S.C JUDGMENT IN NOVARTIS CASE IS A STRIKING BLOW TO
WESTERN PHARMACEUTICAL FIRMS TARGETING INDIA TO DRIVE SALES AND A VICTORY FOR
LOCAL MAKERS OF CHEAP GENERICS.
By K P C Rao., LLB.,
FCMA., FCS.,
CMA (USA).,
FIPA (Australia)
Practicing
Company Secretary
kpcrao.india@gmail.com
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By Dr.
K. Anila.,
MS.,Ph.D(Organic Chemistry),
Northern Illinois University, USA
anilakethe@gmail.com
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Background
As part of the
Commonwealth, India inherited its intellectual property laws from Great
Britain. However, after gaining independence in 1947, there was a growing
consensus that to boost manufacturing, restrictive product patents must be
temporarily removed. In 1970, amendments to the Indian Patents Act abolished
product patents but retained process patents with a reduced span of protection.
In the 1990s, during Uruguay Round negotiations of the World Trade Organisation
(WTO), India pledged to bring its patent legislations in tune with the TRIPS
mandate in a phased manner. Consequently, in 1999 India allowed for transitional
filing of product patent for grant of exclusive marketing rights with
retrospective effect from 1995. Full product and process patent protection was
re-introduced from 2005 when all transitional regulations ended.
During the absence of
any product patent regime, the Indian pharmaceutical industry grew at a
remarkable pace, ultimately becoming both a net exporter and the world's
third-largest by volume and fourteenth-largest by value. With the new patent
system in place, there are fears that this generics-fuelled growth may have led
to lower research and development investment and innovation in comparison with
multinational pharmaceutical companies based primarily in western developed
economies.
Novartis v. Union of
India & Others
Novartis v. Union of
India & Others is a landmark decision by the Indian Supreme Court on the
issue of evergreening of pharmaceutical patents. The decision is a culmination
of a seven year long litigation fought by Novartis for grant of Indian patent
on ‘imatinib mesylate’ in beta
crystalline form and thereby to restraint Indian generic pharmaceutical
manufacturers from producing drugs based on the compound. The Supreme Court has
upheld the rejection of the patent application filed by Novartis for Glivec in
1998 before the Indian Patent Office.
The patent application had initially been rejected by the Controller of
Patents in 2006, after hearing 5 pre-grant oppositions filed by various generic
pharmaceutical companies including Ranbaxy, Cipla, Hetero and one patients
group – the Cancer Patient Aid Association (CPAA). Novartis had initially filed
an appeal with the Madras High Court which subsequently transferred the appeal
to the Intellectual Property Appellate Board (IPAB). In a separate petition
Novartis had also unsuccessfully challenged Section 3(d) of the Patents Act,
1970 before the Madras High Court. In 2009, the IPAB upheld the rejection by
the Controller. Later in the same year, Novartis appealed directly to the
Supreme Court.
Brief facts of the case
Imatinib mesylate is a
salt formed by a 1:1 reaction of imatinib and methanesulfonic acid. It is the
free base form of anti-cancer agent imatinib. In the early 1990s a number of
derivatives of N-phenyl-2-pyrimidineamine were synthesized, one of which was CGP
57148 in free base form (later given the International Nonproprietary Name
‘imatinib’ by the World Health Organisation (WHO)). A patent application was
filed in April 1993 and in 1996 the United States and European patent offices
granted one of the inventors, Jurg Zimmerman, a patent on behalf of Novartis
over imatinib derivatives. In 2000, Novartis filed for separate patents on the
beta crystalline form of imatinib mesylate (the mesylate salt of imatinib). A
United States patent was granted in 2005 following the orders of the US
Appellate Court, while the United States Food and Drug Administration (FDA) had
in 2001 approved Novartis-marketed imatinib mesylate as Gleevec (U.S.) or
Glivec (Europe/Australia/Latin America).
In May 2001, TIME
magazine hailed imatinib as the "magic bullet" to cure cancer. The magazine
again hailed Gleevec on a 2009 cover of as the "magic bullet" to cure cancer.
In 2004, NATCO Pharma
Ltd (an Indian generic pharma company) was restrained by Novartis after it was
found that NATCO was marketing a generic version of Gleevec in UK in violation
of the 1996 Zimmerman patent. The dispute was settled out of court after NATCO
pledged to stop market its generic version of imatinib mesylate and paid
monetary compensation.
