The patent system is devised on the principle that the innovators should receive incentives to disclose their technologically-advanced innovations to the public. A limited monopoly is granted to innovators for such research disclosures. There are two important but conflicting consequences of a patent grant, one being the monopoly granted to the innovator, the second the severity of its impact on public interest. A balance between these two aspects is extremely important for any country. In India, a developing country where more than one-third of the population lives below the poverty line, public interest is an important factor in deciding the monopoly of an innovator.
The Patent Act, 1970 (the Act), under Section 48, provides an exclusive right to the patentee to exclude third parties from making, selling, offering for sale, using or importing the patented product or process; on the other hand, it safeguards the public interest by providing provisions for compulsory licensing under Chapter XVI, which was introduced in the Act by the amendment act of 2002 to comply with the TRIPS Agreement. Section 83 of the Act provides that patents are granted to encourage innovations and to ensure that patented inventions are worked in India to the fullest extent. It further provides that patents are granted to promote technology development in India and to make the patented invention available to the public.
Section 84 of the Act provides that a grant of compulsory license can be requested by any person interested after the expiry of three years from the date of grant, if the reasonable requirements of the public are not satisfied by the patented invention, or if the patented invention is not available to the public at a reasonable price, or the patented invention is not worked inthe territory of India. The intention of the legislature is clear that the monopoly is granted to encourage inventions which are available to the public at reasonable prices. Thus these provisions of the Act, when read in conjunction, clearly appear to balance public interest and the rights of innovators or patentee.
The judiciary has a role to play in striking this delicate balance, particularly where pharmaceutical products, more specifically life-saving drugs, are involved. While deciding the balance of convenience in the injunction plea of Franz Xaver Huemer, Chief Justice MJ Rao of the Delhi High Court stated that factors such as defendants’ investment, loss of employment, public interest in the product being a life-saving drug, product quality coupled with price, or the defendant being smaller in size, should also be considered, which may lead to a judgment going against the plaintiff.
Similarly, the Bombay High Court, while deciding the motion of Novartis for seeking orders against Meher Pharma to restrain Meher from manufacturing, selling, marketing and exporting Veenat (the generic version of Novartis’ anti-cancer drug Glivec), showed concern that if an interim injunction were granted to the plaintiff, the manufacturing network of the defendants would be dismantled and, if eventually the plaintiff failed to make the drug available in the required quantity at reasonable prices in India, it would be disastrous to patients. Following the same approach, Justice Ravindra Bhatt of the Delhi High Court dismissed the ad interim injunction application of Roche for restraining Cipla from manufacturing, offering for sale, selling and exporting Erlocip, the generic version of the Roche-patented drug Tarceva.
The Controller General of Patents, while deciding the first of its kind application involving compulsory licensing of Bayer’s patented drug Nexavar to Natco, has elaborately dealt with the issue of public interest. The Controller General was of the view that the term “reasonably affordable price” should be construed predominantly with reference to the public. The Intellectual Property Appellate Board (IPAB), while dismissing the interim stay petition of Bayer against the grant of compulsory license to Natco, reiterated the determination that the term is directly linked to the purchasing capacity of the public.
There is no denying the stark reality that a vast majority of people of the least-developed nations – and most of the developing nations – find prices of a large proportion of life-saving drugs unaffordable. This is further compounded by weak social health care infrastructure, unaffordable health insurance and the inavailability of the drugs in government hospitals, forcing hospitals to finance the drugs at a huge cost. Therefore, there is a need for a paradigm shift in the way the pharma sector conduct business, particularly in these parts of the world. The flip side is the huge costs incurred on development, testing, trials and patenting worldwide by the innovating entities, costs they seek to recover through their drug pricing mechanism. In absence of any incentive, no drug entity will invest in such development, and thus availability of new, more potent drugs will suffer. The drug entities may reduce development costs by outsourcing to countries like India, and affordability may be improved by social pricing based on what a each jurisdiction can bear. Some entities tend to mitigate poor patients’ hardship, even in developed countries, by selectively making available drugs free of cost to them. There is need to develop suitable models so that while on one hand, the innovating entity has sufficient incentive to develop new drugs, at the same time patients of various social strata have fairly equal access to such drugs.
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