How an Indian Patent Case Could Shape the Future of Generic Drugs

On Wednesday, the Indian Supreme Court will hear a landmark case that could limit Indian companies’ right to make inexpensive generic drugs.

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India’s rising global presence is often associated with its booming tech sector. But in many poor countries, India’s role is that of a low-cost pharmacy. The country has become a leading supplier of affordable HIV/AIDS and Tuberculosis medications and is the second leading provider of medicines distributed by UNICEF in the developing world. This, however, may change.

On Wednesday, the Indian Supreme Court is set to hear a landmark patent case that could limit Indian companies’ right to make inexpensive copies of pricey drugs developed and patented in the U.S. and Europe. The high-profile case — the first of its kind to reach India’s highest court — has created a sharp divide between defenders of intellectual property rights, who demand that India do more to protect patented drugs developed in the West, and international aid groups who say excessive pharmaceutical patenting stifles generic competition that makes life-saving medication accessible to patients around the world. “This case is key because the scaling up AIDS treatment around the world has come from Indian made medicines,” says Leena Menghaney, manager of Doctors without Borders’ access to medicines campaign in India. “If they did not exist or were not available most governments would not have ventured into starting large scale AIDS treatment programs.”

(MORE: HIV Patients Should Start Drug Treatment Right Away, New Guidelines Say)

At the heart of the current dispute is the breakthrough cancer drug Glivec  (Gleevec in the U.S.). Novartis, the Swiss drug company that helped develop the drug, is appealing the rejection of its 2006 patent application in India. In the U.S., where patent laws make it easier to register a patent claim, a monthly dose of Glivec can cost as much $5,000. In India, locally made generics cost patients $200.

In 1970, the Indian government disallowed the patenting of drugs, paving the way for Indian pharmaceutical companies to freely produce medicines pioneered by foreign drug companies at a fraction of the cost. Today, India’s pharmaceutical industry is worth $10 billion a year and is one of the nation’s largest sectors. The price of HIV/AIDS treatment, a first-line combination of stavudine, lamivudine, and nevirapine, which cost patients $10,000 a year in 2000, now sells for $150 worldwide, due primarily to Indian companies’ low cost manufacturing. This rush of cheap drugs, which are also produced in the U.S. and Europe, now provides medication for 80% of the 6 million people receiving treatment in the developing world today, according to Doctors Without Borders.

(MORE: India’s Medical Emergency)

In 2005, as a requirement of admission into the WTO, India reenacted patent protections for intellectual property, which included medicines. The Indian patent law, however, set the bar much higher than in the U.S. “India has time and again really expressed a strong preference for public health concerns over private patent rights,” says Shamnad Basheer, a professor of intellectual property law at the National University of Juridical Sciences in Calcutta. Earlier this year, the Indian patent office reasserted its preference for generic competition, stating that if a patented drug in the Indian marketplace is not made widely available at a reasonable price, then generic manufacturers are entitled to make their own versions of the drug and pay a royalty to the patent holder.

Novartis’ first attempts at patenting Glivec were rejected in India because it was considered to be an updated version of an existing Novartis drug, and therefore not eligible for patent protection. To protect consumers of low-cost medicines — and its pharmaceutical industry — Indian patent law aims to curtail a process known as ‘evergreening,’ in which pharmaceutical companies make sometimes minor improvements to an old medicine, allowing them to renew their patent. Under India’s tough standards, modifications that do not improve the efficacy of the drug are not eligible for extended patents.

Novartis cites modifications that make its new drug more effectively absorbed into the bloodstream, an improvement that was granted a patent in the U.S. in 2001.  “All the drugs that come out from USDA are not new molecules that are formed every year,” says Ranga Iyer, former head of the Organization of Pharmaceutical Producers of India. “They are newer versions of penicillin and other drugs. Do we call that evergreening?  No. There’s a lot of work going on to do that.” Iyer and other critics of India’s patent laws claim they are stifling innovation on new groundbreaking drugs. “If you tell an innovator to set prices low enough that everybody can afford it, how can a company recover cost?” says Iyer. “If innovation is not protected, people will not innovate.”

