Patents: Doing Just Fine
In the wake of
the Madras High Court’s landmark ruling on Novartis, CHAN
PARK and ACHAL PRABHALA disentangle
some key myths around patent law
early August, the Madras High Court dismissed Swiss pharmaceutical giant
Novartis’ claim that a section of Indian patent law was unconstitutional.
In the aftermath of the decision, one image stood out: the MNC pharmaceutical
lobby, with its tropical agents in tow, raising a big stick to beat an
errant country. In a situation rife with speculation, we should know that
we have no reason to cower.
Patients are ecstatic
on account of the decision, for continued access to medicines in India
and around the world. This access hinges on a sensibly calibrated patent
system, which — to an extent — we have, and whose validity
the Madras HC affirmed. As much as we believe that the Indian patent system
could do even more for patients, there is no doubt that it is already
Novartis and its
MNC cohorts are understandably glum. This decision could throw a spanner
in the works of an outdated business model whose hegemony owes more to
brute force than market logic. And it doesn’t help that their Indian
setback arrived closely on the heels of different but similarly inclined
actions in South Africa, Thailand and Brazil.
in the courtroom, the MNC lobby immediately launched a PR blitz aimed
at frightening policymakers in New Delhi into submission. Broadly speaking,
two claims were advanced. One: India does not allow patents for “incremental
innovation” to pharmaceuticals, and this will hamper its otherwise
strong innovative potential. Two: Since India has chosen not to recognise
incremental innovation, FDI in pharmaceutical research will be diverted
There are only two
problems with these claims. One: Indian law already allows patents for
incremental innovation. Two: FDI in pharmaceutical research will go wherever
there is an attractive cost/skill balance. It has nothing to do with the
strength or weakness of local patent law. Take the first red flag: “incremental
section of Indian patent law that Novartis challenged, 3(d), clearly states
that if an existing innovation is tinkered with to create something different,
the resulting innovation can still qualify for patent protection —
provided it exhibits increased “efficacy”. By our count, over
200 patents on drugs have been granted since India introduced section
3(d) in 2005, most of them for changes to existing drugs. Novartis is
the proud owner of several of these patents. (That many of these might
have been wrongly granted is another matter.) Novartis’ contention
with 3(d) stems from the Indian Patent Office’s rejection of its
application for a patent on Glivec. The base compound used in Glivec had
been patented prior to 1995, thus making it ineligible for protection
in India. The post-1995 “innovation” they claimed was deemed
neither incremental nor innovative under Indian law.
This is Novartis’ beef: that any changes they make to drugs must
be protected by a patent, regardless of whether they make that drug any
better. And this is the cause of their outrage: that our law demands for
incremental innovations to be, well, incrementally innovative.
Now for the other
red flag: FDI. Statistics reveal that MNCs make up only 23 percent of
the Indian drug market. Of top 20 pharmaceutical companies in India, ranked
by sales, only five are MNCs. The bulk of Indians buy their drugs from
Indian companies, and these companies are the ones investing (that some
of them act as licencing agents for MNCs and therefore toe their lobbying
line, is not relevant here).
When corporations say “research in India,” they do not mean
research for diseases especially prevalent in India and the Third World,
like kala azar or malaria. They mean research for diseases in their most
valuable markets — Europe, Japan and North America — which
together account for over 90 percent of the MNC pharmaceutical industry’s
turnover. Sure, we have those diseases too; but whether a drug is developed
using Indian intelligence or Swiss skill has no effect on a company’s
ability to patent and capitalise on the invention in the markets that
matter most to it. To the extent that India is an attractive place for
research investment, it has everything to do with our low-cost/high-skill
advantage and very little to do with our patent law.
That the MNC lobby
plays the “China card” illustrates this point perfectly. To
recap: pharmaceutical research FDI in India (a trickle anyway) will now
move on account of India’s “bad” patent law (even though
the research is aimed at markets elsewhere) and it will move to, er, China,
which is only the worst “offender” of Western intellectual
property over every other country in the world (as confirmed in the US
Trade Representative’s annual Special 301 Report these past 20 years).
They must be joking.
Novartis and friends want to make us an offer we can’t refuse, but
this is an offer we can’t understand.
is with the Lawyers Collective; Prabhala researches intellectual property