I N D I A M U S T P R O T E C TI N T E L L E C T U A L P R O P E R T Y e c a f _ 1 9 6 2 1 0 1

Roger Bate

India has made great strides in encouragingpharmaceutical research and developmentover the past decade, but a few key decisionsover the summer may undermine thosehard-won gains. The Swiss drug companyNovartis will appeal June’s decision of theIndian Intellectual Property Appellate Board(IPAB) to deny it a patent on itsanti-leukaemia drug Glivec. IPAB’s ruling ishugely flawed and it raises questions as towhether the Indian government is seriousabout the intellectual property (IP) laws itenacted in 2005, which made it compliantwith TRIPS – the intellectual property rulesof the World Trade Organization (WTO).

The Manmohan Singh government isfortunate that Novartis is appealing because ahigher court will now be able to demonstrate,probably in December, that the rule of lawstill applies in India by overturning most ofthe rulings of IPAB.

At issue will be the findings of IPAB,which claims that Glivec is not patentableunder section 3(d) of the Indian Patents Act;that is, it is not sufficiently different from anearlier patented version of the drug to betreated as a new one.

But this conclusion seems to contradict itsown findings: IPAB found Glivec to be bothnovel and inventive and an improvement overolder formulations of the drug. What is evenmore unjust is that IPAB will not allow newinformation about any enhanced benefits to besubmitted by Novartis. IPAB argues it shouldhave been included in the original patentapplication. But since this application wasmade in 1999 and the extra demand of proof of‘enhanced’ efficacy only became law in 2005,this is clearly unreasonable. This retrospectiveapplication of the law is probably in violationof TRIPS and Novartis could urge the Swissgovernment to bring a complaint under WTOlaw against the Indian government.

These issues are at least debatable in law.But IPAB has also argued egregiously thatgranting Glivec a patent would lead to‘public disorder’ because the drug isexpensive. As Shamnad Basheer, Professor ofIntellectual Property Law at the NationalUniversity of Juridical Sciences at Kolkata,says on his Spicy IP blog, IPAB’s decision ‘isplain ridiculous! There is nothing in the

patents act to support such a reading’.Professor Basheer continues: ‘One ought todraw a distinction between the grant of apatent and the subsequent use/abuse of apatent’. In other words, if the Indiangovernment believes Glivec is too expensiveit could cap its price directly, or drivecompetition by allowing generics firms toproduce the drug. All of these methods havecosts, but at least they are legal. But thegovernment has no legal authority to deny apatent on pricing grounds.

In the end, the government of India mustdecide whether it actually wants to fulfil itsobligations under TRIPS. In the mid-1990sthe Indian government, of which the currentprime minister, Manmohan Singh, was thenfinance minister, decided, in concert with theWTO, that by 2005 India would enact lawsto protect IP. Like all countries, India has todeal with domestic lobbies arguing for ruleswhich benefit them against the commongood; the fact that product patents did notexist until 2005 was directly due to lobbyingby domestic companies that wanted to copyforeign products, notably drug firm Cipla.Mr Singh stood up to these lobbies then andhe must do it again now.

Over the past decade pharmaceuticalinvestment has flourished in India because ofthe defence of IP. India has enormouspotential for drug development, not leastbecause it is well-suited to conduct clinicaltrials – a large, diverse population, many ofwhom speak English. It has many excellentcompanies, such as Piramal and Ranbaxy,and these companies and others are workingwith many large, equally excellent,international firms – Novartis included.Significant technology transfers are beingmade with drugs being developed to benefitIndia’s middle classes, as well as valuableexport markets. The IPAB decision puts thiskind of investment at risk.

The Court may yet find in favour of theoverall decision taken by IPAB to deny apatent for Glivec, but it should strike downIPAB’s retrospective application and incorrectreading of the law.

Roger Bate is the Legatum Fellow in GlobalProsperity at the American Enterprise Institute(rbate@aei.org).

Public Healthand theEnvironment

© 2009 The Author. Journal compilation © Institute of Economic Affairs 2009. Published by Blackwell Publishing, Oxford