Five years after the Indian Supreme Court’s Novartis verdict

Five years after this landmark decision, the impact is being felt around the world. India’s decision is frequently held up as example for other countries to follow, and while it has has had a ripple effect, challenges remain.

Original version first published on IP-Watch. Author: Patrelekha Chatterjee.

On 1 April 2013, in a packed room inside India’s Supreme Court, a magnificent building in Indo-British architectural style, two judges delivered a verdict that impacted the national and global conversation about patents and patients.

India’s apex court delivered a 112-page landmark judgement which dismissed Swiss pharma giant Novartis AG’s appeal for a patent for its life-saving cancer drug, marketed under brand name Glivec in most parts of the world.

29 January 2007: Treatment activists and people living with HIV rally in Delhi to demand that Novartis Drop the case against 3(d). © DNP+

The Novartis case triggered a hugely polarising discourse around the world about a key feature of India’s patent regime.

Intellectual Property Watch was in the Supreme Court covering the famous case (IPW, IP Law, 1 April 2013), which at its core was about the interpretation of a specific clause (Section 3(d) of India’s patent law), which explains what does and does not constitute “invention” under India’s patent regime.

Section 3(d), which continues to evoke hugely divergent opinions, states that:

“the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.”

Novartis had fought a long and bitter battle over several years, hiring some of India’s most eminent lawyers, but at the end, India’s Supreme Court rejected the company’s final appeal for a patent on imatinib mesylate (Glivec) that treats chronic myloid leukaemia (CML).

Five years after Novartis’ challenge to India’s anti-evergreening safeguard — section 3(d) – was struck down by India’s Supreme Court, it is time for stock-taking. Clearly, the famous clause in India’s patent law, aimed at preventing ‘evergreening’ or not allowing patents on new forms of existing medicines unless they demonstrate a significant increase in efficacy, remains a thorny issue, admired and hated equally.

But what about its domestic and international impact? How has it helped or not helped countries leverage TRIPS flexibilities and civil society activists campaign for access to affordable drugs?

Leena Menghaney, South Asia head for Médecins Sans Frontières’ (MSF, Doctors Without Borders) access campaign says there is greater global awareness that the patent system is being abused by the pharmaceutical industry to block the early entry of competition that drives medicine prices down.

“The campaign that civil society led in this case against evergreening played a role in the genesis of this debate. During the campaign, we saw elements of the debate on the impact of patents on high prices emerging in the United States. Today, you can see the steps being taken in the European Union, South Africa and Argentina – which offer the beginning of a new approach to examining patents and preventing unnecessary extensions of monopolies in the pharmaceutical markets.”

“India itself however has a big challenge ahead,” points out Menghaney. “The recent report on Pharmaceutical Patent Grants in India: How our safeguards against evergreening have failed highlights the strategies pharmaceutical corporations are using to overcome section 3(d) and 3(e) – the major safeguards against evergreening.”

“The majority (72%) of granted patents for pharmaceuticals are secondary patents, granted for marginal improvements over previously known drugs for which primary patents exist,” Menghaney told Intellectual Property Watch. “As MSF, we have observed this trend in new TB drugs where a number of weak secondary patents granted could impact early entry of alternative suppliers from India.”

Domestic impact

In India, two of the key civil society groups that were present at the Supreme Court almost through the entire litigation were Delhi Network of HIV positive people (DNP+) and Cancer Patients Aid Association (CPAA).

Loon Gangte, is an Indian activist living with HIV, he’s regional coordinator for South Asia for the International Treatment Preparedness Coalition (ITPC), and one of the founders of the DNP+. He says: “The Indian Supreme Court’s decision on Section 3(d) in the famous Novartis case created a precedent and has helped us in our campaign for affordable medicines.”

“Despite all the pressure from various fronts, from Big Pharma and countries of their origin, at negotiations in trade deals Indian courts have upheld the underlying principles of section 3(d) and thwarted attempts by multinational firms to evergreen their medicines. This has kept costs of life-saving drugs low,” Gangte said.

Y. K. Sapru, who heads the Cancer Patients Aid Association (CPAA), which took on Novartis, expressed similar sentiments. “As a result of the 2013 Supreme Court judgement, the price of Glivec was reduced from INR 150,000 (approximately USD 2,200, for one month’s treatment) to INR 6,000 (USD 88) in the generic drugs market,” Sapru said. “The drastically reduced price of the generic version of Glivec has helped saved the lives of around 500,000 patients of Chronic Myloid Leukaemia in the last five years.”

Sapru, Gangte and others, typically point out the positive fallout of the landmark judgment, but also the pressures and challenges continue.

In the last five years, there have been two important studies which have gone into the issue of how India’s patent office has been granting and rejecting patents.

