India Patent Act Changes

By Julie Shursky

Behind South Africa, India is managing the world’s second largest HIV treatment program.  In 2015, more than 900,000 patients received antiretroviral treatment in India.[1]  Despite the enactment of various government-funded health insurance programs and organizations to combat infectious and chronic diseases such as HIV/AIDS, the Indian government continues to struggle in financing adequate healthcare facilities for its citizens, causing a significant number of Indian citizens to “fund their health needs through out-of-pocket expenses.”[2]  In an effort to protect and manage its market, India enacted Section 3(d) and established patent laws that allow its government to grant compulsory licenses for pharmaceutical products.

In an effort to increase the availability of low-cost drugs, the Indian Patent Act of 1970 (“1970 Act”) prohibited the patentability of pharmaceutical products.[3]  The 1970 Act, however, permitted patents on the manufacturing process of said products,[4] which led to the booming of India’s generic drug sector through capitalizing on innovation by multinational companies that were unable to obtain patents under Indian law.  As a direct result of this legislation, India earned the nickname “pharmacy of the world” for its burgeoning production and exportation of generic pharmaceutical products.[5]

India’s fast-emerging pharmaceutical sector is broadly divided into two major groups: multinational pharmaceutical corporations or pharmaceutical MNCs, and domestic pharmaceutical corporations.[6]  The rivalry between brand-name drug makers, who seek patent protection and generic manufacturers, who sell lower-cost, copycat versions of medicines, has grown over the years.

The United States, for example, has expressed its concern with recent developments in India’s patentability standards and grants for compulsory licenses.[7]  In a report by the United States Trade Representative, the United States expressed particular concern with “[t]he unpredictable application of Section 3(d)” and “the lack of clarity on standards for Sections 85 and 92 compulsory licenses.”[8]  Unlike the United States, India’s patent laws limit evergreening[9] strategies and ensure that companies are receiving only a one-time price premium for their innovative products, rather than extending patent protection for minor enhancements.  As such, India’s patent laws do not support the extension of patent terms on current products, but rather require “enhancement of the known efficacy” for protection.[10]  Section 3(d), therefore, is only intended to prevent evergreening – it does not prevent the patenting of new, innovative drugs within the pharmaceutical industry.[11]

 

[1] SPOTLIGHT: Catalysing change for an AIDS-free generation in India, World Health Organization (July 25, 2016, 11:58 AM), http://www.who.int/hiv/pub/newsletter/hiv-hep_newsletter_mar2016/en/index7.html.

[2] Madhavi Chopra, Of the Big Daddy, the Underdog, the Mother Hen, and the Scapegoats: Balancing Pharmaceutical Innovation and Access to Healthcare in the Enforcement of Compulsory Patent Licensing in India, its Compliance with TRIPS, and Bayer v. Natco, 13 Santa Clara J. Int’l L. 333, 335 (2015).

[3] The Patents Act, No. 39 of 1970, INDIA CODE §5(a)-5 (2005), vol. 15, available at http://indiacode.nic.in.

[4] Id. at §53.

[5] Janice M. Mueller, The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and the Rise of Indian Pharmaceutical Innovation, 68 U. Pitt. L. Rev. 491, 536-37 (2007) (“India has been a net exporter of drugs since 1988-89 . . . .”).

[6] Id. at 532-42.

[7] Office of the U.S. Trade Rep., 2016 Special 301 Report 38-39 (2016).

[8] Id. at 39.

[9] Evergreening “is when a company manufactures a product for which it secures a patent.  Shortly before the expiration of that patent, the company files a new patent that revises or extends the terms of protection . . . . [Evergreening] is a method by which technology producers keep their products updated, with the intent of maintaining patent protection for longer periods of time than would normally be permissible under the law.”  Uttam K. Shukla, ‘Ever Greening’ Patents, SCI. REP., Aug. 2011, at 31.

[10] Patents Act, 1970, § 3(d), amended by Patents (Amendment) Act, 2005.

[11] Javier Esparza, Indian Patent Law: Working Within the TRIPS Agreement Flexibilities to Provide Pharmaceutical Patent Protection While Protecting Public Health, 24 J. Transnat’l L. & Pol’y 205, 221 (2014-15).

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