EverGreening: An Abuse of the Patent System

By Sushmita R., Christ Law College, Bangalore

Editor’s Note: Intellectual Property laws are one of the most complexed laws that exist today. India, in order to strengthen its patent regime and align it with the TRIPs agreement, introduced amendments to the Patent Act in 2005, with a special focus on the pharmaceutical industry. This was done in order to prevent the process of evergreening, a process whereby patents are extended without any enhancement in the therapeutic efficiency of the drug. This was also done in order to increase access of the public to patented drugs, by avoiding unnecessary protection to the inventors. India’s commitment to stop the process of evergreening was reflected in the case of Novartis v. Union of India. However, the need of the hour is a balanced approach that serves public interest, and at the same time, protects the rights of inventors.”

Introduction

“Evergreening,” is referred to the practice whereby pharmaceutical firms extend the patent life of a drug by obtaining additional 20-year patents for minor reformulations or other iterations of the drug, without necessarily increasing the therapeutic efficacy. However it has become a practice in the pharmaceutical industry where on one hand innumerable patients struggling to afford the high priced patented drugs, while on the other hand innovators struggling to give immortal value to their creation.

A patent as described in the Indian Patent Act, 1970 as “a grant or a right to exclude others from making, using or selling ones invention and includes right to license others to make, use or sell it”. In the Webster’s Ninth New Collegiate Dictionary, it is defined as an official document conferring a right or a privilege, letters patent, writing securing to an inventor for a term of years the exclusive right to make, use and sell his invention, the monopoly or right granted[i].This monopoly right is given only for a certain number of years. After the expiration of this duration, this right is taken away from them and the technology or the product becomes easily accessible to any other person and he may not earn any more profit from his own creation.

Chapter II of the Indian Patent Act, 1970 Section 3 deals with  what is not patentable. Sub-section (d) which reads “the mere discovery of a new form of a known substance or 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[ii]”.

This provision aims to prevent ever greening and protect the genuine innovators. This was demonstrated in the judgment of Novartis case which shows that there is a shift in the development pattern of  usage and production of technology. Earlier India was just a user of the technology hence its laws provided weak protection to the intellectual property. But gradually  India became  a producer of technology, thus providing a strong protection to intellectual property.

Novartis Case

In 2005 when a condition was inserted in Section 3 (d) of the Patent Act regarding the efficacy of the drug, it was interpreted as to the therapeutic efficacy of the drug and not just the improvements in the physical characteristics or stability of the product. Novartis filed an application before the Chennai patent office related to a drug name GLIVEC which was slightly a different version of its 1993 patent for Anti Leukaemia drug.  The Assistant Controller of Patent and design, Chennai Patent Office rejected the application under section 3(d). Novartis prayed the Court to declare section 3(d) of Patent (Amendment) Act 2005  non compliant with the TRIPS Agreement and violative of Article 14 of the Constitution. The entire argument regarding violation of Article 14 Constitution of India was based on arbitrary discretionary power vested in the Patent Controller in determination of enhanced efficacy

The court said that the aim of the patent system is to discourage the extension of the patent after the expiration of the patent term of twenty years so that other firms can produce and market  the drug. The Court said that the Amendment was intended to:

  • Preventing ever-greening;
  • To provide easy access to the denizens of this country for life saving drugs; and
  • To discharge their constitutional obligation of providing health care to its citizens.

It is important to note that the judgment was not in contradiction to the patent laws.  The court remarkably factored public interest while deciding the case[v]. The right to health is a cause of concern in many parts of the world, one-third population of world does not have access to basic medicines and among this one-third, majority of population lives in African and Asian continent. Since price is one of the major factors in accessibility, this decision was of great significance as it allowed many poor countries to access the patented drug at affordable prices

Effect on the Economy of Drugs

This judgment undoubtedly contributed to the affordability of drugs. Obtaining patents became more difficult. But it should be remembered that until unless compulsory license is granted to the non patent holders to manufacture the drug, the drugs which are under product patent will continue to have a high price.

India’s International Commitments

India has always aimed  to promote innovation and to improve and strengthen the national intellectual property systems with a view to providing an effective response to the challenges created by knowledge based society and the introduction of new technologies. This is well emphasised in the numerous bilateral treaties of India with Australia, Germany ,U.S.A and many other countries[vi] . Most of the MOU’S intend to strengthen cooperation of the Intellectual Property offices of the respective countries for benefit of industry, research and citizens. These MOUs  touch aspects of public awareness and human resources management in field of IP.  For Instance the MOU between India and Switzerland[vii] provided for setting up a joint committee mainly that aimed at: Protection of IP at national level, Exchange of experiences between the countries and  Development of continuous cooperation.

The MOU also discusses strategies aimed at preventing the manufacture, distribution, sale and consumption of counterfeit and pirated products as well as at raising public awareness of damages caused by counterfeit and pirated products[viii].

