Drug MNC Challenges India’s Patent Act

Amit Sen Gupta

AS a consequence of having become a signatory to the TRIPS agreement (as part of the WTO agreement), India was required to amend its Patent Act by January 1, 2005. While there were various obligations placed on India as a signatory to the TRIPS agreement, the most important one related to the granting of product patents for medicines. The Indian Patents Act of 1970 exempted medicines from product patents and allowed only processes of making medicines to be patented. This provision allowed Indian companies to manufacture new medicines that were patent protected elsewhere in the world, by developing new processes for these.

CPI(M)
STAND

The TRIPS agreement did not allow this and, as a result, the Indian Patent Act had to be amended to allow for product patents in the case of medicines too. The CPI(M) had all along maintained that the TRIPS agreement itself is biased in favour of the multinational corporations (MNCs) and developed countries, and that India should not have agreed to sign it, in the first place. Unfortunately, in 2005, the option not to amend our act was not a choice available to us, as the TRIPS Agreement was part of the WTO agreement. If India had refused to amend its Patent Act, the WTO could have authorised retaliation by other countries in other sectors, in the form of trade sanctions, etc. The CPI(M) is of the view that India needs to pursue this issue in the WTO negotiations, and fight for the removal of the TRIPS agreement from the WTO framework. 

At the same time, in the immediate context, the CPI(M) has been of the view that while amending the Indian act, all measures possible to minimise the damage caused by the amendment to the act should be taken. One of these measures relates to the ways in which it can be made more difficult to patent the medicines in the country by excluding from patentability the medicines that are not true innovations but involve only a small change in an already available medicine (incorporated as Section 3(d) in the amended Indian Patent Act). Another measure was to allow Indian companies to continue producing medicines that they had commenced manufacturing before January 1, 2005, even if these medicines were to be granted a patent after amendment to the India’s Patent Act (incorporated in Section 11 A(7) of the amended Indian Patent Act).

Both the above measures were incorporated in the Indian act after intervention by the CPI(M) and other Left parties in parliament. The earlier ordinance, brought in by the government in December 2004, did not reflect these measures. The CPI(M) was able to muster widespread support in favour of its position and forced the government to allow the ordinance to lapse, and introduce new changes in the act. This was a major victory for us, and for the campaign in India to promote access to vital medicines.

When the CPI(M) took this position and forced several changes in the government’s draft (including the two mentioned above), the BJP and some NGOs had criticised the CPI(M) for having “sold out.” They charged the CPI(M) with having “colluded” with the government in amending the Patents Act without the incorporation of adequate safeguards that were possible within the TRIPS framework. The CPI(M) had maintained then that the amendments that it had forced the government to adopt would make it much more difficult for the MNCs to patent their products in the country.

NOVARTIS CHALLENGE
TO KEY PROVISION

Recent developments have clearly vindicated the CPI(M)’s position. This year, on May 17, 2006, a Swiss MNC, Novartis, filed two petitions in the Chennai High Court. The first petition challenges the Indian Patent Office’s order rejecting the company’s patent application on its anti-cancer drug called Gleevec. (This is used to treat a form of leukaemia.) Gleevec is one of the significant breakthroughs of medical science in recent history and brings hope to thousands of leukaemia patients. The drug was being manufactured by several Indian companies, since 2002-03 at a treatment cost of Rs 8,000 per month. The Novartis was granted an exclusive marketing right (EMR) for Gleevec in November 2003, and started marketing its product at over Rs 1,20,000 per month of treatment. Moreover, it also filed a petition in the Chennai High Court restraining Indian companies from marketing the same product. 

In January 2006, however, the Indian Patent Office rejected the patent application of the Novartis for Gleevec and thus also terminated its EMR, as per the provision in the Indian Act. The petition filed by The Novartis challenges: 1) The rejection of its patent application; and 2) the constitutional validity of section 3(d) on the plea that it is not compliant with the TRIPS agreement and hence the parliament should not have accepted it while proposing to adopt a TRIPS compliant legislation.

