Patents and Right to Health

By Arunima Singh, Amity Law School

Editor’s Note: ‘Patent’ word derives its origin from the Latin word “Patere” which means to “open up”. Patent is an Intellectual Property Right that grants exclusive monopoly rights to the holder of the patent to use, manufacture, produce, sell and/or market the invention. Though patents provide an incentive to innovate but they also make it difficult for countries to keep health care costs low. Considering specifically pharmaceutical patents (product patents), monopoly rights to commercially exploit a drug may lead to high pricing of the drugs to recoup the R&D costs before expiration of term of the patent. Therefore, the issue becomes very significant because while patents are food for thought of inventors, it cannot be neglected that these do lead to high prices of drugs, thereby affecting the health of the society at large.

INTRODUCTION

Reward for creation has promoted innovation, true. But high priced drugs and non affordability has created problems so much so that the international community is looking for way outs. While promoting innovators for benefit of individual and society is responsibility of the state, ensuring accessibility of vital life saving drugs at affordable prices is also a duty the state must fathom. This is where IPRs and Human rights are at crossroads. TRIPS allowed flexibilities regarding grant of compulsory licenses which the Doha Declaration strengthened further. This essay has examined different aspects from grass-root level of developing drugs to patenting such drugs and their consequent cost and after-patent protection in form of Supplementary Protection Certificates.

Before looking onto different overlaps of human intellect protection and human rights, it is only fair to be updated about where India stands individually in both the facets.

IPR: The International Property Rights Index[i] indicates that India has a strong IPR protection regime which as per this index improved further in 2013 as compared with 2012. In the overall category ‘Intellectual property rights’ the country stands at 55th position out of a total of 130 countries as compared to 1st position held by the United States and 11th position by United Kingdom. While USA has the best regime for protection of IPRs, especially patent protection, India is climbing ladders and currently at the 40th spot in both the categories. However, in copyright protection category the country lags far behind at 58th spot on the index. Also, for the year 2013-2014, India occupied 60th spot on the Global Competitiveness Index which takes into account innovation and IP protection of a country to ascertain the standings[ii].

Human Rights: In a ranking that indicates state of affairs conducive to protection of human rights in descending order, India stands at the 18th number with Syria topping the list countries and Scandinavia performing the best, thus securing the deserved last spot of the index out of a total of 197 countries[iii]. India, recognised as key emerging economy, dropped into the ‘extreme risk’ zone with countries like Philippines(27th spot) and Nigeria(10th spot)[iv].

Clearly, the IP environment and level of human right protection of the country is not up to the mark. Having understood the current standing of India in both these fields, this essay will now proceed to understand the overlapping of patent protection and access to drugs, the effects of being on such crossroads and the road ahead.

India had legislations aiming at protection of intellectual property but it was after the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement of 1995 that Indian IPR protection regime was brought at par with the international standards. TRIPS is one of the most important multilateral agreements of WTO and came into force on 1st January, 1995 setting out minimum standards of protection each member country is bound to follow. The agreement comprehensively deals with all facets of IP and works on the principles of Most Favoured Nation (MFN) and National Treatment through Articles 4 and 3 respectively[v].

Out of all the IPRs, patents have been considered to be an incentive for innovation which in turn benefits the society as a whole. But since, in ways as will be described in this work further, patents hinder availability of drugs affecting the basic humanitarian right – right to health, it has been considered a necessary evil. After efforts from developing countries to cope national health problems, in particular with HIV/AIDS, a declaration on public health was signed in 2001 in Doha, Qatar. Recognising the effect of granting protection to intellectual property on the prices of drugs the Doha Declaration was adopted in Doha, Qatar on November 14th, 2001, with the purpose to promote public health and access of medicines to all. All the countries participating in this ministerial meet agreed through Para4 of the declaration that TRIPS does not and should not prevent members from taking measure to protect public health and for this the countries were allowed to make full use of the flexibility provisions in the TRIPS agreement. While complying with their obligations under TRIPS, countries were granted the following flexibilities under para5 of the declaration:

  • While interpreting any clause of the TRIPS agreement, the objectives and principles as enshrined in its Objectives and principles is to be kept in mind;
  • Members can grant compulsory licenses. The grounds on which such licenses are to be issued is also to be determined by the countries them self;
  • Members have the right to determine what situation or which public health crisis constitutes a national emergency or other circumstances of extreme emergency, such as, HIV/AIDS, tuberculosis, malaria and other epidemics; and
  • Subject to the principles of Most Favoured Nation (MFN) and national treatment, member countries are free to establish individual regimes for the exhaustion of IPRs without challenge.[vi]

Keeping the humanitarian approach, a change was made in Article 31(f) by virtue of Para 6 of the declaration. Traditionally, compulsory licenses were granted to meet the requirements of domestic markets but after the declaration, member countries agreed that generic copies made by virtue of compulsory licenses can be exported to a country which lacks the capacity to produce them. For example, if India has to export a life saving patented drug to another country which lacks the capacity to produce it, the importing country will have to grant a compulsory license to the Indian manufacturer. This is called cross-border licensing.