(MORE: Why India Is Still One of the Most Dangerous Places to Give Birth

But international pharmaceutical companies aren’t the only ones innovating. Generic drug manufacturers have also pioneered new treatments, creating pediatric HIV/AIDS drugs to cater to a segment of the market in developing countries that the big global drug manufacturers tend to overlook. Breakthroughs often come from publicly funded labs making the cost of research and development not as high as it seems, says Yusuf Hamied, chairman of the Indian pharmaceutical company CIPLA. “If you look at the world’s top 50 drugs being sold today, they are being marketed and sold by companies that did not invent them,” says Hamied. “I respect patents. I’ll pay a royalty. But I shouldn’t be denied the right to produce drugs for poor people at reasonable prices.”

For both proponents and critics of India’s patent laws, the supreme court’s interpretation will set an important precedent. Foreign drug companies see India as a growing market, but perhaps more importantly as a potential model for other developing countries’ patent regulations. If the court rules in favor of Novartis’ claim, aid groups worry it will set off numerous new patent claims making it impossible for India to produce cheap generics of all sorts. But the court is unlikely to lower the standard thereby granting Novartis a patent, says Shamnad Bhasheer. The Indian laws were designed specifically to favor public health interests, and the court would likely only lower the standard if it believed that innovation, particularly by Indian companies, was being stifled.

MORE: Why 40% of Donated Medical Equipment Goes Unused in Poor Countries

40 comments
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Betty Sherlin Schueler
Betty Sherlin Schueler

As a person who is alive, because of various medications, I have to hope that humanity, and not big pharma, wins this case. It is unfair that I should live, while others die, just because I have health insurance to cover my drugs. In the end, big pharma will still win because of the outlandish prices they charge us for medicine in the US.

John Cheong
John Cheong

Drug development cost a LOT of money. A single successful product need to earn enough to pay for its own Ramp;D and the Ramp;D of other failed drugs (for every successful molecule, there will be hundreds of others that failed). No sane private enterprise will take such a risk if not for a tidy profit in the horizon. No government in the world can efficiently drive Ramp;D in the same way that the private sector can. People criticize drug companies because it's easy - it's easy to sit in your armchair and accuse these companies of profiteering when they are bringing into existence NOW new medicine that would otherwise take 20, 30, 40 more years to development (if via public funding). Who's going to pay for the Ramp;D of future therapies if not for the pharma companies? Certainly not their critics. Someone's got to pay for the Ramp;D if we want better, safer, medicine sooner rather than later. By the way, patents do expire - and many patients are now benefiting from highly effective off-patent medication that were very expensive in the past.

LadyBehindTheMask
LadyBehindTheMask

If meds costs reflected Ramp;D, etc, I'd have less problem w/them. But starting in 2002, the US pharma industry began listening to consulting firms that helped it understand that meds should be "value priced" -- that is, priced according to the value they provide to their users. That's why any med that extends life a year costs $50K-$60K a year in the US, because that's what the US considers to the actuarial value of a year of human life. 

What this means, in essence, is that in the US meds are priced as luxury goods.  You don't pay for what meds cost to develop and produce (including that reasonable overhead of the whole Ramp;D pipeline), plus some fair profit: you pay what the industry believes you and or your insurance company can be coerced into paying. The patient assistance programs, although helpful, are primarily a way to take a tax write off -- that is to say, giving away overpriced drugs is better business than selling drugs at a fair price.

John Cheong
John Cheong

I understand your position on this matter - I use to hold your position as well. However, the problem is that we operate within a free market economy and "fair profit" is determined by the amount in which people are willing to pay for any product/service. The cost of some medication is exhorbitant but it is the price that we (collectively as a society) have to pay if we want to incentize companies to continue innovating and investing aggressively in Ramp;D despite the risks involved.  

