded to Bayer. Bayer
This month therefore presents an criteria and categories for excluding was charging about US$5039 (INR 280 420) per month for the
opportune moment to consider the patentability; to the disclosure drug, Cipla about $539 (INR 30 000––but is reported to have since
compatibility of key aspects of India’s requirements of applicants; and to dropped this amount to about $123 (INR 6840), and the Natco
patent laws with its obligations the discretions expressly granted in licence authorises about $158 (INR 8800) per month. Bayer’s
under the TRIPS Agreement, made these connections. And they can set worldwide sales of the drug from 2006–10 were $2·99 billion. In
India in 2011, Bayer only sold 593 boxes—reaching on its own
at the WTO in 1994 to harmonise limited exceptions to the exclusive
admission only 2% of eligible patients—compared with Cipla’s
international patent protection. rights conferred by a patent. For
4686 boxes. In Natco’s view, 70 000 boxes are needed annually.
example, the WTO dispute panel
TRIPS obligations rejected the EU’s challenge to Canada’s Source: The information in this panel is mainly taken from the decision of the Indian Controller
of Patents, in Natco versus Bayer, March 9, 2012. Current internet exchange rates have been
The harmonising TRIPS Agreement pro-generics law which allowed third used to convert amounts in Indian rupees to US dollars.
sets out minimum standards of parties without the patent holder’s
www.thelancet.com Vol 380 September 15, 2012 e2

2. Special Report
Under section 84 of the Indian As well as being a well established
Panel 2: Section 3(d) of the Indian Patents Act 1970, as Patents Act 1970 (amended twice basis for granting compulsory licences,
amended post-TRIPS), 3 years after a patent “failure to work” was established by
3. The following are not inventions within the meaning of has been granted, an application for a famous US case nearly 70 years ago
this Act... a compulsory licence can be made to be abusive when the patented
(d) the mere discovery of a new form of a known substance which on one of three grounds: that the article is important for public health
does not result in the enhancement of the known efficacy of that reasonable requirements of the public purposes.
substance or the mere discovery of any new property or new use with respect to the patented invention It might be that there are concerns
for a known substance or of the mere use of a known process, have not been satisfied; or that the that the licence has been granted
machine or apparatus unless such known process results in a new patented invention is not available to without any suggestion of an urgent
product or employs at least one new reactant. the public at a reasonably affordable public health emergency being
Explanation. For the purposes of this clause, salts, esters, ethers, price; or that the patented invention underway, but there is no support in
polymorphs, metabolites, pure form, particle size, isomers, is not worked in the territory of India. Article 31 of the TRIPS Agreement
mixtures of isomers, complexes, combinations and other In the Bayer case, India’s Controller of for restricting licensing to such a
derivatives of known substance shall be considered to be the Patents was satisfied on each of the situation. Of course, such a situation
same substance, unless they differ significantly in properties with three grounds. could merit such a licence, but the
regard to efficacy. Section 84 of the Indian Patent Act only relevance of such an emergency
seems to be entirely compliant with in Article 31 is to allow waiver of
the TRIPS Agreement. The grounds the precondition of first making
are recognised examples of use on which a compulsory licence may reasonable efforts for a reasonable
without the patent holder’s consent. be granted are not specified in the time to get a voluntary agreement.
These uses often take the legal form TRIPS Agreement, as emphasised by
of a compulsory licence, a traditional the 2001 Doha Declaration on the The Novartis case
and widely applied limitation on the TRIPS Agreement and Public Health, At stake in the Novartis challenge is
monopoly power of patents that paragraph 5(b) of which states that section 3(d) of the Indian Patents Act,
has been traced back to the Patent “Each Member has the right to grant a provision aimed at preventing “low
Congress held at Vienna’s World Fair compulsory licences and the freedom quality” or “secondary” patents for
in 1873. The Paris Convention for the to determine the grounds upon which drugs that do not demonstrate en-
Protection of Industrial Property 1883 such licences are granted”. And, as hanced efficacy (panel 2).
(as revised and amended), which is Nuno Pires de Carvalho, director of The company’s antileukaemia drug
binding for TRIPS signatories, also the IP and Competition Policy Division Glivec—containing a β crystalline form
states that countries have the right to at the World Intellectual Property of imatinib, a methanesulfonate salt—
make laws allowing for compulsory Organisation, states: “WTO Members was refused a patent in January, 2006,
licences “to prevent the abuses which that are Paris Union Members based largely on this provision. Since
might result from the exercise of have been authorised for over one then, the company has been engaged
the exclusive rights conferred by the century to grant compulsory licences in several substantive and procedural
patent, for example, failure to work”. on grounds of a lack of working, challenges, before the Madras High
regardless of the technological field Court, the Intellectual Property
of the patents in question. They Appellate Board, and now the
have since been fully aware that Supreme Court, all aimed at reversing
compulsory licences might also be the 2006 decision (panel 3). So far,
granted in the area of public health, it has failed in its arguments that
and especially in situations of crisis.” section 3(d) violates Article 27(1) of
The US seems though to be taking the TRIPS Agreement and Article 14
issue with the Indian Controller of the Indian Constitution for being
of Patent’s view that “worked vague and arbitrary.
