Finding the patent balance: the Novartis Glivec case and the TRIPS compliance of India's Section 3(D) efficacy standard.

Author:Turrill, Zoee Lynn
Position:Agreement on Trade-Related Aspects of Intellectual Property Rights
  1. INTRODUCTION II. THE EVOLUTION OF INDIA'S PATENT PROTECTIONS A. Pre-2005 Development of Law and Industry B. 2005 Move to Comply with TRIPS III. THE THREE ISSUES AND PROCEDURAL HISTORY OF THE GLIVEC CASE A. Background, Exclusive Marketing Rights, and Rejection of Patent B. Issue 1: Patentability of Glivec C. Issue 2: TRIPS Compatibility of Section 3(d) D. Issue 3: Constitutionality of Section 3(d) E. The 2013 Supreme Court Ruling on Patentability IV. THE PATENT BALANCE, CHALLENGES TO THE BALANCE, AND BALANCE ADJUSTERS OTHER THAN SECTION 3(D) A. Challenges to Both Sides of the Balance B. Current Balance Adjusters from Industry, Domestic Laws, and WTO Law 1. Industry Patient Assistance Programs 2. The Grandfather Clause? 3. Compulsory Licenses under TRIPS Article 31 V. SECTION 3 (D) WOULD BE UPHELD IN THE DISPUTE SETTLEMENT BODY AS A VALID USE OF TRIPS FLEXIBILITIES AND SHOULD BE UNDERSTOOD AS A CONSTRUCTIVE PROPOSAL TO CHANGE TRIPS A. Is a Higher Patent Bar Allowed Under the Current TRIPS Agreement? B. Amending TRIPS to Prevent Evergreening From Upsetting the Patent Balance VI. CONCLUSION I. INTRODUCTION

    Policymakers face a complicated landscape when deciding where to set the bar for patentability. Patients benefit from the innovation funded by pharmaceutical companies when those companies discover life-changing drugs like Glivec, but they will be harmed if patents are never allowed to expire so that low cost generics can enter the market. On the other hand, if patents are not granted on their products pharmaceutical companies lose years of monopoly profits and are not able to fund the research and development necessary for innovation. The patent balance seeks to find a compromise. Before the development of an international regime, countries made this policy decision independently, and differently, at the national level. (1)

    The Trade Related Aspects of Intellectual Property (TRIPS) agreement, housed in the World Trade Organization (WTO), sought to homogenize the balance by imposing minimum standards with which all WTO members must comply. (2) The TRIPS patent balance is based on standards drawn from U.S. law, and developing countries assert that it does not take into account their unique interests. (3) Thus, developing countries have advanced a number of "balance adjusters" to alter the TRIPS standard to meet their needs. One balance adjuster is India's Section 3(d), which seeks to prevent the practice of "evergreening" patents. (4) Evergreening occurs when a drug manufacturer makes small improvements to an old medicine, allowing it to renew its patent and to extend the time it will enjoy monopoly control rights. (5) To prevent this phenomenon, Section 3 (d) does not allow patents to be granted in India for the "mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy...." (6) Section 3(d)'s efficacy standard serves as a patent balance adjuster because it seeks to prevent the harm to patients caused by forty, sixty, eighty, or more years of monopoly control over lifesaving drugs.

    Part II of this Note explores the development of patent law in India, including its move in 2005 to become compliant with TRIPS. For many years, India did not allow patents on products, only on processes. A booming generics industry developed under that system and is now one of the largest contributors to India's economy. This industry has earned India the nickname of the "pharmacy of the developing world" because of the volume of generics it exports each year. That volume of generics, in combination with Section 3(d), means that many otherwise patent-worthy drugs are already "known substances" that will require a showing of increased efficacy in order to be patentable.

