Indian Court Rules Against Drug Maker Novartis
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In a test case for drug patents in developing nations, Novartis loses an attempt to challenge an Indian patent provision.
SocialFunds.com -- An Indian court earlier this month ruled against Swiss pharmaceutical company Novartis' challenge to India's right to refuse patents on existing medicines. While international aid agency Oxfam and the Interfaith Center on Corporate Responsibility (ICCR), an institutional investor organization, see the verdict as "an important victory for global public health," Novartis is worried that the "Indian court ruling will discourage investments in innovation needed to bring better medicines to patients." Novartis is a widely held stock in socially screened portfolios.
The ramifications of this ruling by the High Court in Chennai reach well beyond India to other developing nations, largely because of India's important role as a manufacturer of generic drugs. Oxfam reports that over two-thirds of the generic drugs made in India are then exported to other developing countries for considerably less cost than the patented brand medicines. Unicef, Doctors Without Boarders, and other aid programs also depend on the low cost generic medicines manufactured in India.
The lawsuit hinged, in large part, on how drug innovation occurs and if slight differences in medicines, i.e. "incremental innovation," require new patents for the drugs. Novartis brought India to court challenging the constitutionality of the Section 3(d) of the provision of Indian Law that states patent monopolies will be awarded for only "truly innovative medicines" rather than minor changes of existing medicines. The US Supreme Court also recently ruled in favor of stricter criteria for medicine patents.
The lawsuit hinged, in large part, on how drug innovation occurs and if slight differences in medicines, i.e. "incremental innovation," require new patents for the drugs. Novartis brought India to court challenging the constitutionality of the Section 3(d) of the provision of Indian Law that states patent monopolies will be awarded for only "truly innovative medicines" rather than minor changes of existing medicines. The US Supreme Court also recently ruled in favor of stricter criteria for medicine patents.
The World Trade Organization (WTO) in 1994 confirmed the Agreement on Trade Related Intellectual Property (TRIPS) to balance the rights of developing countries to protect public health and the rights of intellectual property. In 2001, developing and developed nations met again over TRIPS to clarify the agreement. India's provision is safeguarded by TRIPS, Oxfam reports.
However, the irony is that currently Novartis doesn't sell Glivec in India and 99% of the patients prescribed Glivec in India receive it free from Novartis through its Glivec International Patient Assistance Program ( GIPAP.)
Novartis reported that its access-to-medicine programs reached over 33 million patients worldwide in 2006, with contributions totaling nearly a billion Swiss francs. This represented some 2% of its total net sales donated to patients and research into neglected diseases.
Scott told SocialFunds.com, "This case did not threaten the supply of medicines from India to poor countries given the safeguards already in place. Medicines are made available through tiered-pricing solutions, public-private partnerships, shared contribution models and donation programs."
However, giving away free drugs is not the issue, as much as the 7,500 patients who have received free Glivec might appreciate it. "Medical philanthropy is not sustainable for developing nations," said Oxfams's Malpani, "Countries need to have functioning public health care systems."
"In India, Novartis is faced with a globalization dilemma that characterizes many emerging economic powers today: two markets within one country. India has a booming middle class on one hand, and a vast number of extremely poor people on the other," said Novartis' spokesperson Scott. "As a result, in India, we are pursuing a dual, patient-focused strategy. We are aware of the many obstacles poor patients face regarding access to medical care there. At the same time, we take affluent India seriously as a formidable world power with all the rights and obligations that such status brings with it. "
The Indian court has deferred to the WTO to resolve the question on TRIPS compliance. The Glivec patent appeal is still not decided and the Intellectual Property Appellate Board (IPAB) review continues as a separate proceeding. Although the drug maker could appeal to the Indian Supreme court or ask the Swiss government to present it before the World Court, Novartis told SocialFunds.com the company will likely not appeal the decision. What happens next will be probably be behind the scene, with harder lobbying by Novartis and other drug companies of the Indian government to rewrite laws.
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