Pharma MNCs cannot keep inventions a secret in perpetuity. Hence, the role of patents which provide them a 20-year cover.

The Supreme Court verdict on Glivec has brought into focus the debate on inventor’s interest vis-à-vis the larger public interest.

The apex court endorsed the Madras High Court’s rejection of Novartis’ patent application for its blockbuster cancer drug Glivec on the ground of lack of novelty.

In the absence of proof of inventiveness, the Court was constrained to assume that Novartis was seeking mere ‘evergreening’ of its existing patent. With inventions drying up, drug companies, in their desperation, are trying all the tricks in their repertoire. ‘Ever-greening’ is the easiest of them all, thanks to the indulgence shown towards it by many Western governments. That India has dared to defy the might of the multinational drug companies and their governments is galling to them.

Evergreening of patents to reap monopoly profits in perpetuity is as reprehensible as evergreening of loans — repay old loan only to seek a fresh one pronto, or repay and seek another loan for a group company — done by crooks with the connivance of bank officials.

The patent regime, ever since its inception, has spelt compromise for both parties — inventor and consumer. The inventor, in return for making his invention public, is guaranteed monopoly rights over his invention, typically for twenty years, during which he can recover his huge investments on R&D many times over through unconscionable pricing as well as royalties.

No one grudges this, because after 20 years when the invention becomes off-patent, its price would fall dramatically. Thus patent is a fine balancing act, the one that rewards invention even while taking care of public interest by limiting the monopoly rights to a reasonable period.

What has upset this delicate but fair arrangement is the pushing of the envelope by the drug fraternity in the West.

Evergreening or its variant, incremental patenting, consists in not unburdening everything on the patent office at one go.

However, developing nations, home to quite a few life-threatening diseases, have managed to secure another concession from the patent straitjacket --- compulsory licensing. It is from the patent holder’s point of view, a party-pooper because it has the potential to virtually bring to a halt the monopoly profits, just as they start to pour in.

Trade secret

The only alternative to what inventors consider a stifling patent regime, especially in disease-prone and populated Third World countries, is keeping the invention under wraps. By keeping an invention under wraps it is possible to heighten the profits through monopoly in perpetuity – as opposed to 20 years through patents.

This, however, is easier said than done, what with peeping Toms, ‘reverse engineers’ and disgruntled employees furiously at work and keeping inventors on tenterhooks.

Coca-Cola for more than a century claims to have kept its secret formula, the syrup, a trade secret, with bottlers across the globe obliged to source it only from its headquarters in Atlanta.

Heineken, the premium beer produced by a Dutch company is also a trade secret. Keeping an invention a trade secret is not everyone’s cup of tea as the Swiss army knife realised to its chagrin, especially when the Chinese endowed with brute-force software, so to speak, upset its applecart.

Yet, for the harried drug multinationals facing resistance from developing nations like India and Brazil, the idea of keeping their inventions under wraps must be tempting. After all, there is no one breathing down your neck and you can make monopoly profits in perpetuity, unless someone blows the lid off the invention out of spite or greed.

PROMOTIONAL CONSTRAINT

But a drug firm faces serious constraints, not faced by a soft drinks or beer major. For the latter, the freedom to advertise is available. A drug firm on the other hand is constrained by the restriction not to advertise. A drug thus can never be a brand, unless it is sold across the counter.

And, a drug for treating life-threatening ailments can never be sold across the counter. Willy-nilly, therefore, drug makers have to seek the sanctuary of the patent office -- with branding, advertising and use of celebrities being ruled out.

Doctors, whom they try to humour with goodies and freebies so that they prescribe the drugs manufactured by them, are helpless because a patient’s family invariably baulks at a horrendously expensive patented drug, when an equally safe and efficacious generic substitute is available.

In short, to a drug inventor, patent is the only salvation. In the event, companies like Novartis have to continue to repose their faith in the patenting regime in Third World countries, for whatever it is worth.

(The author is a New Delhi-based chartered accountant.)

(This article was published on April 8, 2013)
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