By K P C Rao., LLB., FCMA., FCS.,
CMA (USA)., FIPA (Australia)
Practicing Company Secretary
By Dr. K. Anila.,
Northern Illinois University, USA
As part of the Commonwealth, India inherited its intellectual property laws from Great Britain. However, after gaining independence in 1947, there was a growing consensus that to boost manufacturing, restrictive product patents must be temporarily removed. In 1970, amendments to the Indian Patents Act abolished product patents but retained process patents with a reduced span of protection. In the 1990s, during Uruguay Round negotiations of the World Trade Organisation (WTO), India pledged to bring its patent legislations in tune with the TRIPS mandate in a phased manner. Consequently, in 1999 India allowed for transitional filing of product patent for grant of exclusive marketing rights with retrospective effect from 1995. Full product and process patent protection was re-introduced from 2005 when all transitional regulations ended.
During the absence of any product patent regime, the Indian pharmaceutical industry grew at a remarkable pace, ultimately becoming both a net exporter and the world's third-largest by volume and fourteenth-largest by value. With the new patent system in place, there are fears that this generics-fuelled growth may have led to lower research and development investment and innovation in comparison with multinational pharmaceutical companies based primarily in western developed economies.
Novartis v. Union of India & Others
Novartis v. Union of India & Others is a landmark decision by the Indian Supreme Court on the issue of evergreening of pharmaceutical patents. The decision is a culmination of a seven year long litigation fought by Novartis for grant of Indian patent on ‘imatinib mesylate’ in beta crystalline form and thereby to restraint Indian generic pharmaceutical manufacturers from producing drugs based on the compound. The Supreme Court has upheld the rejection of the patent application filed by Novartis for Glivec in 1998 before the Indian Patent Office. The patent application had initially been rejected by the Controller of Patents in 2006, after hearing 5 pre-grant oppositions filed by various generic pharmaceutical companies including Ranbaxy, Cipla, Hetero and one patients group – the Cancer Patient Aid Association (CPAA). Novartis had initially filed an appeal with the Madras High Court which subsequently transferred the appeal to the Intellectual Property Appellate Board (IPAB). In a separate petition Novartis had also unsuccessfully challenged Section 3(d) of the Patents Act, 1970 before the Madras High Court. In 2009, the IPAB upheld the rejection by the Controller. Later in the same year, Novartis appealed directly to the Supreme Court.
Brief facts of the case
Imatinib mesylate is a salt formed by a 1:1 reaction of imatinib and methanesulfonic acid. It is the free base form of anti-cancer agent imatinib. In the early 1990s a number of derivatives of N-phenyl-2-pyrimidineamine were synthesized, one of which was CGP 57148 in free base form (later given the International Nonproprietary Name ‘imatinib’ by the World Health Organisation (WHO)). A patent application was filed in April 1993 and in 1996 the United States and European patent offices granted one of the inventors, Jurg Zimmerman, a patent on behalf of Novartis over imatinib derivatives. In 2000, Novartis filed for separate patents on the beta crystalline form of imatinib mesylate (the mesylate salt of imatinib). A United States patent was granted in 2005 following the orders of the US Appellate Court, while the United States Food and Drug Administration (FDA) had in 2001 approved Novartis-marketed imatinib mesylate as Gleevec (U.S.) or Glivec (Europe/Australia/Latin America).
In May 2001, TIME magazine hailed imatinib as the "magic bullet" to cure cancer. The magazine again hailed Gleevec on a 2009 cover of as the "magic bullet" to cure cancer.
In 2004, NATCO Pharma Ltd (an Indian generic pharma company) was restrained by Novartis after it was found that NATCO was marketing a generic version of Gleevec in UK in violation of the 1996 Zimmerman patent. The dispute was settled out of court after NATCO pledged to stop market its generic version of imatinib mesylate and paid monetary compensation.