In India, Novartis
sought to patent imatinib mesylate in beta crystalline form (a specific
polymorph of imatinib mesylate) rather than imatinib or imatinib mesylate
itself. The patent application was filed in 1998 and thus muddled through three
distinct legal approaches - the original 1970 patent laws (which denied product
patent), the transitional laws enacted between 1999 and 2005 (with repeated
legislative amendments in 1999, 2002, 2005) and the final TRIPS compliant
version as amended in 2006. The Assistant Controller of Patents and Designs
rejected the application on 25 January 2006 as failing to satisfy requirements
for novelty and non-obviousness. As the Appellate Board was not yet convened,
Novartis filed several appeals before the Madras High Court in 2006. Before the
High Court could decide on the issue of patentability, the Intellectual
Property Appellate Board (IAPB) was formed and in 2007 the case was transferred
before the IAPB in line with section 117G of the Indian Patent Act. The IAPB on
26 June 2009 modified the decision of the Assistant Controller of Patents and
Designs stating that ingredients for grant of patent novelty and non-obviousness
to person skilled in the art were present in the application but rejected the
application on the ground that the drug is not a new substance but an amended
version of a known compound and that Novartis was unable to show any
significant increase in the efficacy of the drug and it, therefore, failed the
test laid down by section 3(d) of the Indian Patents Act.
Novartis mounted a
separate and concurrent litigation before the Madras High Court arguing that
section 3(d) of the Indian Patents Act is unconstitutional. The High Court
rejected this writ in 2007 observing that section 3(d) aims to prevent
evergreening and to provide easy access to life saving drugs. Novartis did not
further challenge this order.
After IAPB rejected the
patent application in 2009, Novartis appealed directly before the Supreme Court
through a Special Leave Petition (SLP) under Article 136 of the Indian
Constitution; under normal circumstances, an appeal from IAPB should have been
before one of the High Courts before it could proceed to the Supreme Court.
However the patent if granted on appeal would expire by 2018 and thus any
further appeal at that stage would render the matter infructuous. Considering
this urgency and the need for an authoritative decision on section 3(d) (other
cases on this issue were pending before various High courts), the Supreme Court
granted special leave to bypass the High Court appeals process and come
directly before it.
Points considered by
the Apex Court
The important points
considered by the Apex Court are analysed below:
1) What
is the true import of section 3(d) of the Patents Act, 1970?
2) How
does it interplay with clauses (j) and (ja) of section 2(1)?
3) Does
the product for which the appellant claims patent qualify as a “new product” which comes by through an
invention that has a feature that involves technical advance over the existing
knowledge and that makes the invention “not obvious” to a person skilled in the
art?
4) In
case the appellant’s product satisfies the tests and thus qualifies as “invention” within the meaning of
clauses (j) and (ja) of section 2(1), can its patentability still be questioned
and denied on the ground that section 3(d) puts it out of the category of “invention”?
Before analysing the
issues referred above, some of the key terms figured in this case are explained
herein below:
Evergreening means what?
Evergreening refers to
a variety of legal and business strategies by which technology producers with
patents over products that are about to expire retain rent from them by either
taking out new patents (for example over associated delivery systems, or new
pharmaceutical mixtures) or by buying out or frustrating competitors, for
longer periods of time than would normally be permissible under the law.
Evergreening is not a formal concept of patent law; it is best understood as a
social idea used to refer to the myriad ways in which pharmaceutical patent
owners use the law and related regulatory processes to extend their high
rent-earning intellectual property rights, otherwise known as intellectual
monopoly privileges, particularly over highly profitable (either in total sales
volume or price per unit) "blockbuster" drugs.
The evergreening
process has caused some controversy in the pharmaceutical industry. In this
context, evergreening may be used by manufacturers of a particular drug to
restrict or prevent competition from manufacturers of generic equivalents to
that drug.
What is Incremental
Innovations?
Incremental Innovation
may be defined as a series of small improvements to an existing product or
product line that usually helps maintain or improve its competitive position
over time. Incremental innovation is regularly used within the high technology
business by companies that need to continue to improve their products to
include new features increasingly desired by consumers. Section 3(d) of the
Patents Act, 1970 does allow incremental inventions to be patented provided they
entail demonstrable novelty and improved efficacy. This provision is aimed at
curbing ‘evergreening’ by preventing
the grant of a patent for new forms of known substances, unless the applicant
can establish the new form demonstrates an increased efficacy.