The Patent Cooperation Treaty[ix] to which India is a signatory aims at the following-

  • Contribution to the progress of science and technology,
  • Perfect the legal protection of inventions
  • Facilitate and accelerate access by the public to the technical information contained in documents describing new inventions

A close examination into India’s international commitments reveals the importance given to the aspect of public welfare in the context of new inventions. A contribution towards science and technology has been given importance, but not at the cost of public health and welfare. The aspect of evergreening clearly affects the public health and welfare; and India being a welfare country, is bound by the  Constitution to consider public welfare.

New Patent Regime in India

The Indian Patents (Amendment) Act, 2005 introduced product patents in India and marked the beginning of a new patent regime aimed at protecting the intellectual property rights of patent holders. The Act was in fulfillment of India’s commitment to the World Trade Organization (WTO) on matters relating to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)[x]. The TRIPS compatible Indian Patents (Amendment) Act, 2005 addressed few important issues regarding patents:

  • Adopting the definition of ‘pharmaceutical substance’;
  • Exclusion of ‘mere discovery of new form of known substance’ and the ‘new use for a known substance’; and
  • Manufacturing products which may be granted patent protection in the new regime’[xi].

Furthermore, the Act brought in a definition of the term ‘new invention’ and also introduced restrictions as to the scope of patentability (section 3(d)). It is explicitly mentioned in section 3(d) that patents would not be granted on the following grounds:

  • The mere discovery of a known substance, which does not result in the enhancement of the known efficacy of that substance,
  • The mere discovery of any new property or new use for a known substance, and;
  • 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”

The Indian Patents (Amendment) Act 2005 was India’s final step towards attaining TRIPs compliance. It was an attempt to balance the competing interests of different stakeholders which include domestic generic manufacturers, civil society groups concerned with access to medicines, the research and development community, foreign multinational companies and the intellectual property lawyers.

However, this legislative effort had greater international significance because of introduction of pharmaceutical patents and the subsequent threats to an internationally famous generic industry that had so far, guaranteed the supply of affordable drugs. Hence, India while complying with the TRIPs agreement and introducing a product patent regime for new drugs that were invented, also added a safeguard enabling refusal of patents on discovery of new forms or new uses of old drugs (i.e. preventing ever-greening).It is noteworthy that the TRIPs agreement provides in its objectives and principle[xii] that each country can introduce a patent regime that is more suited to its socio-economic context.

Consequently, after six years of enacting the TRIPs agreement, WTO members recognized the need of the poor countries to combat provide affordable healthcare and came up with Doha Declaration on TRIPS and Public Health[xiii] However, even after the adoption of Doha Declaration, the pharmaceutical companies have failed to reduce the prices of the medicines, especially for the treatment of diseases like cancer, HIV/AIDS. This demonstrates that the multinational corporations do not address the health problems of the developing countries adequately. Hence the health policies that must foster the availability of drugs at an affordable price to all those needy, worldwide has been proven ineffective.

Property Rights Report, 2006 supports the fact that countries can adopt legislation and examination guidelines requiring a level of inventiveness that would prevent evergreening patents from being granted. It further states that the TRIPS Agreement gives freedom to WTO Members to determine the hurdle required for the inventive step.[xiv]

A Balance between the Patients and Patents

Just describing the problems caused by the strict patent laws or evergreening of the patent is not enough. It is also important to prescribe a solution for these problems. The need is to create balance between the patent laws and their extension while keeping a low price for the patented drugs, so that they are affordable by the common people of India. There are ways that can help in the reduction in the price of patented drugs.

Compulsory Licensing

By providing for compulsory licensing, permission is granted to non-patent holders of the drug to manufacture that drug. In this way ,prices of these drugs though patented are still kept low and they are within reach of the poor sections of the society.

Mutual Benefit Programs

The government should ensure proper health care is available to all the sections of the society. Because in India, there are  problems like low income and inadequacy of healthcare facilities. The common man has very limited access to essential drugs and it does not matter whether the drug is patented or not. Even if the drug is not patented, access to such crucial drugs is very less. Hence, the government should ensure access to basic health facilities .

Approach in Other Countries

The need to strike a balance between innovators and patients is not a concern isolated to India such issues, and concerns over the  potential abuses of evergreening are widespread throughout the global community. This aspect of balancing is important, and some nations have tried to come to viable and creative solutions for the same/

Australia

Limited term extension for drug patents is  a feature of the Patents Act, 1990[xviii] with the ability to apply for extensions of up to five years for pharmaceutical substance patents[xix] This specific extension is regarded as some compensation for the extended regulatory approval process and safety trials to which new drugs are subjected, and is a common element of many patent systems. The Australian Government was of view that new application must meet all the requirements for patentability in its own right, and will only receive protection to the extent its claims are valid. As Karin Innes states, ‘patent evergreening will still be permitted to the extent that it does not transgress the law.’[xx]She asserts that the practice of evergreening was ‘effectively endorsed[xxi] by the High Court of Australia in Aktiebolaget Hässle v Alphapharm Pty Ltd[xxii]