Doha declaration is a major event that has given WTO countries a chance to bridge the gap between patent protection and access to life saving medicines. In a nutshell, it allows all the member countries, especially the third world countries, to fully use the flexibilities in the TRIPS agreement without the stress of opposition from developed countries and take appropriate measures to ensure access to medicines for all, while fulfilling their commitments under the TRIPS, in good faith.

HOW DO PATENTS AFFECT ACCESSIBILITY OF DRUGS?

‘Patent’ word derives its origin from the Latin word “Patere” which means to “open up”. Patent is an Intellectual Property Right that grants exclusive monopoly rights to the holder of the patent to use, manufacture, produce, sell and/or market the invention. Exclusive monopoly rights imply that other than the holder of the patent or his authorized agent, no person can use, manufacture, produce, sell and/or market the invention without the permission of the inventor. IPRs have been introduced with the idea to enhance innovation and reward the subjects of the society for portrayal of their intellect. Patents are an award for the inventor and reward for the investor.

Patents are, in a way, lifeline for the Pharmaceutical industry, the food for its thought. Patents are granted mainly because of the following:

  • To award an inventor for introducing a novel step over the existing knowledge to the society;
  • To encourage investment in Research and Development (R&D);
  • To remunerate the inventor for all the R&D costs incurred by him in the process of developing the invention and getting it patented;
  • To allow the inventor to fully commercially exploit his invention[vii];
  • To benefit the society from full disclosure of inventions;
  • To inspire innovators to create inventions beneficial to mankind and society.

Though patents provide an incentive to innovate but they also make it difficult for countries to keep health care costs low. Considering specifically pharmaceutical patents (product patents), monopoly rights to commercially exploit a drug may lead to high pricing of the drugs to recoup the R&D costs before expiration of term of the patent. In a developing country like India, affordability of such high priced drugs becomes a severe concern. Complying with the TRIPS agreement is an obligation for India but ensuring accessibility and feasibility of life saving drugs to its citizens is a fundamental duty the nation cannot neglect. In most of the countries, medicines come under the ambit of Health Ministry but in India there are two ministries responsible for medicines, that is, the Ministry of Chemicals and Fertilizers and Ministry of Health and Welfare. Despite the fact that India produces eight percent of the medicines present in the global market in terms of value and thirteen percent in terms of value[viii], the situation here is that sixty percent population of the country does not have regular access to essential medicines because of their unaffordable cost[ix]. India is lagging behind in making drugs available for its subjects because even though the drugs are available in the market, they aren’t affordable; availability is not merely presence of a drug in the market but availability of such drug to the public at affordable prices.[x] Developed countries have been granting product patents even before the Uruguay round of GATT but developing countries like India started fully entertaining mailbox applications only after the radical amendment of 2005 in its patent legislation. Though the TRIPS agreement and further the Doha declaration provide for flexibilities in the Intellectual Property regimes but the underlying question remains the same, whether patent rights for pharmaceutical products should be given at all?

When the patent is granted, the drug is introduced in the market for commercial sale and often at very high prices making the drug unaffordable for majority of the population. Now, patents affect right to health because the exclusive rights it gives to the drug producers rule out all the competition for the drug so patented, which means that the patented drug is the only one that can be used to cure a particular illness (generic cheaper versions are unavailable until the term of the patent lives) leaving almost no choice in the hands of the customer or the ill. And one who wants to save his life must pay for the high priced drug irrespective of whether he can afford the same or not. Patents affect the right to health in the following ways:

  • Monopoly rights leave much less choice in the market from the customer’s point of view;
  • If the patent holder (producer) of the drug fails to make the drug available in the market, the demand for such drug is not met. Technically, the medicine people require exists in theory but not available in practicality.
  • It is not necessary that on grant of the patent, the holder brings the subject of the patent into the market. This may happen due to a number of reasons like lack of adequate funds or resources. Patents are also often obtained to secure walls around a technology or method just to keep it free from outside interference. Consequently, potential technologies and methods never actually “benefit the society” which is the underlying purpose of granting them[xi].

