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 01 Introduction and Background

02 The Law Relating to Patents in

India

03 Legal Tools for Safeguarding

CONTENTS Public Health

04 Case Study: Novartis AG v. Union

of India [AIR 2013 SC 1311]

05 A Critical Assessment of the Law

on Pharmaceutical Patents in
India and its impact on access to
Lifesaving Drugs
01 Introduction and Background
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Why does Patenting Matters in the

Pharmaceutical Industry?

The Indian Pharmaceutical Industry

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 Why does Patenting Matters in the Pharmaceutical Industry?

• The Pharmaceutical Industry is purely a science-based, innovation-intensive industry which naturally

warrants the necessity of patents.

• Moreover, being a socially sensitive industry, particularly in the light of good health being a basic hum
an right, controversies about the welfare implications of pharmaceutical patents have characterised t
his industry ever since its inception. However, in the course of the past three decades, the establishm
ent of a strong tendency towards extremely tight IP regimes has made this debate even more heated.

• In addition to this, the occurrence of pandemics, like the ongoing Novel Coronavirus Global Pandemic
makes the issues with regards to pharmaceutical patents even more compelling and pertinent.

• The factors which have led to the re-emergence of this issue are provided for in the next slide:
 Your great subtitle in this line
• The factors which have led to the re-emergence of this issue are as follows:
 Advent of biotech:
i. Progresses in molecular biology and their increasing relevance for industrial innovative activities have strained to th
e limit a patent system which was essentially conceived for technologies like mechanical engineering and chemistry
.
ii. Stretching the notions of novelty and usefulness
iii. The development of the biotechnology industry itself is strictly dependent on a highly favourable IPR regime
iv. The transformations of the latter have been significantly influenced by the growth of the biopharmaceutical sector.

 The spread of policy doctrines aiming at facilitating the commercial exploitation of publicly funded research: a majo
r impetus to this phenomenon was given by the Bayh-Dole Act or the Patent and Trademark Law Amendments Act
(Pub. L. 96-517), in the USA in 1981 and there have been subsequent attempts to import at least part of its principl
es in other countries as well.

 The TRIPS Agreement: The pharmaceuticals industry is one the main supporters of this Agreement, because of certa
in terms favourable to the players in the industry on a large-scale basis. This has ignited raging controversies which
go beyond domestic boundaries, reaching the global level.
 The Indian Pharmaceutical Industry
• The pharmaceutical industry in India is a largely successful one. In terms of the volume of production, it is the second
largest pharmaceutical industry in the world, with exports being made to around 200 countries across the world.
• The current players in the pharmaceutical industry comprises of several privately owned Indian companies that have
captured a substantial share in the domestic pharmaceutical market due to factors such as favourable government p
olicies and limited competition from foreign competitors. In addition to this, the liberalisation of the Indian economy
has led domestic players to shift from domestic markets and prepare for international competition.
• This has become possible due to their increasing investment in Research & Development (R&D) activities, which has
resulted in more and more inventions, thereby increasing the number of patents granted. Dr. Reddy’s Laboratory, CI
PLA, and Ranbaxy are some examples of the prominent Indian Multi-National Pharmaceutical Companies, which hav
e international presence due to technological excellence
• The Indian pharmaceutical industry is known for making available essential drugs at affordable prices, by creating ge
neric versions of lifesaving drugs. At present, India provides for 20% of the world’s generic-drug market. It is interesti
ng to note that India provides 90% of the developing world’s AIDS medicine supply and 50% of the world’s AIDS medi
cine supply.
• Further, since 2000, the pharmaceutical sector has attracted a Foreign Direct Investment of more than 12,000 Millio
n US Dollars.
02 The Law Relating to Patents
in India

The Patent Act, 1970.

The 2005 Amendment to the Patent Act, 1970.

 The Patent Law in India
• Patents in India are regulated by the Patents Act of 1970. This legislation applies to pharmaceutical
patents as well.
• One interesting aspect of the 1970 Act was that it granted only process patent while disallowing pro
duct patents in the highly sensitive and socially relevant health sector. Additionally, the law also restr
icted the validity period for process patents in the health sector to 7 years from the date of filing or 5
years from the date of sealing, whichever is earlier.
• Such a stance of the 1970 Act was to protect the Indian pharmaceutical industry and to create an at
mosphere where prices of drugs are controlled, which ultimately worked well in the interests of the
general public.
• However, a fallout of this was that, many foreign companies were discouraged by the 1970 Act from
Investing substantially in India , which in turn has caused lack of research into new drugs domesticall
y.
 The 2005 Amendment to the Patents Act, 1970
• A major change in the patent law of India was brought about through the enactment of the Patent
(Amendment) Act, 2005. The main reason of this amendment was to make patent laws in India com
pliant with the provisions of the TRIPS Agreement, which India had signed.
• As far as pharmaceutical patents are concerned, after the 2005 Amendment, both processes and pro
duct could be patented for up to a period of 20 years, although special provisions were included to p
revent ever-greening of patents.
• Though this Amendment was a milestone in addressing the concerns raised by pharmaceutical comp
anies earlier, its introduction did not cease patent disputes, particularly in the context of Compulsory
Licensing.
03 Legal Tools for Safeguarding
Public Health

