The Hindu Business Line : Drug IPR: Where India must not `trip'

Lack of clarity in the intellectual property regime as well as in drug pricing can affect development of innovation, new drug discovery, as well as new investments in Research and Development. If India is to become a major participant in developing innovative pharmaceutical products, it must bring its patent practices into conformity with the TRIPS Agreement, says S. NARAYAN.

Some months ago, the Ministry of Chemicals and Fertilisers (MoC&F) had circulated a draft policy on pricing of drugs and pharmaceuticals that has been the subject of considerable debate. The Ministry, focusing on affordable drug delivery, had proposed to bring a larger list of commonly used as well as life-saving drugs under a price-control regime, a move considered retrograde by the indigenous generic industry. The Prime Minister recently constituted a Group Of Ministers to examine this issue, somewhat to the discomfiture of the MoC&F.

The draft policy also contained a proposal to bring all patented drugs under a price-control regime. It is proposed that marketing approvals for patented drugs would be subject to agreements on price negotiations with the manufacturers, and that prices for patented drugs would be set on the basis of reference prices, arrived at after a study of pricing policy in other countries. The MoC&F has now notified a committee to arrive at the guidelines for reference pricing of patented drugs.

Debates of Extremes

It does appear, therefore, that issues relating to product patents, availability of patented drugs, and creating a competitive environment in India for drug discovery, are not yet over. Indian industry, media and interested industry have been engaged in a debate over intellectual property protection that ranges between extremes of cold logic and wild emotion. Several questions were raised during the discussions on the legislation passed by Parliament in March 2005 to provide for product patent protection for pharmaceuticals, chemicals, food and biotechnology inventions, in order to comply with India's obligations under the World Trade Organisation's Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement). These were referred to a high-level committee headed by the Director-General of the Council for Scientific and Industrial Research, and the recent publication of his report has renewed the debate on the compatibility of Indian legislation with international commitments.

The March 2005 legislation provided for patent protection for pharmaceutical inventions, restoring the concept of `product patents' in this category, for the first time since 1970, the year the earlier Patents Act was passed. International criteria of patentability (novelty, non-obviousness, utility and adequate disclosure) were retained, but the Act has some additional requirements as well. The new Act would exclude micro-organisms from being patented, and would also limit patents only to new chemical entities. Additional criteria of demonstrating enhanced efficiency were also prescribed.

Efficacy standards

There are also other criteria. Section 3(d) of the new Act stipulates that a new form of a known substance is excluded from patent coverage, if it does not show significantly enhanced efficacy compared to the known substance. Interestingly, this provision has been taken from Article 10(2) (b) of Directive 2004/27/EC of the European Parliament relating to medicinal products for human use. The term efficacy is being construed in a `drug regulatory' sense.

Not only are the patent examiners ill-equipped to appreciate the efficacy standards, the patent applicants also find it difficult to satisfy efficacy requirements at the stage of filing and prosecution of patent applications. Pharmaceutical applications are usually filed at the initial stage of drug discovery, and it much later in the development cycle, that efficacy and safety data is generated during clinical trials.

Section 3(d) appears to be contrary to TRIPS in two respects. First, pursuant to TRIPS Article 27, WTO members must make patents "available for any invention whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application." Article 27 (3) of the TRIPS agreement provides a non-extendable list of types of subject matter that can be excluded from patent coverage. This list does not include "new forms of known substances lacking enhanced efficacy," being excluded by Section 3(d) of the Indian law. Secondly, Section 3(d) discriminates between patents on inventions specifically relating to pharmaceutical compounds and other technology areas by creating an additional hurdle for pharmaceutical inventions alone.

Nebulous concepts

In addition, the current scope of the provision — particularly the reference to "other derivatives of known substances" — could be interpreted so as to deny patents for new chemical entities. The concepts in Section 3(d) are nebulous and potentially have a broad impact, thus undermining incentives for innovation. An element of vagueness is, indeed, built into the language of Section 3(d), and this has led to diverse interpretations in the four patent offices. As such, it leaves room for subjective judgment about the significance of any modification of the original product.

India has developed significant capacity to manufacture pharmaceuticals. The Government now hopes that India can become a major participant in developing innovative pharmaceutical products, including through research and development activities of its own and conducting clinical trials. Lack of clarity in the intellectual property regime as well as in drug pricing would affect development of innovation, new drug discovery, as well as new investments in R&D. It is in India's own interest to bring its patent practices into conformity with the TRIPS Agreement. Recent debates and reports are an attempt to make this happen.

(The author is a former Union Finance Secretary.)