In India, Novartis sought to patent imatinib mesylate in beta crystalline form (a specific polymorph of imatinib mesylate) rather than imatinib or imatinib mesylate itself. The patent application was filed in 1998 and thus muddled through three distinct legal approaches - the original 1970 patent laws (which denied product patent), the transitional laws enacted between 1999 and 2005 (with repeated legislative amendments in 1999, 2002, 2005) and the final TRIPS compliant version as amended in 2006. The Assistant Controller of Patents and Designs rejected the application on 25 January 2006 as failing to satisfy requirements for novelty and non-obviousness. As the Appellate Board was not yet convened, Novartis filed several appeals before the Madras High Court in 2006. Before the High Court could decide on the issue of patentability, the Intellectual Property Appellate Board (IAPB) was formed and in 2007 the case was transferred before the IAPB in line with section 117G of the Indian Patent Act. The IAPB on 26 June 2009 modified the decision of the Assistant Controller of Patents and Designs stating that ingredients for grant of patent novelty and non-obviousness to person skilled in the art were present in the application but rejected the application on the ground that the drug is not a new substance but an amended version of a known compound and that Novartis was unable to show any significant increase in the efficacy of the drug and it, therefore, failed the test laid down by section 3(d) of the Indian Patents Act.
Novartis mounted a separate and concurrent litigation before the Madras High Court arguing that section 3(d) of the Indian Patents Act is unconstitutional. The High Court rejected this writ in 2007 observing that section 3(d) aims to prevent evergreening and to provide easy access to life saving drugs. Novartis did not further challenge this order.
After IAPB rejected the patent application in 2009, Novartis appealed directly before the Supreme Court through a Special Leave Petition (SLP) under Article 136 of the Indian Constitution; under normal circumstances, an appeal from IAPB should have been before one of the High Courts before it could proceed to the Supreme Court. However the patent if granted on appeal would expire by 2018 and thus any further appeal at that stage would render the matter infructuous. Considering this urgency and the need for an authoritative decision on section 3(d) (other cases on this issue were pending before various High courts), the Supreme Court granted special leave to bypass the High Court appeals process and come directly before it.
Points considered by the Apex Court
The important points considered by the Apex Court are analysed below:
1) What is the true import of section 3(d) of the Patents Act, 1970?
2) How does it interplay with clauses (j) and (ja) of section 2(1)?
3) Does the product for which the appellant claims patent qualify as a “new product” which comes by through an invention that has a feature that involves technical advance over the existing knowledge and that makes the invention “not obvious” to a person skilled in the art?
4) In case the appellant’s product satisfies the tests and thus qualifies as “invention” within the meaning of clauses (j) and (ja) of section 2(1), can its patentability still be questioned and denied on the ground that section 3(d) puts it out of the category of “invention”?
Before analysing the issues referred above, some of the key terms figured in this case are explained herein below:
Evergreening means what?
Evergreening refers to a variety of legal and business strategies by which technology producers with patents over products that are about to expire retain rent from them by either taking out new patents (for example over associated delivery systems, or new pharmaceutical mixtures) or by buying out or frustrating competitors, for longer periods of time than would normally be permissible under the law. Evergreening is not a formal concept of patent law; it is best understood as a social idea used to refer to the myriad ways in which pharmaceutical patent owners use the law and related regulatory processes to extend their high rent-earning intellectual property rights, otherwise known as intellectual monopoly privileges, particularly over highly profitable (either in total sales volume or price per unit) "blockbuster" drugs.
The evergreening process has caused some controversy in the pharmaceutical industry. In this context, evergreening may be used by manufacturers of a particular drug to restrict or prevent competition from manufacturers of generic equivalents to that drug.
What is Incremental Innovations?
Incremental Innovation may be defined as a series of small improvements to an existing product or product line that usually helps maintain or improve its competitive position over time. Incremental innovation is regularly used within the high technology business by companies that need to continue to improve their products to include new features increasingly desired by consumers. Section 3(d) of the Patents Act, 1970 does allow incremental inventions to be patented provided they entail demonstrable novelty and improved efficacy. This provision is aimed at curbing ‘evergreening’ by preventing the grant of a patent for new forms of known substances, unless the applicant can establish the new form demonstrates an increased efficacy.
Did the Apex Court ban incremental innovation?
