PATENT PROTECTION AND PHARMACEUTICAL INDUSTRY: BALANCING INCENTIVES AND ACCESS TO MEDICINE

This article is written by Sangamithirai. V of Chettinad School of Law

ABSTRACT

The relationship between patent protection and access to medicines in India’s pharmaceutical industry is a complex and multifaceted issue. As a signatory to the TRIPS Agreement, India has undergone significant changes in its patent laws, to align with international standards while attempting to safeguard its domestic health needs. This paper examines the impact of patent protection on the Indian pharmaceutical industry, focusing on the balance between incentivizing innovation and ensuring access to affordable medicines. It traces the evolution of India’s patent laws, from the exclusion of pharmaceutical products in the 1970s to the introduction of product patents in 2005[1]. The paper analyses the role of compulsory licensing, a provision that allows generic manufacturers to produce patented drugs under certain conditions, in promoting access to essential medicines. The study also explores the economic implications of patents, including their impact on drug pricing and welfare losses. It discusses the legal and regulatory framework governing pharmaceutical patents in India, highlighting landmark judicial decisions that have shaped the landscape. Furthermore, the paper provides a comparative analysis of India’s patent laws and their impact on access to medicines with those of other countries, particularly in the Global South. It examines the role of international organizations in advocating for access to medicines and influencing patent policies.

KEYWORDS

Trips, Patents, Pharmaceutical industry, Drugs.

INTRODUCTION

One of the largest sectors in India where patent protection comes head-to-head with public health access is that of pharmaceutical industry. India’s patent laws have severely evolved over the decades especially after its accession to TRIPS, at a time when it sought global consensus on Details of Trade-Related Aspects of Intellectual Property Rights while still taking care of domestic health requirements. India, known for its strong capacity to produce generic drugs in his pharmaceutical sector has had a history where it thrived under a process patent regime rather than product patents. A typical example (that achieved the opposite of what you now expect) is when local firms were allowed to copy patented drugs and mass-produce cheaper versions them, which increased access for millions. Nevertheless, the case of product patents after 2005 has come under fire from critics who worry that this provision will increase drug prices and according reduce access once more to low-income groups. The difficulty lies in protecting the rights of patent holders who claim they need their patents to make a return on investment from R&D (research and development) expenses, while preserving everyone’s right for affordable medicines. The TRIPS Agreement[2] introduces the concept of compulsory licensing, which enables a government to permit qualified firms in member states able to produce patented drugs without consulting the patent holder first under specific situations that lead to wider access for essential medications. Further, this Declaration reiterated that countries have the right to put public health interests ahead of patent rights and call for controlled access to medications.

The pharmaceutical industry is running into an unprecedented patent cliff and with it the issue of replenishing a depleted pipeline of new therapies. To better understand the situation, you might need to have an in-depth look at some ways by which companies are seeking longer patent life for their products such as getting more patents based on new formulations or uses. Although these practices are not illegal, and there still is some ongoing debate to what extent they may have a competition-inhibiting impact in the market. Critics claim that this type of “strategic patenting” may block competition and stall the introduction of cheap generic copies to US markets, thereby harming consumer welfare as well as public health outcomes. In addition, the general nature of patent law worldwide, particularly in developing countries makes this balance hard to attain. Urband last advised guidelines to be followed for countries during transition from process patent regime ( under the TRIPS Agreement) as being witnessed by India in form of product patents thereby having far reaching consequences on local manufacturing and availability. For policymakers, industry stakeholders and patients alike, the delicate balance between protecting intellectual property rights on one hand but ensuring that life-saving drugs are accessible to people who need them is an issue of persistent concern.

RESEARCH OBJECTIVES

• An overview of compulsory licensing in India
• Trips agreement and patent laws in India
• Government agencies and funding
• Challenges and recent discoveries:
• Access to essential medicines
• Indian pharma innovation, ai and biotechnology
• Government agencies and funding

RESEARCH QUESTION

How has the TRIPS agreement impacted on India’s pharmaceutical patent regime and what impact it will have for public health?