Did
the Apex Court ban incremental innovation?
The Court held:
“We have held that the
subject product, the beta crystalline form of Imatinib Mesylate, does not
qualify the test of Section 3(d) of the Act but that is not to say that Section
3(d) bars patent protection for all incremental inventions of chemical and
pharmaceutical substances. It will be a grave mistake to read this judgment to
mean that section 3(d) was amended with the intent to undo the fundamental
change brought in the patent regime by deletion of section 5 from the Parent
Act. [para 191 of the SC judgment]
What is efficacy?
Section 3(d) requires
increased novelty and increased
efficacy in the new forms of an already patented product. As per Supreme Court
‘Increased efficacy’ means as anything that further increases the intended
therapeutic effect in the patients. Non-therapeutic advantages in the developed
product like increased shelf-life, decreased toxicity, increased
bioavailability, better flow properties are
not considered to meet the requirements of increased efficacy.
Novartis claimed that
the increased bioavailability qualified as increased efficacy, but the opposing
argument was that therapeutically, the two compound forms were never shown to be differentiated. The Supreme Court,
in fact, noted in its decision that Novartis had never provided any data on the
effect of bioavailability or therapeutic efficacy
What is the “known
substance”?
For the purposes of
comparing efficacy under Section 3(d), it was necessary for the Supreme Court
to compare the claimed invention to a “known substance” and there has always
been a disagreement between both parties on what constituted the “known substance”
i.e. the “imatinib free base” or the “beta-crystalline form of imatinib
mesylate”. Novartis had sought comparison with the “imatinib free base” while
the opposing side sought a comparison with the “beta-crystalline form of
imatinib mesylate”. The Supreme Court followed the sequence of innovation
leading to the claimed invention and held that imatinib mesylate was the “known
form” for the purposes of Section 3(d). In pertinent part, it held the
following:
“We
have so far considered the issue of enhanced efficacy of the subject product in
light of the finding recorded earlier in this Judgment that Imatinib Mesylate
(non-crystalline) is a known substance from the Zimmermann patent and is also
the substance immediately preceding the patent product, that is, Imatinib
Mesylate in beta crystalline form.” [para
174 of the SC judgment]
Demonstrable Novelty
means what?
In the instant case,
the Zimmerman patent was the main piece of prior art cited against the Glivec
patent and the Supreme Court appears to have used this piece of art as the main
document in invalidating Novartis’s patent.
The court pointd out
that in the face of the materials referred to above, they are completely unable
to see how beta crystal form of Imatinib Mesylate can be said to be a new
product, having come into being through an invention that has a feature that
involves technical advance over the existing knowledge and that would make the
invention not obvious to a person skilled in the art. Imatinib Mesylate is a
known substance from the Zimmermann patent.
“That
Imatinib Mesylate is fully part of the Zimmermann patent is also borne out from
another circumstance. It may be noted that after the Zimmermann patent, the
appellant applied for, and in several cases obtained, patent in the US not only
for the beta and alpha crystalline forms of Imatinib Mesylate, but also for
Imatinib in a number of different forms. The appellant, however, never asked
for any patent for Imatinib Mesylate in non-crystalline form, for the simple reason
that it had always maintained that Imatinib Mesylate is fully a part of the
Zimmermann patent and does not call for any separate patent.” [para
132 of SC judgment]
Apex Court Ruling
Supreme Court decided
the matter de novo looking into
matters of both fact and law. The court first analysed the question of prior
art by looking into Zimmerman patent and the related academic publications. On
perusal of the documents the court concluded that imatinib mesylate is a known
substance from the Zimmermann patent itself. Further its pharmacological
properties are also known in the Zimmermann patent and in the published
academic articles. Therefore imatinib mesylate in beta crystalline form does
not qualify the test of invention as laid down in section 2(1) (j) and section
2(1) (ja) of the Patents Act, 1970.
Court decided to
interpret "efficacy" as "therapeutic efficacy" because the
subject matter of the patent is a compound of medicinal value. Court
acknowledged that physical efficacy of imatinib mesylate in beta crystalline
form is enhanced in comparison to other forms and that the beta crystalline
form of imatinib mesylate has 30 per cent increased bioavailability as compared
to imatinib in free base form. However as no material had been offered to
indicate that the beta crystalline form of imatinib mesylate will produce an
enhanced or superior efficacy (therapeutic) on molecular basis than what could
be achieved with imatinib free base in vivo animal model, the court opined that
the beta crystalline form of imatinib mesylate, does not qualify the test of
Section 3(d).