United States

USA has had numerous debates about the dangers of evergreening and has attempted to strike a balance between the interests of inventor and generics drug companies which provides drugs at an affordable price. This is done primarily within the framework of the Hatch-Waxman Act. This Act introduces a procedure for obtaining regulatory approval for generic drugs. An ‘abbreviated new drug application’ (ANDA) can be made to the US Food and Drug Administration by generic drug manufacturers seeking approval for the release of their drugs. The rationale underlying this system is that if the original drug has already received regulatory approval, then in order to gain marketing approval for their drugs, all a generic company should be required to do is to demonstrate bio-equivalency with the original drug, that is to say an identical biological effect rather than demonstrate safety and efficacy independently. In order to balance interests, the Hatch-Waxman Act requires ANDA lodgments to make one of four certifications in relation to the patent status of the competing generic drug. The options are:

(a) The drug is not patented;

(b) Relevant patents have expired;

(c) Relevant patents will expire by the time the generics drug hits the market; or

(d) The patent won’t be infringed or is invalid[xxiii]

The Hatch-Waxman Act contains several other important elements[xxiv]. First, it makes provision for periods of data exclusivity (for example, to an originator listing a new molecular entity). Secondly, it also grants patentees a more expeditious mechanism for obtaining stays on generic product releases. Finally, it further provides for term extensions in order to make up for delays caused by regulatory processes.

Conclusion

The 2005 Amendment and the ruling in the Novartis case signals that India has chosen to adopt an IP regime that is in keeping with the spirit of WTO, but at the same time, makes a provision for inexpensive access to medicines by prohibiting patent ‘evergreening’. It has implications for global companies seeking to utilise the R&D and commercial opportunities in India as well for Indian generic companies seeking to develop innovative products for both domestic and international markets. India can incorporate any of systems of other developed countries only to ensure accessibility of life saving drugs to millions of patients so that it can more effectively tackle anti-evergreening regimes.

Edited by Kudrat Agrawal

[i] Indian Patents Act 1970.

[ii] Indian Patents Act 1970.

[iii] Hoffman La Roche Ltd V Cipla decided in I.A 642/2008 IN CS (OS) 89/2008F

[iv]http://www.rediff.com/money/interview/interview-novartis-ruling-is-not-an-anti-patent-judgement/20130410.htm

[v] Roche vs. CIPLA is another such case where a Court in India has heavily considered ‘public interest’ while granting temporary injunction.

[vi] www.patentoffice.nic.in

[vii] Memorandum of Understanding between Ministry of Commerce and Industry of India and The Federal Department of Economic Affairs of Switzerland on Intellectual Property 7th August 2007

[viii] Article 1 of MOU between Ministry of Commerce and Industry of India and The Federal Department of Economic Affairs of Switzerland on Intellectual Property 7th August 2007

[ix] Patent Cooperation Treaty done at Washington on June 19 1970 amended on September 28,1979,modified on February 3 1984 and on October 3 2001

[x] WTO, Agreement on Trade Related Aspects of Intellectual Property Rights, Annex C available at http://www.wto.org/english/docs_e/legal_e/27-trips.doc, visited on May 26, 2008

[xi] Biswajit Dhar, Post 2005 TRIPS Scenario in patent protection in the pharmaceutical sector: the case of generic pharmaceutical industry

in India available at http://www.iprsonline.org/unctadictsd/docs/Dhar%20Indian%20 Pharma%20November06.pdf

[xii] Article 8 specifically states that member countries may adopt measures necessary to protect their public health and nutrition and to promote public interest in sectors of vital importance to their socio-economic and technological development.

[xiii] WTO Doha Ministerial Declaration, WT/MIN (01)/DEC/2, 20 November 2001

[xiv] WHO Public Health, Innovation and Intellectual Property Rights Report, 2006

[xv]See, eg, discussion of the United States Federal Commission’s 2002 inquiry into evergreening abuses: Thomas Faunce, ‘The Awful Truth about Evergreening’, The Age (Melbourne), 7 August 2004, 9.

[xvi] See, eg, the comparative regulatory discussion in Anita Nador and Melanie Szweras, Comparing Canadian Notice of Compliance (NOC) Regulations for Patented Medicines with Corresponding United States and European Union Provisions (4 March 2002) Bereskin and Parr Intellectual Property Law <http://www.bereskinparr.com/English/publications/art_html/bio-noc-regul-nador.html>. Although these jurisdictions differ considerably in their approaches, they are more homogenous than others.

[xvii] Australia–United States Free Trade Agreement Opened for signature 18 May 2004, [2005] ATS 1 (entered into force 1 January 2005)

[xviii] Intellectual Property Laws Amendment Act 1998 (Cth) sch 1 div 2.

[xix] Patents Act 1990 (Cth) ss 70–9A.

[xx] Karin Innes, ‘The Impact of the Australia–United States Free Trade Agreement on Pharmaceutical Patents’ (July 2005) Blake Dawson Waldron: Life Sciences Update 7 <http://www.bdw.com.

au/publications/lifescience/lifescience072005.pdf>.

[xxi] Id.

[xxii] Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 41.

[xxiii] Federal Food, Drug, and Cosmetic Act, 21 USC § 355(b)(2)(A) (2004).

[xxiv]EVERGREEN OR DECIDUOUS? AUSTRALIAN TRENDS IN RELATION TO THE ‘EVERGREENING’ OF PATENTS, Robert Chalmers, Melbourne Law Review March 2007.

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