Compulsory Licensing

Parallel Imports

Pre-Grant Opposition
 (A) Compulsory Licensing
• Compulsory Licenses are authorizations given to a third-party by the Government to make, use or sell a particular p
roduct or use a particular process which has been patented, without the need of the permission of the patent owne
r.
• This concept is recognised at both national as well as international levels, with express mention in both the Indian
Patent Act, 1970 and Article 31 of the TRIPS Agreement. There are certain pre-requisite conditions, given under sec
tions 84, which need to be fulfilled if a compulsory license is to be granted in favour of someone. As per Section 84,
any person, regardless of whether he is the holder of the license of that Patent, can make a request to the Controll
er for grant of compulsory license on expiry of three years, when any of the following conditions is fulfilled:
a) the reasonable requirements of the public with respect to the patented invention have
not been satisfied
b) the patented invention is not available to the public at a reasonably affordable price
c) the patented invention is not worked in the territory of India.
• Further, compulsory licenses can also be issued suo motu by the Controller under Section 92 of the Act, pursuant to
a notification issued by the Central Government if there is either a "national emergency" or "extreme urgency" or i
n cases of "public non-commercial use".
• India's first ever compulsory license was granted by the Patent Office on March 9, 2012, to Natco Ph
arma for the generic production of Bayer Corporation's Nexavar, a lifesaving medicine used for treati
ng Liver and Kidney Cancer. Bayer sold this drug at exorbitant rates, with one month's worth of dosa
ge costing around Rs. 2.8 Lakhs. Natco Pharma offered to sell it for around Rs. 9000, thereby making
it affordable for people belonging to every stratum. All the 3 Conditions of Section 84 of the Patent A
ct, 1970 were fulfilled and the decision was taken for the benefit of general public.
• Even though Compulsory Licensing ceases the exercise of exclusive rights to a product or process by
the patent holder, the holder would still have some rights over it, including the right to be paid for th
e authorised copies of the product.
 (B) Parallel Import
• Parallel imports (sometimes referred to as gray market goods), refer to branded goods that are impo
rted into a market and sold there without the consent of the owner of the trademark in that market.
• For instance, in Mozambique, 100 Unites of Bayer Pharma’s Ciprofloxacin costs USD 740, but India s
ells the same quantity of the same drug for USD 15, owing to local generic-drug competition. In such
a situation, Mozambique can import the drug from India without Bayer’s consent.
• This concept is based on the Theory of Exhaustion of IP Rights, which stipulates the extent to which I
P rights holders can control the distribution of their branded goods. According to the Concept of Exh
austion, once IP right holders sell in a particular jurisdiction a product to which their IP rights are atta
ched, they must allow the resale of that product in that jurisdiction. The IP rights covering the produ
ct have been “exhausted” by the first sale.
 (C) Pre-Grant Opposition
• Pre-grant opposition gives third parties the opportunity to oppose the grant of a patent just after pu
blication of the patent application , that is, a party need not wait until the grant itself.
• In the Indian Patent Act of 1970, according to Section 25(1), any person may, in writing, oppose the g
rant of a patent following publication of the patent application but before the grant of the patent ba
sed on the grounds stated in Sections 25(1)(a) to (k). The decision is to be taken by the Controller of
Patents.
• Pre-grant opposition acts as a defensive shield to confirm the validity of the patent applications befo
re patents are granted to the applicant. Furthermore, pre-grant opposition usually functions as a bus
iness approach, where opponents take it as an opportunity for opposing the granting of unlawful pro
tective rights.
04 Case Study: Novartis AG v.
Union of India
Supreme Court of India
AIR 2013 SC 1311.
 Case Study: Novartis AG v. Union of India
• FACTS: Novartis is one of the world’s leading pharmaceutical companies. They filed a patent application f
or its new version of a cancer drug, called Glivec, which happens to be an expensive one. Glivec was alrea
dy in the market, and Novartis decided to seek a patent on a slightly altered version, in order to potential
ly give them a longer period of market exclusivity in Indian Markets.
• ISSUES: (a) Whether Glivec is a patentable product?
(b) Whether it involves ever-greening?
• ARGUMENTS: Novartis took the plea that the drug is patentable due to the fact that they had made signi
ficant alterations to the composition of the drug. Furthermore, they also challenged Section 3(d) of the P
atent Act, 1970 as being violating of Article 14 of the Indian Constitution, and also the provisions of the T
RIPS Agreement.
• DECISION: The Supreme Court upheld the constitutionality of Section 3(d) of the Patents Act, 1970, and
also, rejected the granting of patent to Novartis on the following grounds:
 Mere modification does not give novelty to the product and the applied product has
no better effect than the already existing drug.
 If the application is allowed to grant patent for glivec it becomes re-patenting and lie
within the purview of ever greening which is prohibited under the Indian Patent Law.
 Since the patent for the already existing drug has expired manufacturing and selling
of generic versions within the country at cheap rate.
• The Judgment has thus made it easier to extend the accessibility of the generic drugs through its ext
ensible manufacturing and distribution, thereby reducing its cost on consumers.
• This decision implies that the standard of granting drug patents in developing nations must be mater
ially different from that in the developed world. This is because of variety of reasons, the most promi
nent being the peculiar socio-economic conditions prevalent in the developing world, which India is
part of.
• Most importantly, the Court made it very clear that no patent can be granted for the new form of a k
nown substance if it lacks ‘increased therapeutic efficacy’. Mere minor changes or insignificant altera
tion made to new form of a known substance would not ipso facto make it eligible for the grant of a
patent, unless it can be proved that its therapeutic efficacy has been enhanced by such changes or al
terations. The Court in this decision reiterated that this crucial aspect had not been proved by Novar
tis. The judgement of the Supreme Court is based on this rationale which needs to be appreciated.
05 A Critical Assessment of the
Law on Pharmaceutical
Patents in India and its
impact on access to
Lifesaving Drugs