The first study, which analysed the rejected patents by the Indian Patent Office (IPO), reported a rise in rejections based on the precedent set by the Supreme Court in dealing with Section 3(d) of the Indian Patent Act in the Novartis case. “Section 3(d) was raised in 69% of the cases where the exceptions to patentability were cited indicating its use as a policy tool by the IPO in rejecting applications that fell within the exceptions,” noted the report released in December 2017.

The report, authored by Dr. Feroz Ali, Dr. Sudarsan Rajagopal, Mohamed Mustafa and Chinnasamy Prabhu said: “The increased application of Section 3(d) by the IPO soon after the Novartis case could be due to the legal certainty provided by the decision of the Supreme Court in upholding the rejection of a patent application rejected under that section.”

29 January 2007: Treatment activists and people living with HIV rally in Delhi to demand that Novartis Drop the case against 3(d). © DNP+

Challenges remain

However, a subsequent report by the same group of authors which studied the patents granted by the IPO found that section 3(d) has not been effectively utilised in preventing secondary patents from being granted. The study, released in an April 2018 report titled, Pharmaceutical Patent Grants in India: How our safeguards against evergreening have failed, and why the system must be reformed, analyses the challenges that have led to Section 3(d) being under-utilised despite the landmark judgment of the Supreme Court.

Feroz Ali, IPR chair professor at the Indian Institute of Technology, Madras, and a practising advocate who was involved with both the reports, stresses that there have been inconsistencies in the way the ‘Novartis standard’ is dealt with by the Indian Patent Office.

“One of the reasons we identified for not following the Novartis standard was that the pharma guidelines developed by the IPO do not spell out the details of the Novartis Standard,” Ali said. “The standard developed by the Supreme Court, which lists various steps to determine whether an invention falls within the ambit of Section 3(d), has not been captured in the pharma guidelines prepared by the IPO. Rather they merely quote paragraphs from the Novartis decision without indicating how the lessons from the decision can be put into practice.”

“Apart from suggesting an amendment to section 3(d) to make the provision absolute, we have made recommendations for updating the Guidelines and creating a checklist for examiners,” he told Intellectual Property Watch. “We hope that with with stronger examination guidelines and better application of the Novartis Standard by the IPO, we will be better at detecting evergreening.”

“The enthusiasm we saw in rallying behind the Novartis case (no doubt important) was not seen in getting the guidelines amended or in pointing out to the manner in which the IPO was implementing the guidelines. I feel that the civil society has not focused enough on standard-setting at the IPO. This will require them to work closely with the patent office, get involved in training programmes, etcetera.”

Anand Grover, an eminent Indian lawyer who represented the Cancer Patients Aid Association as an attorney and won the legal fight against drug maker Novartis on the issue of patent of cancer drug Glivec, also underlines the mixed picture that has emerged, five years after the Novartis verdict.

Grover agrees that Section 3(d) is one of the TRIPS flexibilities around which civil society has rallied around within and outside India, and there have been many examples which illustrate the successful leveraging of the Novartis verdict. In India, Grover cites  the  following as  examples where Section 3(d) has been used successfully: “Tenofovir (2076/DEL/1997) where we represented Sahara Centre for residential Care and Rehabilitation against Gilead Sciences, Inc, Nevirapine (2485/DEL/1998) where the Lawyer’s Collective represented The Indian Network for People Living with HIV / AIDS (INP+) + and Women’s Network against Boehringer Ingelheim, and Sofosbuvir base (6087/DELNP/2005) where the first order of the Patents Controller entailed rejecting the patent, rejected some claims under Section 3(d).” [paragraph modified]

However, he said, “Despite the fact that Section 3(d) is useful, it appears that 3(d) is being deliberately ignored by the patent controller’s office. As a result, it is not being applied correctly always. This is evident from the recent study of Feroz Ali et al: If 3(d) had been correctly applied, there would have been less patents.

“There is a need for the government to get an independent audit done of the patents granted to ensure that undeserving patents are not granted,” Grover told Intellectual Property Watch.

International impact

The Indian Supreme Court’s 2013 verdict’s footprint is visible in the Report of The United Nations Secretary-General’s High-Level Panel on Access to Medicines. The report, released in September 2016, recommends that World Trade Organization members must make full use of the policy space available in Article 27 of the TRIPS agreement by adopting and applying rigorous definitions of invention and patentability that curtail ‘evergreening’ to ensure that patents are only awarded when genuine innovation has occurred.

Inspired by India’s example, South Africa’s draft intellectual property rights policy also proposes stricter patent criteria and patent oppositions. See update below ┼.

“The fact that Section 3(d) of India’s Patents Act withstood a challenge in the Indian Supreme Court when Novartis failed to patent cancer medicine Glivec, shows our government that you can stand up to pharma pressure and use these safeguards to protect your people,” Lotti Rutter, advocacy and campaign manager of South Africa’s Treatment Action Campaign (TAC) told Intellectual Property Watch. “The fact that Novartis threatened to withdraw their pharmaceutical operations from India during the case, only to expand their investment after the judgment, also tells our government that Big Pharma’s threat that using TRIPS flexibilities will lead to less foreign investment is a lie. TAC joined in global protests in solidarity with Indian activists against Novartis.”