In the long run - all drugs, no matter how expensive, will become affordable when patent expires. If we take away the monetary incentive, these potentially life saving medication might not even exist.

It is very sad to see a person not being able to afford medication that can save his/her life, or make their condition better - but it is most likely that these medications might not even be discovered if not for the high prices.

We all want better medicine but someone has to pay for it. The price we are paying now is for better healthcare in the future.

Having said that, it is true that pharma will try to game the healthcare system to maximize their profits. This is however a different issue and not so much about patents...

LadyBehindTheMask
LadyBehindTheMask

If meds costs reflected Ramp;D, etc, I'd have less problem w/them. But starting in 2002, the US pharma industry began listening to consulting firms that helped it understand that meds should be "value priced" -- that is, priced according to the value they provide to their users. That's why any med that extends life a year costs $50K-$60K a year in the US, because that's what the US considers to the actuarial value of a year of human life. 

What this means, in essence, is that in the US meds are priced as luxury goods.  You don't pay for what meds cost to develop and produce (including that reasonable overhead of the whole Ramp;D pipeline), plus some fair profit: you pay what the industry believes you and or your insurance company can be coerced into paying. The patient assistance programs, although helpful, are primarily a way to take a tax write off -- that is to say, giving away overpriced drugs is better business than selling drugs at a fair price.

Gary McCray
Gary McCray

Public health ought to have always been a primary governmental concern, not simply a private sector business geared to maximum profits.

The drug companies of which you speak are some of the most profitable Corporations in the world.

They do not need to maximize those profits at the expense of human life although that is exactly what they do.

They are the enemy of the people, not their benefactors.

srutherford36
srutherford36

I have been managing my modest investments, which mostly consist of Vanguard mutual funds, for years with the advice of the very reputable Independent Guide for Vanguard Investors, published by Dan Wiener. You might find it interesting to know that the one and only sector fund he consistantly recommends as a stable growth fund, month after month, year after year, is the Healthcare fund. It includes Big Pharma, of course. It consistently does well year and year. Even throughout our recent Great

Depression, it remained strong. I won't have anything to do with it.

Dave Holt
Dave Holt

You have to feed the pigs money !

Gary McCray
Gary McCray

What a surprise property rights versus human rights.

The one percent takes all, the rest - - DIE!

Nobrows
Nobrows

I have never understood drugs pricing.  Yes, it costs money to develop new drugs.  However, charging a very reasonable price, they could still recuperate their expenditure within the first year.  When they price their drugs in a way where people cannot afford them, they have no concern to the fact that, in actuality, they are killing people for a buck.  How do they sleep knowing the pain and senseless death they are causing?

jimmy kraktov
jimmy kraktov

"How do they sleep knowing.....?" Soundly, I'm guessing.

The "for profit" approach to health care will only insure that eventually there won't be enough people around to pay ANY price for what they have to offer. By then it will be too late. Unless this model changes, we'll not have to worry about the planet becoming over-populated.

cm6096
cm6096

The idea of allowing a drug company to keep a drug scarce so it can charge $5000 instead of $200 is the real crime.  I know drug companies need to recoup their investments in developing the drug, but maybe that should come in the form of tax right offs, tax rebates, etc...  Not by KILLING PEOPLE who can't afford the price premimum of a new drug.

Jfante1452
Jfante1452

That line about recouping investments is just the spiel they give to justfy high costs. It's like the oil company's claiming they have to raise prices to recover Ramp;D costs. Both industries are greedy.

Vijendra Pangam
Vijendra Pangam

If I understand correctly the issue is not regarding patent, its regarding "evergreening". Normally patents are awarded for few years, if pharma companies are modifying drug slightly and asking for patent again, that's like extending patent period on the same drug, that way they can maintain the patent forever. I don't know if big pharma uses this as loophole to maintain the patent, if they are then probably court should give verdict against them. 