Criticisms of the Approach of Indian Law

Suggestions to Improve the Current Scanario

Conclusion
 Criticisms of the Approach of Indian Patent Law
• Although the legal position with respect to pharmaceutical patents are fine-tuned to be relatively mo
re beneficial to consumers, it results in certain drawbacks.
• The most pertinent shortcoming is that, such protective measures like compulsory licensing would ser
ve as a disincentive to pharmaceutical companies. This implies that companies may not be interested
in further research into developing new and more effective drugs if they are not going to be granted
sufficient protective rights over their products. This would also in turn lead to lower investment in Res
earch & Development.
• Another important point to be noted is that, the development of a new drug often puts a huge financ
ial strain on pharmaceutical companies, which would naturally be reflected in the price of the drug. L
owering such prices with government mandated ceilings and the like would only put companies in a
detrimental position.
 Suggestions
The following initiatives may prove to be beneficial for the interests of both consumers and the players i
n the pharmaceutical industry:
• The Government should step in to take proactive measures to ensure accessible healthcare for all, an
d introduce subsidized insurance schemes where health coverage, including the cost of medicines ex
tends to the poorest of the poor.
• The Government should invest in research and development right at the Higher Education/University
level to come up with more economically priced drugs, which would be under the licensure of the Go
vernment itself. Mobilising Public Sector Undertakings for this purpose may also be a viable option.
• Open Source Drug Discovery (OSDD) network is an emerging platform designed to garner resources f
or developing drugs that pharmaceutical companies would not find attractive to invest into, the logic
being, whatever drugs the OSDD comes up with would not be patented because it is the governmen
t’s funds that has been invested into the research.
 CONCLUSION
The Indian measures in the light of the topic, as discussed above were enacted through less complex legi
slation with more discretion left to the Indian Patent Office and Courts. The law barring new forms and u
ses of known chemicals was meant to counteract criticism that pharmaceutical companies elsewhere ha
ve been able to gain protection for longer than their initial discoveries warrant through creative claiming
of new forms and uses of chemicals. It also meets the local needs, which, in the case of India, include bo
th a large patient need for lower-cost medicines and also, the needs of the local generic drug industry. T
herefore, it can be said that in an era where healthcare is assuming a transnational character, the import
ance of the international human rights cannot be understated. It should be understood that the right to
health cannot by itself be understood as a traditional right which is enforceable against the State but a c
onscious effort should be made to formulate and acknowledge the right to health as a positive right at t
he global level.
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