The Court held:
“We have held that the subject product, the beta crystalline form of Imatinib Mesylate, does not qualify the test of Section 3(d) of the Act but that is not to say that Section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances. It will be a grave mistake to read this judgment to mean that section 3(d) was amended with the intent to undo the fundamental change brought in the patent regime by deletion of section 5 from the Parent Act. [para 191 of the SC judgment]
What is efficacy?
Section 3(d) requires increased novelty and increased efficacy in the new forms of an already patented product. As per Supreme Court ‘Increased efficacy’ means as anything that further increases the intended therapeutic effect in the patients. Non-therapeutic advantages in the developed product like increased shelf-life, decreased toxicity, increased bioavailability, better flow properties are not considered to meet the requirements of increased efficacy.
Novartis claimed that the increased bioavailability qualified as increased efficacy, but the opposing argument was that therapeutically, the two compound forms were never shown to be differentiated. The Supreme Court, in fact, noted in its decision that Novartis had never provided any data on the effect of bioavailability or therapeutic efficacy
What is the “known substance”?
For the purposes of comparing efficacy under Section 3(d), it was necessary for the Supreme Court to compare the claimed invention to a “known substance” and there has always been a disagreement between both parties on what constituted the “known substance” i.e. the “imatinib free base” or the “beta-crystalline form of imatinib mesylate”. Novartis had sought comparison with the “imatinib free base” while the opposing side sought a comparison with the “beta-crystalline form of imatinib mesylate”. The Supreme Court followed the sequence of innovation leading to the claimed invention and held that imatinib mesylate was the “known form” for the purposes of Section 3(d). In pertinent part, it held the following:
“We have so far considered the issue of enhanced efficacy of the subject product in light of the finding recorded earlier in this Judgment that Imatinib Mesylate (non-crystalline) is a known substance from the Zimmermann patent and is also the substance immediately preceding the patent product, that is, Imatinib Mesylate in beta crystalline form.” [para 174 of the SC judgment]
Demonstrable Novelty means what?
In the instant case, the Zimmerman patent was the main piece of prior art cited against the Glivec patent and the Supreme Court appears to have used this piece of art as the main document in invalidating Novartis’s patent.
The court pointd out that in the face of the materials referred to above, they are completely unable to see how beta crystal form of Imatinib Mesylate can be said to be a new product, having come into being through an invention that has a feature that involves technical advance over the existing knowledge and that would make the invention not obvious to a person skilled in the art. Imatinib Mesylate is a known substance from the Zimmermann patent.
“That Imatinib Mesylate is fully part of the Zimmermann patent is also borne out from another circumstance. It may be noted that after the Zimmermann patent, the appellant applied for, and in several cases obtained, patent in the US not only for the beta and alpha crystalline forms of Imatinib Mesylate, but also for Imatinib in a number of different forms. The appellant, however, never asked for any patent for Imatinib Mesylate in non-crystalline form, for the simple reason that it had always maintained that Imatinib Mesylate is fully a part of the Zimmermann patent and does not call for any separate patent.” [para 132 of SC judgment]
Apex Court Ruling
Supreme Court decided the matter de novo looking into matters of both fact and law. The court first analysed the question of prior art by looking into Zimmerman patent and the related academic publications. On perusal of the documents the court concluded that imatinib mesylate is a known substance from the Zimmermann patent itself. Further its pharmacological properties are also known in the Zimmermann patent and in the published academic articles. Therefore imatinib mesylate in beta crystalline form does not qualify the test of invention as laid down in section 2(1) (j) and section 2(1) (ja) of the Patents Act, 1970.
Court decided to interpret "efficacy" as "therapeutic efficacy" because the subject matter of the patent is a compound of medicinal value. Court acknowledged that physical efficacy of imatinib mesylate in beta crystalline form is enhanced in comparison to other forms and that the beta crystalline form of imatinib mesylate has 30 per cent increased bioavailability as compared to imatinib in free base form. However as no material had been offered to indicate that the beta crystalline form of imatinib mesylate will produce an enhanced or superior efficacy (therapeutic) on molecular basis than what could be achieved with imatinib free base in vivo animal model, the court opined that the beta crystalline form of imatinib mesylate, does not qualify the test of Section 3(d).