    Glivec faced this exact problem, as Part III explains. Glivec, also spelled Gleevec, (7) is produced by the pharmaceutical company Novartis and makes chronic myeloid leukemia a manageable disease. A generic version of the Alpha form was already being produced in India before the 2005 move to become TRIPS compliant. The patent office ruled that the new Beta form was not more therapeutically effective at treating the cancer, despite increases in bioavailability, thermodynamic stability, and shelf life. In court, Novartis challenged (1) the patent office's decision on the patentability of Glivec, (2) the TRIPS compliance of Section 3(d), and (3) the constitutionality of Section 3(d). The Madras High Court and the Intellectual Property Appellate Board upheld the denial of the patent, held Section 3 (d) to be constitutional, and held that there was no jurisdiction to decide the TRIPS issue. Novartis appealed only the first patentability issue, and the Supreme Court of India ruled on April 1, 2013, that the patent had been properly denied.

    Part IV explores how the India Supreme Court's ruling will affect various stakeholders and explores a number of balance adjusters other than Section 3(d), including compulsory licenses and discounted drug sales. Finally, this Note argues that Section 3 (d) should be understood either as a valid use of the flexibilities of TRIPS for developing nations to adjust the patent balance in domestic implementation, or as a proposal to amend TRIPS to prevent evergreening practices that upset the patent balance. This final section concludes that the Dispute Settlement Body (DSB) of the WTO would find Section 3(d) to be compliant with TRIPS.


    The Glivec case arose from a complicated history of Indian intellectual property law. India made a major move to come into compliance with TRIPS in 2005, but the standard for patentability was set higher than the one mandated by TRIPS. (8) Most importantly, it included Section 3(d), which required that a new form of a known substance demonstrate improvements in "efficacy" in order to be eligible for a patent. Since many drugs, including Glivec, were already being manufactured as generics in India when the 2005 law came into force, the drugs are known substances that now must meet the efficacy bar to be patentable.

    1. Pre-2005 Development of Law and Industry

      The Indian pharmaceutical sector dates back to around the turn of the twentieth-century, when Indian pharmaceutical companies were established under British rule. (9) The British enactment of the Indian Patents Act of 1911 created a system of patent administration that remained in force even after India gained independence in 1947. (10) By 1970, the industry in India was dominated by multinational corporations that held 68% of the market. (11) High drug prices and weak domestic industry motivated the government to make a change. (12)

      In September of 1972, India's parliament passed the Indian Patents Act of 1970 and stopped granting patents on drugs as products. (13) The new law provided protection for the process of creating drugs, but not for the product itself. It declared that "[n]o patent shall be granted in respect of a claim for the substances themselves, but claims for the methods or processes of manufacture shall be patentable." (14) The law also reduced the years of patent protection from fourteen years to seven years from the date of application. (15)

      This change paved the way for Indian pharmaceutical companies to start reverse-engineering medicines produced by foreign drug companies and then use a different process to produce generic versions at a fraction of the cost. (16) That is, the local pharmaceutical companies could sell the same drugs internationally without violating the Indian process patents as long as they could find an alternative way to synthesize the drug. (17) The 1970 law can be credited, at least in part, for building India's strong domestic pharmaceutical market. (18) One study showed that the pharmaceutical market in India increased from Rs. 4 billion in 1970 to Rs. 290 billion in 2003, a compounded annual growth rate (CAGR) of 13.4%. (19) Today, India's pharmaceutical industry is booming: it is one of the nation's largest sectors and is worth around $10 billion (Rs. 550 billion) a year. (20) This industry has gained India the nickname as the "Pharmacy of the Developing World." (21)

    2. 2005 Move to Comply with TRIPS

      On March 22, 2005, a divided Indian Parliament moved to comply with the country's obligations as a signatory of TRIPS by passing The Patents (Amendment) Act 2005 and by resuming the grant of drug product patents rather than just process patents. (22) As required by Article 27 of TRIPS, the international criteria of patentability were included in the law, such as non-obviousness. (23)

      However, the government of India took measures to protect both Indian consumers and the large domestic generics industry. For example, the government included provisions that allowed for public opposition to new patents both before and after the grant. (24) This allowed local generic companies to be active participants in disputing the patentability of the drugs they had reverse-engineered. The measure to protect the domestic generics industry at issue in the Glivec case is Section 3(d) of the Patents Act. Section 3(d) restricts the scope of what is patentable by listing what are not inventions under the Act, specifically excluding the new form of a known substance that does not increase efficacy over the original substance. The amendment reads:

      (d) the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. Explanation.--For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be...

To continue reading