Prithvi Shiv
Prithvi Shiv

While I can understand the concerns of big business where money spent on important research  needs to be recouped, it makes no sense to insist that this trumps basic human empathy. Everybody has a right to healthcare, though most can't afford it. There's nothing wrong in trying to bridge this gap. If a compromise needs to be reached, let tiered pricing be instituted based on earning capacity and availability of social support.

Though a few posters here claim that big pharma are indeed doing this, I would view it more as publicity gimmick than anything else. How many people were given life saving drugs by big pharma for the same rates as provided by generic makers last year? Not many.

Kimsbenn
Kimsbenn

Every drug company offers programs in the USA to help provide medically necessary drugs to eligible recipients based on income. There is an application process requiring proof of income. The medications are mailed directly to the patient. It is not a gimmick. Even Medicare patients in the donut hole can utilize this life saving service.

Jfante1452
Jfante1452

Sure, but what percentage of people qualify? I could afford the $5,000 a month for Glivec if I sold my house and kissed my retirement fund goodbye, but why should I suffer financially so some billionaire exec can buy another mansion?

Kimsbenn
Kimsbenn

If you need the service apply. It's a 50/50 chance, it's either yes or no. And if you think you could afford it you probably won't qualify. That's what an entitlement culture thinks though: why should I expend myself or resources if I can get someone else to expend theirs. It's also not the role of a business to provide you with their product or service simply because you feel they've made their share of money. No one wants to be sick but if I am it's my responsibility to do what I can to get well. And before you assume I don't know what it's like you would be wrong.

Prithvi Shiv
Prithvi Shiv

 Great, now we can wait for them to replicate it across the world.

Kerul007
Kerul007

FYI,...what is less published is that Novartis does make Glivic available at lower cost via Glivic India Patient Assistant Program (GIPAP) and/or Novartis Oncology Program(NOA).  It's distributed over Rs.4000 cr worth of Glivic in India in the last 9-10 years.   The government needs to recognize the efforts of innovation in cancer care and encourage  pharma Co's in continuing to do so in the future.  For example: Malaria and Dengue effects millions of people in India and Novartis has set up a major research center in Singapore.  The efforts of today will benefit millions all over some day.  Recognition of that research by way of patent is a right. 

Onus of providing health care should be on the government. 

PS: I'm a Leukemia patient on Glivic since 2003 via GIPAP supported by Novartis. 

Robin Ashe
Robin Ashe

It's best for the world if India stands its ground. Hopefully they'll set the standards.

Fatesrider
Fatesrider

I believe in paying for what you get, but as long as health care remains a for-profit enterprise, people will continue to die just because they can't afford to pad the pockets of health care providers.  There's a big difference between paying what something actually costs and what someone thinks should be their profit.

Chinga_Tu_Madre
Chinga_Tu_Madre

Good work so far India. Choose your citizens instead of greedy pharmaceutical companies that care nothing for the life and death of your people. These companies can make their money with the other first world suckers. You keep making generics.

duduong
duduong

I have no opinion on whether India should go one way or another. I just have a nagging feeling that, if China should copy India, much harsher name calling would result from Western media's inherent bias. Let's hope I am wrong on this.

Salazar David W
Salazar David W

 there is a healthy western bias towards china, the country who is involved in cyber-attacks against ALL western countries.

Tothiwim
Tothiwim

This is why drug research and testing should be done at universities with government funding. Big Pharma is not entitled to hold the world's health hostage for profit.

Collider
Collider

Besides, Big Pharma is not interested in a cure.. They make more money by treating people for the rest of their life, at $5000 a month.. Making a cure - in one pill, one week of treatment, is not very profitable is it..

Jfante1452
Jfante1452

Big Pharma is interested in cures ... that make them a lot of money.

O_Pinion
O_Pinion

The Indian drug industry has a parasitic relationship with the US drug industry. It relies on the fact that the US does issue patents to encourage innovation and development of new molecular entities. The Indian attitude is presented as very moralistic but if the US were to adopt the same patent framework there would likely be no Indian drug industry. 

Thiagu
Thiagu

Indian policy is making the patented drug available at affordable price is the best way to keep every sick people in the world alive. Pharma companies get tax break for all the Ramp; D work. Why are they still greedy of recovering the cost over night ?