What is of significance is that the patent application of the Novartis was rejected on the basis of section 3(d) and it is the same section that has been challenged by the Novartis. The Patent Office, while rejecting the Novartis’s application, took into account the fact that Gleevec was only a modified form of a drug that had been patented in 1993, and hence could not be patented in India. As discussed earlier, section 3(d) in its present form was one of the amendments that the CPI(M) had forced the government to accept. 

CPI(M) POSITION
VINDICATED

Interestingly, while attempting to show motivation (!) against it, the Novartis’s petition mentions the speeches by CPI(M) MPs Suresh Kurup and Rupchand Pal in parliament, where they had criticised the Novartis for the exorbitant pricing of Gleevec. Moreover, the petition by the Novartis also points out that section 11 A(7) (another clause introduced through the CPI(M)’s efforts) is also not compliant with the TRIPS and would be challenged if the Patent Office makes use of the provision.

Clearly, the MNCs are not happy with the amended Indian Patents Act, specifically with the amendments that the CPI(M) forced the government to accept. The Novartis’ petition, thus, is a clear vindication of the CPI(M)’s position that the amendments it could get incorporated have introduced some major safeguards in the Indian Act. Interestingly, some of the NGOs who had then criticised the CPI(M) for “selling out” are now campaigning that it is necessary to maintain the safeguards in the Indian act, citing the very same amendments that the CPI(M) had got incorporated in the Indian act!

The petitions filed by the Novartis were heard in September 2006 but the hearing was adjourned, without any arguments from either side, till January 29, 2007. Logically, the Chennai High Court should not entertain the Novartis’s position challenging the constitutional validity of section 3(d) of India’s Patent Act for several reasons. First, the Novartis is a foreign company and has no locus to dispute any constitutional provisions to invalidate a national law. Further, there exists no constitutional provision to invalidate any provision of a national law for an alleged international treaty violation. However, even if the petition is rejected, the Novartis would have succeeded in its purpose. In the WTO, only countries can challenge a national law, as being inconsistent with a treaty, in the WTO’s dispute settlement mechanism. By filing this petition the Novartis (while a number of other MNCs would be watching this case as it unfolds) is trying to focus attention on some key aspects of India’s Patent Act that it finds “objectionable,” and thereby encourage some developed countries to actually challenge these provisions in the WTO’s dispute settlement mechanism. 

It is also interesting to note that section 3(d) of the Indian act is also likely to be invoked while refusing the patent application of a key HIV/AIDS drug called Combivir. The global patent for the drug is owned by the GSK (Glaxo Smith Kline), but in India it is being produced by a number of companies, including Cipla, Ranbaxy, Aurobindo, Emcure and Strides. A pre-grant opposition to the GSK’s patent application has already been filed by the Manipur Network of Positive People, citing section 3(d) of the Indian act.

MOVE TO UNDERMINE
INDIA’S SAFEGUARDS

The Novartis is clearly using the petitions it has filed in the Chennai High Court to “test the waters.” If they do get a favourable judgement (which seems very unlikely), it would be a major victory for them. It would mean that they would get a monopoly in the production and marketing of Gleevec and consign tens of thousands of leukaemia patients to penury or death or both. If they lose the case, they would have still succeeded in focusing attention on some aspects of the Indian Patent Act that they want removed. This is a case that will be watched not only by the Novartis but by other MNCs who have never been happy with the safeguards introduced in the Indian Patent Act. It is quite possible that the case will be followed up by a challenge to some aspects of India’s Patent Act in the WTO dispute settlement mechanism, by the US and other developed countries.

It is thus important that a campaign be mounted to defend the public health safeguards in the Indian Patent Act. The government too needs to give clear signal that it shall defend the Indian act against all challenges, including if such a challenge is mounted in the WTO itself. The Novartis case may well determine the future trajectory of the Indian patents regime. There are a large number of interested parties, many of them within the government, who were unhappy with the ability of the Left to force such amendments in the Indian act as put the interests of the Indian people before the interests of drug MNCs. The time has now come to ensure that these amendments are not given up under pressure from drug MNCs who have the support of the developed
countries.