RESEARCH METHODOLOGY

Research Methodology: Doctrinal. Library-based research, otherwise called doctrinal inquiry which involves the examination of prevailing laws, judgments and scholastic literary works. It exposes the student to theoretical and conceptual dimensions of law by demystifying legal doctrines, principles and jurisprudence. The doctrinal research with the help of primary sources is conducted by way of Statutes, reasoning and decision making bodies (Courts), or authoritative texts. He read the secondary sources such as commentaries, articles and digests. This process involves a systematic review of research through identification, gathering, and examination to analyze the sources while making use of reason-based conclusions based on logical reasoning aimed at preserving scientific integrity. This paper, through doctrinal research purposes to provide an in depth as well as a coherent understanding of the relevant legal framework. Below we define the principles of an ISM methodology that aims to examine sources within a comprehensive study and uses contextual analysis in order to build one coherent view about research question. Synthesis: Doctrinal research balances the interpretation of a subject matter by bringing together varied materials and viewpoints.

TRIPS AGREEMENT AND PATENT LAWS IN INDIA

One of the major sectors where India has seen consequences of TRIPS on its Patent laws is: Pharmaceutical Industry. India had a process patent regime before TRIPS that permitted the production of generic versions for patented drugs. But in 2005, TRIPs kicked in to require India to introduce product patents, which would allow a patent holder an exclusive right on the technology or technique for at least 20 years. In India, the consequence of this is on availability of medicines. When product patents were introduced it increased drug prices and made access to essential drugs more difficult for poorer populations. Yet, the TRIPS Agreement also includes flexibilities that permit nations to give prominence for public welfare.

The TRIPS Agreement contains several flexibilities to help ensure that patents granted do not play off patent protection against public health needs:

Countries may issue compulsory licenses, allowing the production of generic versions of patented drugs under certain conditions (e.g., in response to a public health emergency or when prices are unaffordable).

Parallel importations allow countries to import patented drugs from other regions where the same are offered at a lower price without having the permission of patent holder.

Bolar Exception is an exception to the patent rights, countries may permit generic manufacturers to conduct research and development (r＆d) on patented drugs prior to termination of the patent in order that generics are able be brought onto market more expeditiously.

Countries also get to set their own standard of patentability  for instance, India has implemented a provision in its Patents Act called Section 3(d)[3], which more or less eliminates the possibility that major corporations can receive patents off minor tweaks on existing drugs.

AN OVERVIEW OF COMPULSORY LICENSING IN INDIA

Compulsory Licensing is a provision in the law that enables a third party to produce and market or use its own patented product without the consent of patent holder; however, there are certain conditions under which this can be done. It does so by providing a mechanism to address one of the most important tools for increasing access to medicines namely in a developing country like India where large parts of population rely upon what are affordable healthcare solutions.

Legal Framework

The legal underpinning necessary for the grant of a compulsory license in India is provided by Indian Patents Act, 1970 as amended to ensure compliance with TRIPS Agreement. Under Section 84[4] of the Act, a compulsory license must be made available by third year from grant of patent in two instances i.e. The invention patented here does not meet the reasonable requirements of the public.

For the patent-holding invention, it is likely not available to the general populace at a cost that is considered “reasonable”. Patented invention is not worked in the territory of India and to obtain a compulsory license, an applicant must show it has tried to secure a voluntary license from the patentee on reasonable terms but was not able to do so within a certain amount of time. If requested, the conditions of a compulsory license including royalty are to be committed by Controller of Patents.

Examples of Compulsory Licensing

1. The biggest example of compulsory licensing in India took place back in 2012 when Natco Pharma was given a licence to manufacture generic version of Nexavar, drug used for treatment against liver and kidney cancer, which was patented by Bayer. At ₹2.8 lakh per month (about $5,000), the Indian Patent Office found that Bayer was not meeting the reasonable requirements of public by pricing something most patients could never afford. Natco was given permission to market its own version for about ₹8,800 (around $175) a month — much lower than the original would have cost and thus helping patients who really need it.