in the territory of India” means Section 3(d) is particularly
“manufactured to a reasonable extent important since many secondary
in India”. Even if this interpretation patents have been granted in India
was either wrong in principle or not following the inconsistent application
supported by the evidence, both of of this provision, according to the
the other grounds in section 84 are UN Development Programme
Corbis
met, and only one ground is needed (UNDP). Its review also found that “in
Indian activists protesting against the Novartis patent case for a compulsory licence application. interpreting the meaning of ‘efficacy’
e3 www.thelancet.com Vol 380 September 15, 2012

3. Special Report
in Section 3(d), an extremely high seeking to undermine public health rational use of medicines in India but
standard applies; an ‘advantageous considerations aimed at improving the provisions within the country’s
property’ is not the same as efficacy access and therapeutic advantage. patent laws, if more extensively
and ‘new forms’ that result in The TRIPS Agreement does not limit and properly applied, should help
advantageous properties with respect the grounds on which compulsory rather than hinder such access.
to bioavailability, stability, etc, are not licences can be granted, and does India’s laws and experiences could
patentable”. not prevent patent applicants from provide a useful example for low-
Article 27 of TRIPS generally having to demonstrate enhanced income and middle-income countries
mandates patentability where in- efficacy for their allegedly new and worldwide.
ventions are new, involve an inventive useful inventions. There are many
step (or are non-obvious), and are problems facing access to and Peter Roderick, Allyson M Pollock
capable of industrial application (or
are useful). Provisions such as section
3(d)—which has also, for example, Panel 3: Timeline of Glivec’s legal history in India
been adopted in the Philippines—
July 17, 1998: Novartis applies for a patent for “Crystal Modification of a N-Phenyl-2-
are examples of how countries can
Pyrimidineamine derivative, processes for its manufacture and its use”, application
approach interpretation of each
No.1602/MAS/1998
of these three preconditions of
patentability. It is difficult to see the May–July 2005: Cancer Patients Aid Association, Natco, Cipla, Ranbaxy, and Hetro file
public interest in granting patents for representations opposing the application
minor modifications, which are not Jan 25, 2006: the Assistant Controller of Patents and Designs refuses the
of improved public health benefit. application, after hearings. Novartis subsequently challenges the refusal in the
In the context of the proliferation Madras High Court
of drug patents—between 2005–11, April 2, 2007: the provisions of the Patents Act relating to appeals to the Intellectual
4064 Indian patents have been Property Appellate Board (IPAB) are brought into effect, with the then Controller
granted for pharmaceutical products, General of Patents, Designs and Trade Marks—Shri S Chandrasekaran—appointed as
with a further 12 689 applications the Board’s Technical Member (Patents)
pending—ensuring patents are only July 20, 2007: the IPAB rejects a challenge by Novartis to Chandrasekaran sitting on
granted for genuinely new and useful its appeal, ruling that the appeal should be heard by the IPAB Chairman and Technical
products, seems eminently sensible. Member (Patents). Novartis had argued that this individual should not sit on its
Section 3(d)’s limited integration appeal as he had been the chief Controller of Patents when the Glivec patent
of efficacy considerations, more application was refused in 2006
traditionally seen in drug-marketing Aug 6, 2007: the Madras High Court rejects Novartis’ arguments that section 3(d) of
laws, is a sound and long-overdue the Patents Act is not compliant with TRIPS and the Indian Constitution
attempt to rectify the low level of Nov 13, 2007: the Madras High Court upholds Novartis’ challenge to the IPAB’s
proof of real utility that mars patent decision not to remove Chandrasekaran from the appeal, ordering the IPAB to
regimes. The provision goes some constitute a special bench consisting of the Chairman and the Vice-Chairman—
modest way to counteract the neither of whom are technical experts—to hear the appeal
conclusion of UNDP’s 5-year review of Jan 28, 2008: the Indian Supreme Court rules that the appeal hearing should not
post-TRIPS experience in the country proceed before an IPAB constituted as required by the Madras High Court, following
that “little has changed to dispute the a challenge brought by Natco, arguing that the particularly technical nature of the
conventional wisdom that developing issues in the Glivec appeal require a technical expert
countries should not grant product Oct 1, 2008: the Indian Supreme Court rules that the IPAB hearing the Glivec appeal
patent protection in pharmaceuticals. must include a technical expert, namely Shri P C Chakraborti, Deputy Controller of
They are already paying the cost Patents and Designs
of high prices of patent protected
Dec 24, 2008: the appeal hearing concludes before the IPAB, consisting of the
products without having seen the
Chairman (Shri Z Negi) with Shri P C Chakraborti as Technical Member
supposed concomitant technological
benefits”. June 26, 2009: the IPAB rejects Novartis’ appeal
Sept 11, 2012: Supreme Court hearing scheduled
Conclusion Source: IPAB decision, June 26, 2009; judgment of the Madras High Court in Novartis AG versus Union of India, Aug 6,
In trying to limit compulsory licences 2007; US Department of State cables released by Wikileaks, available here: http://keionline.org/node/1253 (accessed
Aug 23, 2012); Supreme Court Order, Aug 22, 2012, available here: http://courtnic.nic.in/supremecourt/qrydisp.asp
and avoid efficacy tests on products, (accessed Aug 29, 2012).
the Bayer and Novartis cases are
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