Drug Patents and Prices: An Indian Perspective

24 September 2012

According to Government of India estimates, the proportion of the population living below poverty level in India is about 37%. According to a study, India has about 80 million cardiac patients, about 60 million diabetics, about 50 million suffering from asthma, about 50 million hepatitis B patients, and about 14 million tuberculosis patients. The World Bank has estimated that India will have 35 million HIV cases by 2015. While the country registered GDP growth of 7.4% in last year, public spending on healthcare is only about 1% of the GDP. The availability and affordability of life-saving drugs to the poor of India continues to be an area of concern.

India had a process-based patent regime for chemical inventions until the end of 2004. This regime enabled Indian generics manufacturers to manufacture and provide life-saving drugs at a much lower cost as compared to branded drug manufacturers. The 2005 amendments to the Patents Act has changed the scenario. The innovating multinational pharmaceutical companies have been developing new drugs and filing patents in India. Many of these applications have resulted in product patents and, consequently, these companies enjoy monopoly status for the manufacture and supply of these drugs. However, very few of these drugs are new chemical entities; in fact, a very large percentage of the granted patents relate to incremental innovations.

Recently, there have been instances where an interim injunction was not awarded in a patent infringement matter, keeping in view high price of the patented drug. In the matter of Roche v. Cipla, the Delhi High Court observed that Cipla sells a generic version (Erlotinib) of Roche’s patented drug Tarceva at one third the price of Roche’s product. The Court stated that granting an injunction to Cipla in view of Roche’s patent would be an injustice to Indians who depend on this drug and will cause irreparable injury to the life of many. Therefore, Roche was not entitled to an interim injunction.

The Intellectual Property Appellate Board (IPAB), in a decision dated June 26, 2009, on the Glivec matter, stated that the subject matter of a patent application claiming the beta form of Imatinib Mesylate was rejected on the grounds of Section 3(d) and Section 3(b). Section 3(d) proscribes derivatives compounds until and unless they exhibit improved efficacy. Section 3(b) proscribes an invention for which the primary or intended use or commercial exploitation of which could be contrary to public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment. The IPAB stated that the Appellant, while holding the exclusive marketing rights for the “Gleevec” mark, charged Rs120,000 (US$2,600) per month for a required dose of the drug for a cancer patient, which is a high price for a common man in India. Therefore, any patent granted to support such a monopolistic high price would be against public order. It appears to be the first instance where Section 3(b) has been invoked by the appellate authority to justify rejection of a patent application for its high price.

The Draft Patent Office Manual on the Indian Patent Office website lists a few examples of kinds of inventions that fall in the scope of Section 3(b). Clearly, the list does not include “price” as one of such factors. According to analysts, if such would have been the consideration of the legislature at the time of framing section 3(b), price-related issues should also have been clearly included in this section or such interpretation should have been given in draft manual. Also, if the drug has been so offending to the public order or morality, the drug should have been banned in toto from sale in the country and should not have been allowed for sale in the country under the exclusive marketing rights provisions.

After the grant of a patent, there are legal provisions available to Indian Government to restrain the Patentee from abuse of a patent. An invention which is not available to the public in sufficient quantity and at affordable price can be compulsorily licensed under these provisions of Indian Patents Act. Further, Section 3 of the Essential Commodities Act, 1955 also empowers the Indian Government to control and regulate production, supply, distribution and prices of essential commodities including drugs.

The originator drug companies claim that cost of new drug development can range from US$800 million to more than US$1.5 billion, which it claims justifies the high prices of branded drugs. According to an estimate, one out of five drugs that enter the clinical testing stage receive regulatory approval in the United States and are finally marketed. Though these figures are questionable in the majority of cases, the high cost is due to conducting research and trials in high-cost economies, while a majority of potential users are in below povertylevel economies.

According to World Health Organization estimates, 65% of Indians lack access to life-saving drugs because of high cost. The optimum prescription for the originator pharmaceutical companies to balance profits and pricing would be to carry out drug development in a country like India, where a large, highly qualified, highly-motivated and skilled scientific population is available at a fraction of the cost. Already a few pharmaceutical corporations have set up research and development centres for drug development and have outsourced clinical trials to India. Such initiatives, if replicated on a large scale, would go a long way towards reducing drug costs, thereby mitigating the hardships of poor patients the world over.

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