Express Healthcare (Vol.11, No.2) February, 2017

Page 26

cover ) INSIGHT

Keeping the promise of patent bargain and affordable access to medicines in India

YOGESH PAI Assistant Professor of Law and Co-Director, Centre for Innovation, IP and Competition, NLU Delhi

Yogesh Pai,Assistant Professor of Law and Co-Director, Centre for Innovation, IP and Competition, NLU Delhi, in an article which draws from his submissions to the UN High-Level Panel on Access to Medicines (2016), highlights India’s current situation on access to patented medicines in the light of its compliance with IP laws, trade norms and public health IT HAS been widely noted that India achieved self-sufficiency in pharma drugs by way of a combination of several policy instruments, including the withdrawal of product patents for pharma products (19722005), which facilitated strong local generic production with diverse capabilities. However, as of 2015, only 584 Indian generic firms were able to comply with the stringent US FDA regulatory standards to ensure supply of quality drugs. Moreover, the shift from India’s generic prowess in small molecule (chemicalbased drugs) business to big molecule biologics (bio pharma) is a rather significant move that the Indian pharma industry will have to quickly make in the coming years since seven out of top ten selling drugs are biologics. While the Indian biosimilar (copies of biologics) market, valued between $300-400 million is growing, how fast Indian firms manage to overcome the technical and regulatory barriers in order to capture the global export market is yet to be seen. While Indian firms are fast-tracking investments in innovation in the biosimilar space, it is time to reassess the dynamic role of patents in the context of access to medicines in India and the country’s continued ability to pioneer as ‘pharmacy of the world’. The advent of the pharma product patent system since 2005 has led to a new scenario, both in terms of challenges to India’s generic industry and in ensuring equitable access to



February 2017

medicines. It has led to a general assumption that patent owning firms would be able to charge prices way beyond what is generally considered as ‘reasonably affordable’ for the Indian patient population. A recent study, however estimates, “a molecule receiving a patent experienced an average price increase of just three to six per cent with larger increases for more recently developed molecules and for those produced by just one firm when the patent system began.” The study further notes, “the presence of substitute goods should moderate the pricing power of firms receiving patent protection.” Hence, text book cases of pharma patents serving as strict monopolies that lead to

significant increase in prices must be understood with appropriate caveats and caution in the Indian context. This is not to deny that there could be a steady or significant price increase in specific cases in the future depending on the nature of the drug, nature of the technology, disease burden, market size, domestic capabilities, barriers to market entry, drug regulatory challenges, availability of closer substitutes etc. However, to assume that patents in medical technologies, and particularly pharma patents, are always ‘overpriced’, or that there are no market non-distorting mechanisms to deal with pricing issues of patented drugs is a mistaken assumption. There are several provi-

sions in the Indian Patent Law that places significant constraint on the ability of patent-owning pharma firms to engage in drug pricing beyond what is considered as “reasonably affordable”. These provisions have significantly benefitted the Indian generic industry and the patient population at large. In fact, it is quite possible that the very threat of onerous regulation may have significant impact on the behaviour of pharma firms in exploiting their patents in a way inimical to public interest. India has remarkably emerged as a key country to experiment new models in balancing access issues by requiring the criteria of ‘therapeutic efficacy’ through Section 3(d) of the Patents Act, 1970 in

determining legal standards of patentability for a large class of incrementally modified inventions. The Indian Supreme Court has approved of such an approach in the famous case involving Novartis vs. Union of India (2013). However, it is a matter of fact that this provision has mostly been used in combination with other requirements of patentability (viz., novelty, inventive step and industrial application). Although this provision is designed to contain ‘evergreening’, it has no doubt opened up early entry of generic drugs in the Indian market. While Section 3(d) has become a cause célèbre, how it plays out as an administratively manageable standard in terms of offering bright-line