The Supreme Court decided that the substance which Novartis sought to patent is known and thus does not qualify the test of invention as laid down in section 2(1)(j) and section 2(1)(ja) of the Indian Patent Act and rejected the patent application. The decision also for the first time tests the validity and ambit of section 3(d) of the Indian Patent Act which prevents the grant of a patent for new forms of known substances, unless the applicant can establish the new form demonstrates an increased efficacy.
Impact of SC judgment on the Indian Pharma industry
In essence, the apex court defined how the contentious Section 3(d) in India’s Patents Act need to be read and implemented by stating that Glivec failed the test of the Section, but also added categorically that the Section did not bar all incremental inventions of chemical and pharmaceutical substances. Section 3(d) was not amended with the intent to undo the policy of allowing product patents in pharmaceutical and chemical sectors, the court asserted. The Section 3(d), introduced in 2005, bars the grant of patents to new forms of known substances, unless the new form results in significant enhancement in efficacy over the known substance.
Immediately after the Apex Court’s ruling the shares in Novartis’ Indian unit plunged to a 14-month low while rivals climbed. Novartis shares slumped 6.8 per cent to ` 558.10 at the Bombay Stock Exchange; its lowest since January 2012. The judgment was seen as a boost for Indian drug giants such as Dr. Reddy’s, Cipla, Ranbaxy Laboratories and Natco Pharma, which make cheaper generic versions of Glivec. Cipla rose 2.63 per cent to ` 389.0 while Natco jumped as much as 10.72 per cent to ` 475.05. Dr. Reddy's was up 2.64 per cent at ` 1,813.00. Top drug maker Ranbaxy rose 2.77 per cent to a high of ` 452.7 rupees.
The Supreme Court order will greatly strengthen the quest for access to affordable medicines in India. The decision affirms the idea that a patent regime loses its social relevance when a drug is priced beyond the reach of the vast majority of a country’s people. That pharmaceutical companies employ high pricing to limit the number of beneficiaries of “blockbuster” patented molecules and even older “evergreened” medicines is an irony, because making additional copies of a drug is not expensive. On the other hand, cost control and dispensing of essential medications in government-run health facilities is affected, because many States have no centralised procurement system. It is unsurprising, therefore, that less than 10 per cent of medicines sold in India are under patent, while the vast majority are branded generics. The court order should prompt producers of patented drugs to move towards liberal licensing and low cost manufacture in India, the pharmacy of the South that produces ` 100,000 crore worth of medicines annually and sells nearly two thirds within the country. It is a matter of concern that at least a dozen pharmaceutical innovations used in the treatment of cancer, HIV/AIDS, and Hepatitis B and C are not affordable to even the upper middle classes, and impossible to access for the poor.
The Supreme Court judgment denying Novartis a patent for the beta crystalline form of its leukaemia wonder drug Imatinib Mesylate (sold as Glivec) is not a blow against research and innovation. Nor is it designed to hold down drug prices via patent busting. Novartis lost its case on technical grounds. It failed to establish that the drug's new form was sufficiently patentable. Says the judgment, "whether or not an increase in bioavailability leads to an enhancement of therapeutic efficacy in any given case must be specifically claimed and established by research data. In this case, there is absolutely nothing on this score apart from the adroit submissions of the counsel. No material has been offered to indicate that the beta crystalline form of Imatinib Mesylate will produce an enhanced or superior efficacy (therapeutic) on molecular basis than what could be achieved with Imatinib free base..." This failure to establish eligibility for a patent under the law, rather than any desire to use patent busting as a way to cheapen drugs, guided the Apex Court. This is a welcome step.
Drug companies who want to see in the verdict a generalised case for weakening patents are in denial. The law on patents has changed and Section 3(d) does allow incremental inventions to be patented, provided they entail demonstrable novelty and improved efficacy. The judgment makes this explicitly clear.
Now, the drug multinationals should rethink their strategy of keeping nominal rates of patented drugs high while giving away large volumes of expensive drugs for public relations purposes, and welcome price control instead.