What is a patent?

It is a right given to the inventor, either of a new product or a new process for manufacturing a product. Usually, it is valid for a period of 20 years. The idea behind a patent is that if everybody was free to copy a new invention immediately, there would be no incentive for anyone to invest in creating a new product or technology.

From 1972 to 2003, India only allowed process patents, which meant that even a patented product could be produced by someone other than the patent-holder if they could find a different method to manufacturing it. However, in 2005 the law was amended retrospectively to allow for product patents so that India could be compliant with the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). But even before the law was amended, India agreed to invite applications for product patents under the TRIPS agreement. These “mailbox” applications were opened in 2005 when the law was finally enacted. Novartis filed an application for patent for Glivec, the blood cancer drug, under the mailbox provision.

Why was Novartis denied a patent for Glivec in India?

The key issue revolved around whether Glivec was a “new product” under the terms of the law. In January 2006, the Indian patent office ruled that the drug was not substantially different from one for which patents had already been given in the US and Europe. Thus, it did not pass the novelty test. While moving to the new patent regime, Indian lawmakers had inserted a provision — section 3(d) in the Patents Act — to check against ‘evergreening’. This is the term used to describe a practice under which firms slightly tweak an existing process or product to seek a fresh patent once the original protection expires. This helps them retain monopoly rights for a longer period. The patent office’s ruling was upheld by the Intellectual Property Appellate Board (IPAB) and now by the Supreme Court.

How will the SC judgment impact consumers?

If Novartis had won the case, it would have been granted a monopoly on Glivec, and denied Indian companies the right to make the drug. This would obviously have allowed Novartis to sell the medicine at a much higher price. Already, there is a huge differential with generic versions by Indian companies costing Rs 5,000-9,000 for a month’s treatment, compared to Glivec’s cost of around Rs 1.2 lakh a month. The order is also likely to encourage existing Indian manufacturers to step up production and perhaps new players to enter the market. This should lead to a further fall in prices.

What will be the impact on the drug industry?

The multinational drug companies are worried that this could be a trendsetter and are even threatening to block supplies of new patented medicines to India. But this is unlikely to deter Indian industry from developing “copycat” versions that would sell at a lower price. In short, while this is bad news for Big Pharma, it is as much good news for domestic manufacturers as it is for consumers. Big Pharma could also be worried that the Indian example may be emulated by others.