2. Compulsory licensing and antiretroviral drugs:

A second key scenario in which compulsory licensing has been used is with antiretroviral (ARV)[5] drugs for HIV/AIDS treatment. The government of India had even contemplated invoking compulsory licenses to stem the soaring prices ARVs which were busting budgets in providing these life-saving drugs. In India, millions of individuals depend on these medications for their health and survival — the availability of generic versions has played a key role in containment efforts directed towards the HIV/AIDS epidemic.

What the Ruling could mean for Drug Access

The Indian mandatory licensing provision is an important mechanism for states to ensure access to essential medicines, especially those needed against life-threatening diseases. Through permitting plants within the nation to manufacture patented drugs, India can help off-set high drug pricing which typically accompanies patent protection. This does not only improve public health outcomes but is also in line with international public health commitments, such as those enunciated in the Doha Declaration which affirms that patent rights take second place next to access to medicines.

IMPLICATIONS FOR GENERIC PHARMACEUTICALS

Failure to enforce these legislative measures has meant that India is now known as the “pharmacy of the developing world,” with a potential capability to supply millions at an affordable cost. In theymdq of 2022-23, India represented 20% by volume of all-inclusive nonspecific Original drugs with pharmaceuticals worth ₹2.04 trillion being sent out to more than 200 countries. The strong export market highlights how India provides competitively priced medicines, especially for serious health issues such as cancer, tuberculosis and HIV/AIDS. Thanks to the capacity for production of generics, not only more affordable medicines were made available to consumers at home but also across other emerging economies. Indian pharma companies have built compelling capabilities to manufacture high-quality drugs at nearly one-tenth the cost needed in countries like US, which has been crucial for global access concerns plaguing healthcare, Systemic victims Quite a few examples of this phenomenon exist.

CHALLENGES AND RECENT DISCOVERIES

While That said, success has not been universal and currently India’s existing laws are facing significant challenges thanks to some proposed amendments that could be threatening the ‘delicate’ balance much of it achieved through subsequent laws of a liberal patent regime. The Draft Patents (Amendments) Rules, 2023[6] currently being proposed and that could bring in fees for pre-grant opposition as well centralize patent authority may end up eroding the barriers which have so far protected generic industry. Industry stakeholders are worried that these changes could potentially curtail access to medicines at an affordable level and limit the commercially vibrant environment on which both Indian markets as well global health is thriving.

Current Pricing Dynamics

While it is true that product patents have generally led to higher prices for many patented drugs, For example, a recent study revealed that cancer drug costs dramatically increased with some treatments having prices increase ten times in the past few decades. This has dramatically increased the financial burden on patients (where 90% of Patients pay out-of-pocket) in a country where around for purchasing medicines.

Consequences of Pharmaceutical Pricing Controls

To manage the effect of high prices, India has taken different measures like price control through National Pharmaceutical Pricing Authority (NPPA)[7] DOCX Drug Prices Control Order (DPCO) 2013[8]: A key instrument in the price regulation of essential medicines While it is true the introduction of DPCO 2013 shrunk prices for a subset of selected anticancer drugs thereby making them unaffordable leading to reduced utilizations in private sector.

ACCESS TO ESSENTIAL MEDICINES

The Indian government, very wisely decided more than a decade ago to permit companies other than the patent holder company to use patented processes under two conditions first that such production is solely intended for export purposes and secondly if it serves any immediate emergency public health situation in India. In such a scenario, not only do many patients forgo necessary treatment, but they also find themselves obliged to borrow money from usurious sources; in more than one, individuals or families have fallen into abject poverty. More than 55 million people were driven into poverty by out-of-pocket medical expenses, much of which was drug costs.

The Role of Generics

The strength of India in generics is very important as it offers an alternative to high-cost life-saving drugs. Which has permitted several people use prescriptions which would be also prohibitively expensive. The current status quo may foreseeably continue to be maintained, but recent transformations in patent laws and Pharma MNCs pressures might bend this equilibrium more towards cost, thereby augmenting the prices of essential medications with restrained access.

Rising competition: The advent of product patents transformed the competition landscape in India by ushering exclusive rights for production and sell to multinational pharmaceutical companies combating against patentable drugs being manufactured within Indian boundaries.

