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Novartis case: Patents versus patients

India’s Supreme Court has started hearing final arguments in a landmark case involving Swiss pharma MNC Novartis AG and India’s patent office.

The judgment in this case will have far-reaching implications on the rules governing the country’s healthcare sector and its global role as a supplier of cut-price generic medicines.

The dispute is centred on Novartis’ drug Glivec, used to combat a rare type of cancer and stomach tumours. In January 2006, the Chennai patent office rejected Novartis’ patent application, stating the drug was “only a new form of a known substance”, that it is not a new medicine but an amended version of a known compound. After losing two challenges in the Madras High Court, Novartis has approached the Supreme Court.

The case has put under microscope the validity and interpretation of section 3(d) of the Patents Act, which sets strict restrictions on multiple patents for one drug. More specifically, it prohibits patents on a newer form of a known drug unless it offers a significant advance in efficacy. The aim is to prevent “evergreening”, or tweaking a product to get a new patent and extend exclusivity.

A loss for Novartis in the case would not affect it much financially, since India is never likely to account for more than a small fraction of Glivec’s global sales, which totalled $4.7 billion last year. What it wants to ascertain clearly and unambiguously from the highest court in land is the level of innovation needed to secure a patent in India.

That clarity is important, not only for Novartis in making its future investment decisions regarding India, but also for other multinationals fighting similar battles. Thus, Gilead Sciences is fighting a patent rejection on its HIV/Aids medicine Viread in an Indian court, while Roche Holding is battling to defend its cancer drug Tarceva from cut-price generic copies. A rebuff to Novartis will confirm several MNCs in their belief that India is a country where product patents are exceptionally hard to secure.

As regards patients, Novartis runs discount programmes under which the drug is made available much cheaper in poor countries. In India more than 95 per cent of patients receive it free of charge under a company donation scheme, according to Novartis. Indian generic versions, meanwhile, cost about $2,500 a year, compared with $70,000 a year the branded drug costs in US.

Nevertheless, a judgment in favour of Novartis would deal a big blow both to patients and drug makers in India. If Novartis wins the case, it would be easy for MNCs to get patents here as easily as in wealthy countries, and on new formulations of old medicines already in use. The impact on patients would be severe, as treatment costs would rise significantly. India’s status of being the ‘pharmacy of the world’ would also be impacted by the judgment, as domestic companies have played an important role in providing cheap life-saving drugs not only in India but also to other countries.

The stakes, thus, are very high for both the sides. For Big Pharma, costs of research have risen steeply even as its efficacy in yielding blockbuster drugs has declined sharply. As the pipeline of blockbuster drugs has almost run dry, global firms have been extending their patent period by tweaking existing molecules. A study published in a British medical journal said barely five per cent of all newly patented drugs could be rated as breakthrough.The Supreme Court hearing is expected to last several weeks and the verdict may take a couple of months more.

Views expressed by the author are his own and do not reflect the newspaper’s policy