In the 1960s while discussions relating the Paris Convention were progressing, India had some of the highest drug prices in the world and to address this issue the country designed its patent law which came as a statute in 1970[xii]. Patents then were given only for processes but not for products like pharmaceutical drugs. However, after drastic amendments of 2002 and 2005, the Indian Patent law was in full compliance with the TRIPS agreement granting patents for both products and processes.

When we introduced our patent laws with the objective of bringing the costs down, the question is, why are we still struggling from high drug prices affecting affordability and the consequent availability of drugs? To answer that question it is imperative to understand that what factors affect the pricing of drugs and how intellectual property regime, patents in particular, affect these prices.

From the nascent stage of developing the drug to distribution of drugs, the following factors lead to an increase in drug prices:

  • The cost incurred in R&D for the development of the drug is high;
  • High costs of performing the stages of clinical tests necessary to obtain government approval from the regulatory authority;
  • Years of delay in grant of the patent makes the tenure of protection shorter as a result of which pharmaceutical companies aim on maximum exploitation of the drug as soon as it gets patented, this directly affects the price of drugs;
  • The cost of bringing a drug into the market is comparatively much higher than producing generic versions of it. The reason is that generic version of the drug does not require stages of clinical tests (which, as said earlier, calls for huge investments), as required for the patented drug, by virtue of being a copy of it; generic. Therefore the first generation of patients are the ones to absorb cost of developing the drug.[xiii]
  • Once commercially launched in the market, promotion, advertisement and marketing costs of the drug are all reflected in the maximum retail price of such drugs.

In fact, from developing a drug to bringing it in the market, the cost may sum up to more than two billion US dollars. Resultant of this, drug producers and developers price the drug high so as to recoup the costs they incurred in the overall process mentioned above. According to a finding, the cost of treating chronic conditions using biotechnology drugs per month amounts up to almost twenty thousand US dollars[xiv]. All of the above are underlying reasons for it being said that maximum commercial exploitation of the drug is possible only up till the time the patent lives. After expiry of the term, the competition between generic producers decreases the cost of the drugs. However, it is still higher than the marginal cost of the drugs because of indefinite or inelastic demand of medicines.

SOLUTIONS

Even though patents hinder competition and human rights law, they are accepted as a necessary evil. Patents are food for innovation and inventors ought to be awarded, investors ought to be rewarded. Patents give monopoly to pharmaceutical companies making high pricing of drugs in the market conducive and thus directly affecting right to life and health. These exclusive rights are granted keeping in mind the benefit of the society so when it comes to a larger societal issue such as public health, individual rights ought to be subsided. For example, when an epidemic breaks out, focus is on availability of the life saving drug for everyone who needs it, here good of the individual is kept beneath public health. There is a balance that can be struck between obligations under the TRIPS and obligations of the state to ensure availability. In my opinion, following are the measures that can be sought.

Compulsory Licenses

Compulsory License is when a government allows someone else to produce the patented product without the consent of the patent owner[xv]. The idea of granting compulsory licenses is older than Doha (2001) or TRIPS (1995) or even GATT (1947). The first expression of Patents and CL was in UK Statute of Monopolies, 1623. Over centuries, strong protection regimes for IPRs have been established, the effect monopoly and exclusive rights may have on prices and accessibility of drugs has also been considered. This is the reason that Berne Convention, 1886 under Article 11bis(2)[xvi] and the Paris Convention, 1883 under Article 5A(2),(3),(4)[xvii] provides for compulsory licensing provisions. Article 31 of the TRIPS agreement and Para 5 of Doha declaration of 2001 makes it possible for countries to fully use flexibilities in the TRIPS to ensure access of drugs by granting licenses of a compulsory nature. Doha allows member countries freedom to ascertain grounds on which such licenses are issued.

In India, CLs are granted, only after expiration of three years from the date of grant of the patent, on the following grounds (sec84[xviii]):

  • Reasonable requirement of the public in respect of the patented material has not been fulfilled;
  • Unavailability of the patented invention at reasonably affordable prices;
  • Non-working of the patented invention in India; and
  • Cases of national emergencies, epidemics, public non-commercial use.

It is important to note here that except when grounds (d) apply, it is mandatory on part of the applicant (person of interest) to offer the patent holder for a grant of voluntary license on reasonable terms before applying for a compulsory license. TRIPS and the Indian legislation here try to balance between public good and patentee good by giving each a fair chance. If merit is found in the application of the interested person, a compulsory license is granted with royalties and remunerations to the patentee as decided by the authorities. The license so granted is subject to the following:

  • A compulsory license is subject to judicial review;
  • A patent gives exclusive rights to the patentee but a compulsory license does not give exclusivity to the applicant. That is, the patent holder can use the invention.

