Intellectual property rights and Indian pharmaceutical industry: Present scenario

What is Intellectual Property Rights?

Intellectual Property Rights (IPRs) are the rights given to the creators of intellectual property (i.e., creations of minds), which bestows exclusive right to the creator for that product/property for a defined period of time. As per World Trade Organization (WTO), IPR can be categorized basically into two categories: copyright and industry property.[1]

Copyright and rights related to copyright

Rights of the authors of artistic and literary works are protected under “copyright and rights related to copyrights.” The protection offered under “copyright” is for a minimum duration of “60 years” after author's death. Intellectual properties that come under “copyright” are books, other writings, music compositions, sculpture, film, computer program, and painting. Other “neighboring rights” protected along with copyright are performer rights (acting, musician, and singing), phonogram producers (recordings), etc. The motto of such protection is to encourage creative works.[1]

Industrial property

Trademarks and geographical indications

Trademarks refer to distinctive signs which distinguish services or goods of one undertaking from those without undertaking and geographical indices refer to goods originating from one place or attributed to one geographic location, for example, Darjeeling tea. These distinctive signs may be used symbolically for their service/quality and can stimulate fair competition and can help the purchaser with information regarding choices.[1]

Inventions, industrial designs, and tread secrets

These categories of IPR are primarily aimed to encourage innovation in the field of design, new inventions, and new technology. Patents, designs, and trade secret come under this heading. Moreover, the protection offered is for a finite period, i.e., 20 years (for patent).[1]

“Intellectual Property Rights” in Indian Context

The Indian IPR section is grossly categorized into patents, designs, trademarks, and geographical indices.[2] If we see the history of Indian “IPR” section, it can be divided into three definite eras: pre-independence, post-independence (before Trade Related Aspects of Intellectual Property Rights or TRIPS), and post-independence (after TRIPS) era.

Pre-independence era

In India, the history of IPR dates back to preindependence era. In 1856, India witnessed the first legislation regarding patent (Act VI), which was subsequently replaced in 1857 and 1859. In 1872, the act was renamed as “The Patterns and Designs Protection Act.” The 1911 act (Act II) replaced all previous acts which bought patent administration under the “controller of patents,” which was further amended in 1920, 1930, and 1945.[2]

Post-independence era (before TRIPS)

In the postindependence era, mainly multinational companies governed Indian medicine market. The drugs were imported at a higher cost, and in terms of drug price, India ranked among the highest priced nations in the world. It was seen that the old “Indian Patents and Designs Act, 1911” was not fulfilling the requirements of the Indian population.[2,3] Hence, Justice (Dr.) Bakshi Tek Chand committee was constituted for a detailed evaluation of the pros and cons of the Indian patent system. The committee rightly pointed out that the patent act should contain clear recommendation to ensure Indian population's needs with regard to food, medicines, and medical devices and these should be made available to public at the cheapest price commensurate, at the same time honoring patentee with a reasonable compensation. These recommendations are the basis of two major changes; the 1950 (Act XXXII of 1950) amendment (emphasis on working of inventions and compulsory license [CL]/revocation) and the 1953 bill (Bill No. 59 of 1953). Although this bill was introduced in the parliament in 1953, it was allowed to lapse.[2,3] In 1957, Government of India took two significant steps; first is the establishment of Hindustan Antibiotics Limited (As per agreement with UNICEF) and the second is appointment of Justice Rajagopala Ayyangar Committee, for revision of patent law and development of a locally sustainable market. The report of this committee (1959 report) served as the basis of the IPR revolution in India with major changes such as the “process only patent framework” and is the backbone of the “Patents Act, 1970” (brought into force since 1972) which replaced all previous patent laws (except designs). This revised act remained in place for next 24 years till the year 1994.[2,3,4]

Post-independence era (after TRIPS)

The Patents Act 1970 introduced the “process patent” system, which came out to be very advantageous to Indian Pharmaceutical sector. As per this act, patents were valid for 7 years.[4]

In 1994, India became a signatory to General Agreement on Tariffs and Trade (GATT), and consequently, India had to follow the IPR component of GATT, i.e., the “TRIPS” component of the “Uruguay round” of the “GATT Treaty.” Noncompliance with TRIPS could lead to loss of membership of India from WTO.[2,5,6,7] Following this treaty, an ordinance was passed with certain changes in the Indian patent system on December 31, 1994, but it ceased to operate after 6 months. Although “TRIPS” was brought into action since January 1, 1995, but till 1999, no change was noticed in Indian patent regulations. In 1997, the “United States” took the matter of entitlement of only “process patent” in the field of “food and drugs” in India to the WTO. The “dispute settlement body” of WTO concluded that India breached the article 70.8 (a) (requirement of “product patent system” in pharmaceutical and agricultural field) and 70.9 {exclusive marketing rights (EMR) to be provided since 1995}. In conjunction with this, India had to modify its existent patent rule and the amended act came out in 1999. Section 5 (2) of the new amended act of 1999 had the provision of mailbox application and details of EMR were included in Chapter IVA.[3,4,5,6,7]

Although this act was enacted in 1999, it had retroactive effect from January 1, 1995. This amendment had the provision of mailbox applications under the Section 5(2), where a party could apply for product patent in some special areas such as pharmaceutical and agricultural sectors (also known as WTO applications or mailbox applications). Such applications were only to be analyzed after December 31, 2004. However, the applicant could also apply for EMR as specified in Section 24A and 24B, but obtaining “EMR” did not guarantee for obtaining a patent.[5,6,7]

Hence, the GATT treaty and consequent compliance with “TRIPS” had two giant effects on Indian IPR sector; first, India moved to the “product patent” system and the “patent protection period” increased from 7 to 14 than to 20 years. To fully comply with this “product patent” system, India was given time till 2005. After 2005, India became fully compliant under “Product patent system” as per TRIPS.[2,5,6,7]

Current Patent Laws: What Can be Patented and What Cannot be?