“More recently,” she added, “TAC has supported activists in Colombia as the country is the latest to face bullying tactics from Novartis for trying to improve access to medicines”.

South Africa’s draft IP policy identifies public health as a priority on the basis of important public interest considerations. “The draft policy from last August has been approved by cabinet – but no final policy has been released, and no legal reform has occurred yet. Some patent examiners have been hired, but they are still being trained and not yet examining,” Rutter said. See update below ┼.

In Thailand, civil society groups are using Section 3(d) as a model to advocate for stricter patentability criteria with their government.

“Thailand has a great number of evergreening patents on medicines. A study supported by the Thai FDA and the Department of Intellectual Property looked at over 2,000 patent applications and patents granted in Thailand between 2001 – 2010. It found that that 74% of the patents granted in that period were evergreening patents and 84% of the patent applications were ever-greening,” Chalermsak Kittitrakul, coordinator for the Access to Medicines campaign at AIDS Access Foundation in Thailand said.

“We have submitted our comments to the government in an ongoing patent law amendment process in Thailand for which we translated Section 3(d) into Thai and proposed its inclusion in our law,” he said. “Unfortunately, the draft amendment shared with the public so far does not prevent evergreening, but we plan to keep advocating for this change with our government.”

“A provision like Section 3(d) would greatly assist our country in making the process of reducing evergreening patents on medicines faster and easier,” he added. “Until then, we plan to continue to actively challenge evergreening patent applications and ensure that the patent office applies our patent criteria strictly.”

María Lorena Di Giano, director of Argentinian NGO Fundación Grupo Efecto Positivo, which works on guaranteeing access to essential medicines for HIV and Hepatitis C, said, “the Indian Supreme Court’s 2013 verdict on Novartis clarified the interpretation of the application of the section 3(d) of the Indian patent law. By doing this, the Court set an important precedent”.

She pointed out that in 2012, Argentina also made use of the right to define patentability criteria (in consonance with the TRIPS Agreement) for the application of the legal requirements of novelty, inventive step and industrial application and subsequently, the government established even more strict and pro- health anti-evergreening guidelines for the examination of pharmaceutical patent applications. But as in many other countries, there is a predictable backlash.

“These guidelines are under judicial attack,” Di Giano said. “The Chamber of Multinational pharmaceutical companies in Argentina, alongside 26 individual companies, is suing the State and asking the judiciary to nullify the guidelines. Civil society organizations have launched the Big Pharma Drop the Case Campaign. We are doing this to build support from stakeholders from all over the world to demand Big Pharma to withdraw the legal action against this important anti-evergreening measure in Argentina.”

Summing Up

Kajal Bhardwaj, an Indian lawyer working on intellectual property and access to medicines, sums up the situation on the ground crisply. She agrees that Section 3(d) and the civil society campaign to protect it during the Novartis case have played a pivotal role in highlighting the problem of evergreening pharmaceutical patents not just in India but across the developing world.

“The quality of patents is now a key issue in patent law reform campaigns and initiatives in other countries,” Bhardwaj told Intellectual Property Watch. “Of course, for this reason, it has also been opposed tooth and nail. India continues to feature in the priority watch list of the US Special 301 report. The EU in its own attempt to identify priority countries for lobbying IP laws that are beneficial to its companies claims India applies ‘unduly restrictive patentability criteria.”

“In a perverse way this is a compliment for Section 3(d),” Bhardwaj said. “The continuous effort, lobbying, litigation and threats from developed countries and multinational companies to overturn or weaken this provision and their desperate attempts to stop it from being adopted by other countries can be taken as a testament to its effectiveness and potential.”

“It is no wonder that in most recent FTA negotiations, developed countries have attempted to bring in some sort of provision restricting the ability of developing countries to adopt 3d like provisions, Bhardwaj added. “Developing countries in ongoing FTA negotiations must be vigilant and reject any such provisions.”

Intellectual Property Watch reached out to Novartis for its comment on the fallout of the Indian Supreme Court’s 2013 verdict on Section 3(d) of the Indian patents five years down the line but had not received a response at the time of writing.

This story is part of Make Medicines Affordable supported series on The role of civil society in TRIPS Flexibilities implementation. IP-Watch retains editorial independence over the articles in this series. 

┼ UPDATE on South Africa’s IP Policy:

On 24 May 2018, the Cabinet of the Government of South Africa approved the new Intellectual Property (IP) Policy. After nine years of policy development, two different draft policies and various rounds of public consultation, there is now an agreed-upon government policy that can guide much-needed law reform.