The first compulsory license to Natco in 2012 flared sparks in the western world, particularly the USA who accused India of developing protectionist and anti-ip practices and that its laws are non-compliant with TRIPS. This was feared that the Natco CL was just the beginning of the many to come licenses undermining patent holders and innovators. But in October 2013, the Controller General (CG) rejected an application by BDR Pharmaceutical for compulsory licensing of Bristol Myers-Squibb’s Dasatinib because unlike the Natco case, BDR failed to make a prima facie case. Earlier that year in July, an application for compulsory license of Roche’s drug Herceptin (Trastuzumab) was denied by the Department of Industrial Policy and Promotion (DIPP).

From practical experiences it is clear that public health is paramount over individual rights but only on fair conditions. The compulsory license application by Natco came under sec84 which was granted whereas application made by BDR was denied under the same section. Application by Ministry of Health was made under sec92 (license in case of national emergency) but denied. The author here contends that India provides strong legal framework to protect and foster innovation for individual benefit as seen in the Dasatinib and Herceptin cases. However, when reflections of intellect take a stand opposite to that of public health, it is the public health that is paramount, as seen in the Natco case and as agreed in the Doha Declaration.

I suggest following additional solution to this interface between human rights and intellectual property rights:

Supplementary Protection Certificates (SPCs)

The biggest hurdle to access of drugs is their unaffordable prices and SPCs can help them lower down. There are two factors which needed to be considered here:

First, to enter the market, drugs pass stages of clinical tests regarding its possible side-effects, these require heavy investments from parent pharmaceutical companies. Second, these clinical trials take years to get market authorisation thereby decreasing the effective protection term of the patent. According to a finding, it may take up to 15 years from developing a drug – applying for patent – to bringing it in the market. Considering this, effective time for true exploitation of the patent comes down to only 5 years. Heavy investments and reduced effective exploitation term directly shoots up prices of medicines. Higher the costs of the drugs, less is their affordability which is a direct function of accessibility. Granting of SPCs is a plausible solution to this situation. An SPC is a special form of IP that extends the protection of a patented active ingredient or combination of active ingredients present in a pharmaceutical or plant protection product after the expiry of the patent[xix]. Following are a few points to remember:

  • An SPC is granted for an active ingredient or combination of active ingredients protected by a patent. (Pharmaceutical or plant protection products)
  • SPC protection compensates for delay in grant of patent and the protection time lapsed thereby.
  • The term of protection an SPC grants is up to 5 years after expiry of the patent. This protection is to restrain generic manufacturers.

 CONCLUSION AND FINDINGS

In course of my research I have come across many opinions and inferences. As far as grant of patents and its affect on accessibility of drugs is concerned, following are my observations:

  • Patents are a necessary evil. Dynamics is a characteristic of the society and technological advancements are dynamics of the scientific industry. Without due appreciation and reward, development may not entirely cease, but this I can ascertain for sure that it will be limited to a resourceful few. Patents are food for thought of the inventor, award to the inventor, reward to the investor.
  • Accessibility of drugs is affected because of high drug pricing majorly. Another cause is non-working of patented inventions in the territory of a nation, like in the Natco Pharma Compulsory License case. Due to the heavy costs incurred by pharmaceutical companies while developing the drug and thereafter further costs incurred in securing patents and bringing the drug into the market, the pharmaceuticals are not entirely in wrong in pricing the drugs high.
  • Effective short term of patents directly affects the prices of life saving drugs and grant of SPCs is a possible solution here. Though SPCs are presently granted majorly in the United Kingdom but the Indian act can also be amended and similar provisions be invoked.
  • The Doha Declaration came as a huge relief to developing and under developed countries as by virtue of it the countries can fully use the flexibilities granted in the TRIPS agreement without having to face opposition from the western countries.
  • Therefore, even though there are rights that are for the individual benefit but when it comes to public health, individual rights are kept a notch lower. This is what I have learned from this assignment.

I am deeply interested in Intellectual Property Rights law, the opposite stands that exclusive patent rights and accessibility to drugs has attracted my attention. The key-stake holders are INVENTORS, INVESTORS, PHARMACEUTICALS AND R&D DEPARTMENTS, and the most affected COMMON MAN. The significance of this issue and its implications are elaborated in the following paragraph.

