On April 1, the Indian Supreme Court rejected the attempt by Novartis, the Swiss pharmaceutical company, to patent a new version of the anti-leukaemia drug Glivec.
The latest verdict follows previous rulings that granted compulsory licences to an Indian generic drug manufacturer for Nexavar, a drug used to treat kidney cancer, patented by Bayer. These rulings raise five important questions.
What do the recent rulings say about the rule of law in India?
The perception, even caricature, of India (especially among foreigners doing business) is one of pathological dysfunction: bureaucrats obstruct, politicians plunder, policemen harass, and judges delay.
The quip on the rule of law is that India may have rule but China has law. There is some truth in this caricature. That is all the more reason to celebrate the recent ruling, beyond whether or not one agrees with its judgment and the supporting legal arguments.
In the Novartis case, as in the Nexavar case, India has provided due process for foreign companies and patent holders comparable to those in advanced democracies. Patent offices have decided on patents and compulsory licensing granted to Indian companies; their verdicts have been challenged before an independent appellate body, whose verdicts have, in turn, been contested in the courts.
In every instance, the deciding authority has reviewed the arguments and facts, drawn on evidence, relied upon domestic and foreign precedents, and explained their decisions.
Even if outcomes have gone against foreign firms, there can be little doubt about procedure. And in a country notorious for interminable delays in administrative and judicial procedures, patent-related cases have been decided in a timely manner.
Is India anti-intellectual property and anti-foreign?
Taken individually, the patent cases do not point to categorical hostility to intellectual property (IP) protection or to foreigners.
The spirit imbuing all the recent patent cases in India has been to strike a balance between the legitimate returns to inventors and investors against the concerns of consumers in a country where the affordability of drugs is of paramount political and social concern.
That is unavoidable if the prices charged by a drug company exceed the income of more than 99.999 per cent of households in a country and if generic alternatives are available at one-tenth or even one-thirtieth the cost.
But balance and fairness towards foreigners and to the demands of IP rights have not been ignored. For example, the Supreme Court decided to take on the Novartis case instead of waiting for the lower courts out of concern that delays could cut into the life of the patent.
Also, when deciding on the compulsory licensing fee that generic drug makers should pay Bayer, the German maker of the anti-cancer drug Nexavar, the Indian patent office opted for the highest end of the range recommended by the World Health Organisation.
In the subsequent review, the appellate body increased this fee further. Hostility to foreign companies would have translated into weaker protections than this.
India is transitioning from a development stage of being a net user of technology (which favoured weak IP protection) to one of being both a user and producer of technology (which favours stronger IP protection). The drug industry, too, has evolved from exclusively comprising generic manufacturers to one with greater representation of R&D-based companies.
In implementing the World Trade Organisation’s (WTO’s) TRIPS (Trade-related aspects of intellectual property rights) agreement, domestic patent law has been strengthened from virtually no protection for pharmaceuticals to some protection. But recent rulings and the underlying Indian law tend to favour weaker rather than stronger protection of IP.
This reflects the strength of the generic drug industry and of consumer groups, advocating affordable health
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