Reverse engineering problems: Local companies encountered problems in reverse engineering patented drugs, as they were no longer able to develop separate manufacturing processes for producing generic versions.

Higher R&D spend: Indian pharma companies had no choice but to invest more in research and development to develop new drugs or find alternatives for existing molecules just in order not to be left out.

Oppositions by Indian companies were also filed to ensure strong enforcement of the law and voluntary licensing arrangements, patent disputes while resisting stronger patents rights enforcing to limit the size of protected market

Further entrenched in generics: However, EPharma Indian companies retained their hold over the domestic market and remained a key provider of cheap generic medications to low-income countries.

Safeguards and Flexibilities

To keep a balance between the rights of patent holders and public health requirements, India has included certain safeguards and flexibilities in its Patent laws.

Section 3(d): This provision limits the extension of patent protection to imperceptibly small or trivial changes in known substances, closing one route to “evergreening” and keeping affordable generic medicines on the market.

Compulsory licensing: This law allows the government to issue a compulsory license that will enable manufacturers other than the licensor of record to produce a patented product under conditions in which commercial production is not performed on reasonable terms or at enough (for items).

Pre-grant and post-grant oppositions: They allow for objections, by third parties before as well as after grant of a patent to stop the granting of frivolous patents.

INDIAN PHARMA INNOVATION, AI AND BIOTECHNOLOGY

Pharmaceutical innovation and patenting are undergoing a significant transformation in India through the emerging technologies such as artificial intelligence (AI) or biotechnology. These state-of-the-art applications speed up drug discovery, its adaptation for individual patients, and fine-tuning of drug developmental processes.

AI for drug discovery and development:

By analyzing enormous datasets and predicting interactions at speeds far beyond the capacity of human researchers, AI algorithms are changing drug discovery. This accelerates the screening process, lowers costs and enhances drug approvals. AI is transforming clinical trials, determining the best patient candidate for a trial, predice results and facilitating recruitment.

Biotechnology and personalized medicine:

Biotechnologies with AI-based technologies are being extended to personal level treatments as tailored per the patient characteristics. Applying Artificial Intelligence to genomic data, along with lifestyle factors and medical histories allows for the personalization of therapies designed such that they work best while causing fewer side effects. This practically-focused approach is likely to underpin enhanced treatment efficacy and quality of life.

Impact on patenting:

Artificial intelligence and biotechnology are two examples of how patents for pharmaceuticals in India have seen a change. These technologies create innovation at an incredible rate, and with that comes increased demand for ensuring intellectual property rights are protected. On the other hand, patenting of AI-generated inventions and a broader scope for patents on biotechnology become newer challenges to difficult ideas for Indian Patent System.

GOVERNMENT AGENCIES AND FUNDING

Recognizing the significance of promoting a robust research and innovation ecosystem in pharmaceuticals and medical technology, Government of India has promulgated new rules. From the perspective of innovation in pharma-MedTech sector, such as National Policy on Research and Development and Innovation (RDI)[9] in Pharma-MedTech Sector, Scheme for Promotion of R&D & Quality manufacturing by Industry etc. focusses towards AtmaNirbhar Bharat to bring self-reliance with reduced external dependence thereby bringing industry-academia linkage).

CHALLENGES AND FUTURE DIRECTION

The confluence of AI and biotech is about to open tremendous opportunities, but it will also face many pitfalls along the way. These concerns range from data quality and accessibility, regulatory contradictory nature among different countries or regions, inclusive of privacy challenges to access the use case quickly over others due to lack of skilled workforce. Getting over these hurdles would be important for India to realize the potential of its innovative technology and maintain itself as a world leader in pharmaceutical innovation, patenting.

CASE LAWS

1. Novartis AG vs With General Reference to Union of India 2013[10]

This famous Supreme Court case ruled against allowing Novartis a patent for its cancer drug Glivec(Imatinib Mesylate) under Section 3(d), of the Indian Patents Act. The Court further held that the drug was not shown to be more efficacious than existing treatments and in doing so supported the provision against “evergreening” of patents. The case emphasised the need to look out for patents that blocked access to life-saving medicines by granting companies monopoly rights even in the absence of significant innovation.