I consider this issue very significant because while patents are food for thought of inventors, it cannot be neglected that these do lead to high prices of drugs. When life-saving drugs are priced so high and also enjoy patent protection, it directly affects common man for whom it effectively becomes a no-win situation. In 2013, when India granted the first Compulsory License for Novartis’ Drug nexaver to Natco Pharmaceutical, the reaction from US Pharma Lobbyists was disturbing. I have made the following observations in respect to the face-off between Patents and Right to health; accessibility to drugs. These are:

  • Patents are a necessary evil. Dynamics is a characteristic of the society and technological advancements are dynamics of the scientific industry. Without due appreciation and reward, development may not entirely cease, but this I can ascertain for sure that it will be limited to a resourceful few. Patents are food for thought of the inventor, award to the inventor, reward to the investor.
  • Accessibility of drugs is affected because of high drug pricing majorly. Another cause is non-working of patented inventions in the territory of a nation, like in the Natco Pharma Compulsory License case. Due to the heavy costs incurred by pharmaceutical companies while developing the drug and thereafter further costs incurred in securing patents and bringing the drug into the market, the pharmaceuticals are not entirely in wrong in pricing the drugs high.
  • Effective short term of patents directly affects the prices of life saving drugs and grant of Supplementary Protection Certificate is a possible solution here. Though SPCs are presently granted majorly in the United Kingdom but the Indian act can also be amended and similar provisions be invoked.
  • The Doha Declaration came as a huge relief to developing and under developed countries as by virtue of it the countries can fully use the flexibilities granted in the TRIPS agreement without having to face opposition from the western countries.
  • Therefore, even though there are rights that are for the individual benefit but when it comes to public health, individual rights are kept a notch lower.

 Edited by Kanchi Kaushik

[i] International Property Index, 2013 Report, available at http://www.internationalpropertyrightsindex.org/about, accessed on 14.09.2014.

[ii] World Economic Forum, The Global Competitiveness Index 2013-2014, available at http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf, accessed on 14.09.2014.

[iii] CSR International Article, Human Rights Risk Atlas, 2014, published on 14.09.2014 available at http://www.csrinternational.org/human-rights-risk-atlas-2014, accessed on 14.09.2014.

[iv] Available at http://reliefweb.int/sites/reliefweb.int/files/resources/2014_Human_Rights_Risk_Index_Map.pdf, accessed on 14.09.2014.

[v] WTO, Agreement on Trade-Related Aspects of Intellectual Property Rights, available at www.wto.org/english/docs_e/legal_e/27-trips.pd, accessed on 20.09.2014.

[vi] WTO, Declaration on the TRIPS agreement and public health, 2001, available at

http://www.wto.org/English/thewto_e/minist_e/min01_e/mindecl_trips_e.htm, accessed on 04.09.2014.

[vii] However grant of Patent does not guarantee commercialization. Bringing an invention into the market is the inventor’s responsibility. Patent grants exclusive monopoly rights over the commercialized invention.

[viii]World Health Organisation, The World Medicines Situation, available at apps.whi.int/medicinedocs/pdf/6060e/s6160e.pdf, accessed on 28.05.2014.

[ix] Vandana Roy, Usha Gupta & Arun Kumar Agarwal, Cost of medicines & their affordability in private pharmacies  in Delhi (India), Indian J Med Res 136, pp827, November 2012, available at icmr.nic.in/ijmr/2012/november/1115.pdf, accessed on 19.09.2014.

[x] Natco Pharma Ltd. Vs Bayer Corporation.

[xi] Supra 7

[xii] Dr. Peter Drahos, The Universality of Intellectual Property Rights: Origin and Development, WIPO, available at www.wipo.int/edocs/mdocs/…/wipo…/wipo_unhchr_ip_pnl_98_1.doc, accessed on 09.09.2014.

[xiii] Patents and Right to Health by Phileppe Cullet,

[xiv] M. D. Nair, TRIPS and Access to Affordable Drugs, Journal of Intellectual Property Rights Vol.17, pp 305-314,  July 2012, available at http://nopr.niscair.res.in/bitstream/123456789/14458/1/JIPR%2017(4)%20305-314.pdf, accessed on 17.09.2014.

[xv] WTO, Compulsory licensing of pharmaceuticals and TRIPS, available at www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm, accessed on 12.09.2014

[xvi] Available at http://www.wipo.int/treaties/en/text.jsp?file_id=283698, accessed on 12.09.2014

[xvii] Available at http://www.wipo.int/treaties/en/text.jsp?file_id=288514, accessed on 12.09.2014

[xviii] The Patents Act, 1970.

[xix] Intellectual Property Office, Supplementary Protection Certificates, available on http://www.ipo.gov.uk/p-spc.htm, accessed on 20.09.2014.

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