Why can't they sell for less price and recover the money over time slowly ?

Its all the american idiot business ideas, get quick rich schemes by killing as much people as possible. What is the point of so called innovation, if the cost of the drug is not affordable to average low and middle class citizens ?

Thiagu
Thiagu

Indian policy is making the patented drug available at affordable price is the best way to keep every sick people in the world alive. Pharma companies get tax break for all the Ramp; D work. Why are they still greedy of recovering the cost over night ?

Why can't they sell for less price and recover the money over time slowly ?

Its all the american idiot business ideas, get quick rich schemes by killing as much people as possible. What is the point of so called innovation, if the cost of the drug is not affordable to average low and middle class citizens ?

Kimsbenn
Kimsbenn

The reason they offer the drug at such a high cost is they can only charge it as long as the patent lasts. In the USA a drug patent lasts 20 years by law. Patents are normally applied for prior to clinical testing, which last 2-5 years and sometimes longer. By the time it is approved by the FDA and available for mass marketing there may only be 12 years left before generics can be released. The average cost of bringing a new drug to market is $1.3 billion.

Niegol
Niegol

Recovering the money slower has the unfortunate drawback that it makes investing in new drug development less attractive. So unless society is willing to invest substantially in drug development, and thus take up the slack that investors will leave once they cant get a decent return on their investment, reducing patent protection always will lead to less development and in the long run, less treatements for all.

I do understand how unfair this is. But its the reality of this time that pharma Ramp;D is extremely expensive and needs to be payed for. If we take away the incentive for pharma companies to invest in future products, we will have to replace those funds with public capital. Thats a choice I would support.

On the other hand, the practice of evergreening is ridiculus, and the governments efforts to stop that are highly commendable. Only if there is a real increase in efficacy should a patent be extended.

unknownstuff
unknownstuff

 Thiagu, you make a valid point but you should realize that some of these drugs  cost millions and millions of dollars to research and develop. It is a bit unjustified what Indian patent laws are doing.  Indian companies should perhaps produce higher royalties if it still allows them to keep producing these drugs at a low cost.

LadyBehindTheMask
LadyBehindTheMask

If meds costs reflected Ramp;D, etc, I'd have less problem w/them. But starting in 2002, the US pharma industry began listening to consulting firms that helped it "understand" that meds should be "value priced" -- that is, priced according to the value they provide to their users. That's why any med that extends life a year costs $50K-$60K a year in the US, because that's what the US considers to the actuarial value of a year of human life. 

What this means, in essence, is that in the US meds are priced as luxury goods.  You don't pay for what meds cost to develop and produce (including that reasonable overhead of the whole Ramp;D pipeline), plus some fair profit: you pay what the industry believes you and or your insurance company can be coerced into paying. The patient assistance programs, although helpful, are primarily a way to take a tax write off -- that is to say, giving away overpriced drugs is better business than selling drugs at a fair price in the first place.

PsyBaba
PsyBaba

 So millions invested in Ramp;D, compared to multi-billions of dollars in profit negates the value of human life and accessibility to affordable healthcare?

Debbie Ledford
Debbie Ledford

I have to agree with you PsyBaba. I think it is morally reprehensible to value profits over lives. I am a pharmacist and I know that right now in the USA the drug companies spend more on marketing than they do on Ramp;D. 

Lucas Myerson
Lucas Myerson

But it's not just millions. It's hundreds of millions. And that's just for one drug. And for every drug that has made it through testing and has been approved by the FDA, there are many more that don't. Pharmaceutical companies can't afford to just eat the cost of these failed drugs. Lump the duds together and you're looking at costs that creep up on the billion dollar mark. So what do they do? They pass the buck on to the consumers through those drugs that reach the market.

Salazar David W
Salazar David W

 the drug companies make BILLIONS IN PROFITS so complaining about the cost of making and creating the drug are relly not as bad as you make out.