The Supreme Court
decided that the substance which Novartis sought to patent is known and thus
does not qualify the test of invention as laid down in section 2(1)(j) and
section 2(1)(ja) of the Indian Patent Act and rejected the patent application.
The decision also for the first time tests the validity and ambit of section
3(d) of the Indian Patent Act which prevents the grant of a patent for new
forms of known substances, unless the applicant can establish the new form
demonstrates an increased efficacy.
Impact of SC judgment
on the Indian Pharma industry
In essence, the apex
court defined how the contentious Section 3(d) in India’s Patents Act need to
be read and implemented by stating that Glivec failed the test of the Section,
but also added categorically that the Section did not bar all incremental
inventions of chemical and pharmaceutical substances. Section 3(d) was not
amended with the intent to undo the policy of allowing product patents in
pharmaceutical and chemical sectors, the court asserted. The Section 3(d),
introduced in 2005, bars the grant of patents to new forms of known substances,
unless the new form results in significant enhancement in efficacy over the
known substance.
Immediately after the
Apex Court’s ruling the shares in Novartis’ Indian unit plunged to a 14-month
low while rivals climbed. Novartis shares slumped 6.8 per cent to `
558.10 at the Bombay Stock Exchange; its lowest since January 2012. The
judgment was seen as a boost for Indian drug giants such as Dr. Reddy’s, Cipla,
Ranbaxy Laboratories and Natco Pharma, which make cheaper generic versions of
Glivec. Cipla rose 2.63 per cent to ` 389.0 while Natco
jumped as much as 10.72 per cent to ` 475.05. Dr. Reddy's was
up 2.64 per cent at `
1,813.00. Top drug maker Ranbaxy rose 2.77 per cent
to a high of `
452.7 rupees.
Conclusion
The Supreme Court order
will greatly strengthen the quest for access to affordable medicines in India.
The decision affirms the idea that a patent regime loses its social relevance
when a drug is priced beyond the reach of the vast majority of a country’s
people. That pharmaceutical companies employ high pricing to limit the number
of beneficiaries of “blockbuster” patented molecules and even older
“evergreened” medicines is an irony, because making additional copies of a drug
is not expensive. On the other hand, cost control and dispensing of essential
medications in government-run health facilities is affected, because many
States have no centralised procurement system. It is unsurprising, therefore,
that less than 10 per cent of medicines sold in India are under patent, while
the vast majority are branded generics. The court order should prompt producers
of patented drugs to move towards liberal licensing and low cost manufacture in
India, the pharmacy of the South that produces ` 100,000
crore worth of medicines annually and sells nearly two thirds within the
country. It is a matter of concern that at least a dozen pharmaceutical
innovations used in the treatment of cancer, HIV/AIDS, and Hepatitis B and C
are not affordable to even the upper middle classes, and impossible to access
for the poor.
The Supreme Court
judgment denying Novartis a patent for the beta crystalline form of its
leukaemia wonder drug Imatinib Mesylate (sold as Glivec) is not a blow against
research and innovation. Nor is it designed to hold down drug prices via patent
busting. Novartis lost its case on technical grounds. It failed to establish
that the drug's new form was sufficiently patentable. Says the judgment,
"whether or not an increase in bioavailability leads to an enhancement of
therapeutic efficacy in any given case must be specifically claimed and
established by research data. In this case, there is absolutely nothing on this
score apart from the adroit submissions of the counsel. No material has been
offered to indicate that the beta crystalline form of Imatinib Mesylate will
produce an enhanced or superior efficacy (therapeutic) on molecular basis than
what could be achieved with Imatinib free base..." This failure to
establish eligibility for a patent under the law, rather than any desire to use
patent busting as a way to cheapen drugs, guided the Apex Court. This is a
welcome step.
Drug companies who want
to see in the verdict a generalised case for weakening patents are in denial.
The law on patents has changed and Section 3(d) does allow incremental
inventions to be patented, provided they entail demonstrable novelty and improved
efficacy. The judgment makes this explicitly clear.
Now, the drug
multinationals should rethink their strategy of keeping nominal rates of
patented drugs high while giving away large volumes of expensive drugs for
public relations purposes, and welcome price control instead.
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