As per the Indian Patent Act, 1970, a patent is “a grant or a right to exclude others from making, using or selling one's invention and includes right to license others to make, use or sell it.”

The “Patent Act 1970” and amendment (2005) clearly defined the intellectual properties, which are patentable and more specifically, it also clearly states which intellectual properties are “not patentable” in India. “Substance may not be patentable which does not result in the enhancement of the efficacy of that substance or the mere discovery of any new property or new use of a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. Modest changes like salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy will be not patentable as per Section 3(d), 3(e), and 3(i).”[2]

There is no term called “universal or global patent.” The patent protection provided to the applicant is only for the country applied and is boundary specific. However, the patentee may apply in different countries simultaneously to get patent protection in those countries.[2]

Criticisms of the Current Indian Patent System

Effect of product patent on Indian pharmaceutical sector

As Indian patent system was a “Process patent-” driven system, the transition to “product patent” system was expected to be devastating to the pharmaceutical industry, and the early reaction was full of panic.[5] The expected outcomes were “unexpected rise in drug price” and subsequent destruction of Indian Pharmaceuticals Industry. However, the Indian pharmaceutical sector copped up with the new regulatory changes and the indigenous R&D sector started growing.

Patent protection period of 20 years

Granting of “patent” is a way to encourage innovation, which allows patentees to enjoy monopoly over the patented product for a period of 20 years from the date of filing. The effect of this monopoly can be very severe in pharmaceutical sector, more so in the case of lifesaving drugs.[2,3,4,5,6,7]

Compulsory licensing

To counteract this monopoly-associated damage, the Patents Act, 1970, has some specific provisions to balance the situation. This act also has a provision that the patented products to be available to end users at sufficient quantity, and at the same time, the price should be in affordable range. If the patentee fails to do so, the Government of India can give CL to interested parties so that the patented product fulfills the requirement of the product. Although the first CL was issued in the year 2012 (Bayer's patented drug Nexavar to Natco Pharma Limited), the history of compulsory licensing is not new. In Section 22 of the Patents and Design Act, 1911, it is mentioned that, after the expiration of 3 years of a patent life (day 1 being the date of sealing of the patent), any interested person can apply for CL if the following grounds are not satisfied, for example, the commercial angle of the patent is not fully worked out, the Indian population demand/requirement regarding the patented property is not met adequately and the demand of the “patented product” has to be fulfilled substantially by importing it from other countries. The “Patents Act,” 1970 (section 84), also kept the provision of CL if the reasonable requirements of Indian population with respect to the “patented invention” are not satisfied or the “patented invention” is not available to public at a reasonable price. In 2002, another ground was amended which states that CL can be applied if the “patented invention has not worked in territory of India.” In 2005, CL covered both “manufacture and export” of pharmaceutical products (section 92A) to any country which do not have manufacturing capacity of have insufficient manufacturing capacity to address its public health issues.[8]

Although lots of controversies came after India's grant of first “CL” to NATCO and subsequent grants, the trend seems to be an unbiased one, with a critical balance between the interest of generic manufacturers, intention of the patentee, and the interest of the population.[8]

Lots of patent and no clinical translation

Although the number of patents granted is increasing, the translational gap is quite huge in the pharmaceutical sector. Among these, lots of the patents are from academic institutions and are part of academic thesis work. Other important issues are lack of orientation toward clinical translation and deficient funding.

Evergreening

“Evergreening,” refers to a strategy by which additional “secondary patent,” is applied by minor formulation or other changes of the parent patented molecule, of which patent period is going to expire. Indian Patent Act counteracts evergreening measures by inclusion of Section 3(d), which distinguishes between “discovery and innovation” and clearly defines which is not patentable. Although a criticism like nonagreement to TRIPS came in the NOVARTIS case with regard to GLIVEC, the Honourable Court cleared its stand on “evergreening” and discouraged such strategies.[7,9]

Slow work process

High workload compared to patent office of other countries and less workforce are implicated in the delay in the patent process.

Conclusion and Future Direction

Although lots of patent applications are from pharmaceutical sector, their clinical translation is very less. Logically speaking, right now Indian Pharmaceutical Market is dominated by the generic market and invention has a very little share in its expansion. The main reason behind this seems to be segregatory work in each field, lack of proper multidisciplinary work between the preclinical and clinical scientists, deficient funding, heterogeneous interests of the involved sectors, lack of systematic training of workforce, and lack of visionary. Industry-academia collaboration and establishment of quality control bodies can be valuable in this regard.

Till now, the Indian Patent System is balancing the delicate balance between the interest of the patentee and Indian population. There are several stories such as imatinib (Novartis), tadalafil (Eli Lilly), rosiglitazone (GlaxoSmithKline), fenofibrate (Abbott), sorafenib (Bayer) regarding the product patent, EMR, off-patent products, and how the inventor company tries to save their inventions from generic marketing. Effective lesions learned from these events allowed us to understand the limitations of current IPR system and subsequently to make the system more strong.