2. Bristol-Myers Squibb vs. The Controller of Patents[11]

The Intellectual Property Appellate Board (IPAB)[12] has rejected a patent application by Bristol-Myers Squibb for its new formulation of Dasatinib: Deheem as it failed to satisfy the conditions of novelty and inventive step. The ruling again underscored the strict patentability criteria in India and was another of example of refusal to grant patents for minor modifications of existing drugs which do not significantly improve therapeutic efficacy.

3. Bayer v. UOI and Ors., 2011[13]

Introduction The case relates to the patentability of drug sorafenib The Indian government was permitted to issue a compulsory license after the Delhi High Court held for them. The judgment held that when public health is at stake, the requirement of access to medicines for saving lives sets aside patent rights (and not vice versa), consistent with India’s national commitment in ensuring availability and affordability of essential drugs.

4. Bristol-Myers Squibb Co. vs The Controller of Patents 2014[14]

In this case IPAB upheld the rejection of a patent application over new form of old drug Dasatinib thereby supporting necessity in only granting patents for well-founded inventions. About the tension between patent protection and affordable access to medicines, as this case did not allow for an extension of monopoly rights on drugs that could otherwise be marketed at lower prices.

CONCLUSION

The relationship between patent protection and access to medicines in India’s pharmaceutical industry is a complex and multifaceted issue that requires a delicate balance between

incentivizing innovation and ensuring affordable access to essential drugs. India’s journey in navigating this balance has been marked by significant changes in its patent laws, particularly since the 1970s.The exclusion of pharmaceutical products from patentability under the Patents Act of 1970 allowed India to develop a robust generic drug manufacturing industry, significantly improving access to affordable medicines. However, the introduction of product patents in 2005, following India’s obligations under the TRIPS Agreement, raised concerns about the potential for increased drug prices and limited access for low-income populations. India’s pharmaceutical industry has grown rapidly by developing cheaper versions of patented drugs for the domestic market and aggressively entering the international market with generic drugs once the international patents expired. The Patents Act also provides safeguards such as compulsory licensing to prevent the abuse of patent rights and ensure better access to drugs. As India continues to evolve its patent laws to keep pace with international standards and developments, it will be crucial to maintain its position as a pharmaceutical heavyweight while prioritizing public health needs. The Doha Declaration, which reaffirms the right of countries to prioritize public health over patent rights, serves as a crucial reference point in ongoing debates about the role of patents in the pharmaceutical industry, particularly in developing nations like India.

REFERENCES

• Pharmaceutical Patent Protection and World Trade Law: The Unresolved Problem of Access to Medicines by Jae Sundaram
• The Global Governance of HIV/AIDS: Intellectual Property and Access to Essential Medicines by Obijiofor Aginam, John Harrington, et al., (Editors)

• Incentives for Global Public Health: Patent Law and Access to Essential Medicines by Thomas Pogge, Matthew Rimmer, et al., (Editors)
• https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7592140/
• https://www.scconline.com/blog/post/2019/09/03/pharmaceutical-patents-and-healthcare-a-legal-conundrum/

---

[1] The Patents (Amendment) Bill 2005 

[2] TRIPS Agreement 1995

[3] Section 3(d) of Patents Act 1970

[4] Section 84 of Patents Act 1970

[5](ARV)

[6] The Draft Patents (Amendments) Rules, 2023

[7] NPPA

[8] DPCO 2013

[9] RDI

[10] Air 2013 Supreme Court 1311

[11] 156 (2019) Dlt 727

[12] IPAB

[13] Air online 2019 Del 1712

[14] 752 F.3d 967 (Fed. Cir. 2014)

Disclaimer: The materials provided herein are intended solely for informational purposes. Accessing or using the site or the materials does not establish an attorney-client relationship. The information presented on this site is not to be construed as legal or professional advice, and it should not be relied upon for such purposes or used as a substitute for advice from a licensed attorney in your state. Additionally, the viewpoint presented by the author is personal.