‘Novartis verdict will help genuine drug innovation’

It gives a signal that routine experimentation will not count as innovation: IP expert

April 06, 2013 12:25 pm | Updated December 04, 2021 11:08 pm IST - Bangalore

Shamnad Basheer: Government should do more.

Shamnad Basheer: Government should do more.

In a landmark verdict this week, the Supreme Court rejected multinational pharma major Novartis’ plea to patent its cancer drug Glivec. The move takes on global intellectual property (IP) regimes that allow big pharma business to use, and reuse, their patents, thereby keeping lifesaving drugs expensive and out of the reach of vast populations.

With this, India has signalled to the rest of the world that it will insist on rigorous patentability criteria for drugs, says Shamnad Basheer, IP expert and professor at National University of Juridical Sciences, Kolkata. An amicus and an academic intervener in this case, Prof. Basheer, in an interview with The Hindu , takes on big pharma’s claims on R&D costs and innovation.


Why is this a landmark verdict for healthcare in India?

This verdict makes it clear to the rest of the world that India will only support genuine drug innovation and not minor tweaks to existing pharmaceutical substances (through a process called evergreening that gives the drug originator an almost endless monopoly on the same drug). This line of thought is not completely alien; some Western courts have also refused patents in similar cases.

Notably, in Pfizer vs. Apotex, a United States court refused patent protection to an allegedly improved salt form of an existing substance, since it found the claimed advantage (better solubility and stability) to be fairly ordinary and the result of mere routine experimentation. Novartis’s patent claim for beta crystalline form of Imatinib Meyslate was also rejected on the ground that when compared with the existing substance (non crystalline version of Imatinib Mesylate), it did not demonstrate a significant enough technical advance to merit a 20-year patent monopoly.

After the Novartis judgment was announced, within no time, its stocks plummeted. The Swiss major termed it a blow to innovation and deterrent to R&D investment. Is there room for scepticism here?

Firstly, one must appreciate that in so far as global drug majors are concerned, the Indian market is a very tiny fraction of the global market. Therefore, any patent decision from India will only have a very minor effect on R&D policies globally. Drug majors make a significant chunk of their revenues from Western markets … and one might estimate that R&D costs are more than recovered from these markets alone. Further, this decision is not a blow to innovation. If at all, anything, it signals to the industry that mere routine experimentation and minor tweaks will not count as innovation and they must stop wasting their time plucking low hanging fruit.

Is there any clarity on what it really costs to bring a drug to the market, that is, including the research, trials and so on ...

Absolutely not. This is the industry’s best kept secret. The oft-touted $1 billion figure that came out of an industry-funded study is severely contested. In fact, the head of GlaxoSmithKline, Andrew Witty, recently called this figure the biggest myth in the industry. When faced with a compulsory licensing threat, Bayer argued before the Indian Patent Office that it was necessary to charge such ridiculously high prices in India (Rs.2.8 lakh a month) to recoup its mammoth R&D costs for its cancer drug Nexavar.

When the Patent Office asked Bayer to submit these costs and a detailed breakup, it ducked the issue, casting huge doubts on just how much this investment cost really is. Some estimates suggest that this could be as low as $100-200 million, if one subtracts the huge marketing expenses that pharma firms often claim under the R&D head and the public/academic contribution in drug discovery. If this is the case, then drug companies often recover many times this amount within the first couple of years of sales in the leading Western markets. Further, countries such as India should only pay a tiny fraction of this overall cost, commensurate with the size/value of the local market, where the drug is sold.

We must find legal mechanisms for ensuring that these costs are mandatorily disclosed by drug companies. Only then can we even begin to frame sensible policies so as to balance out the need to protect R&D investments with the crying need to ensure affordable access and public health.

In another landmark decision last year, the Patent Office granted a compulsory licence (CL) of Bayer’s cancer drug Nexavar to generic drug maker Natco. Since then have other generic makers applied for CL?

Most of us were a little concerned that after Natco’s thumping victory, no other generic had applied for a CL. Fortunately, a small company from Mumbai, BDR Pharma, recently applied for licences over another cancer drug patented by BMS, where the price differential between the originator version and the generic version is significant. I think our CL provisions are quite potent, but we need to ensure that more generic companies have the courage to begin resorting to it, without expecting the government to jump in and help them.

Of course, the threat of compulsory licenses are really to help drive down prices. One hopes that when MNCs begin pricing their products more reasonably in India, there will be no further need to issue CLs

What have other developing counries done to counter these oppressive IP regimes?

Brazil took the lead in terms of issuing compulsory licenses to bring down the cost of HIV medication some years ago. But India has gone further in its attempts to infuse a more potent public health and public interest perspective into patent law. Further it is important to note a critical difference between the CL decisions of India, Brazil and Thailand. While Brazil and Thailand issued licenses for government use (where the government makes the drug by itself or through an agent), India issued licenses to private generic competitors to supply the market at lower prices

What are the other mechanisms the government can use to keep drug prices low?

The government should play a more active role in promoting access and public health. So far, it has remained content with letting innovators and generics slug it out in the private markets, hoping that increased private competition would reduce drug prices. However, given that more than half of India’s population counts as poor, the government cannot remain content with this strategy. After all, even after Natco was issued a CL to sell a cancer drug for Rs.8,000, one needs to ask what percentage of India would be able to afford even this generic price.

It is a sheer tragedy that the Indian healthcare market is a more privatized one than even the US and almost all of the medical expenses of the aam aadmi has to be bet out of pocket. This must change and we must work towards publicly subsidised health insurance schemes.

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