Novartis AG v. Union of India: Critical Case Analysis

Abstract

The issue of defining “efficacy” under the Indian Patents Act, 1970 by the Supreme Court has been a hot potato for the Indian legal regime. Many foreign pharmaceutical companies are deterred from entering the Indian market due to this lacuna. The patent period in India is for 20 years but usually it takes around 10 years for a patent to be granted and further if any development in inventions take place, Indian authorities deny any protection to it under the garb of protection against evergreening. This leads to lesser innovation in the pharmaceutical sector which ultimately leads to worse medicinal facilities in the already struggling developing nations like India. The case of Novartis AG v. Union of India proved to be major force for this position and the article aims to critically analyse the same while establishing the need for defining ‘efficacy’ by the Indian parliament.

 Keywords: Patents, Efficacy, Evergreening

Introduction

Intellectual property rights (“IPRs”) have played a major role in the present era; be it copyrights, patents, trademarks, designs, etc. This has especially been true in the pharmaceutical industry when it comes to the sphere of patents. Patents are a type of intellectual property right that is awarded to the patent owner for a term of 20 years after which it becomes public domain. The pharmaceutical business is one of the few in the market that obtains patent protection for the items it produces. In the market, a lot of money is spent on research and development (“R&D”) to produce a single medicine. The task of drug manufacturing must be undertaken with extreme caution and care, as it concerns the health of millions or billions of people all over the world; a minor error on the part of the drug manufacturer can result in the death of an individual, which cannot be afforded at all, and the pharmaceutical company can find itself in serious financial trouble; as a result, the work must be carried out cautiously over many years in order to obtain a patent for the drug. However, the issue emerges when these pharma companies strive to achieve monopoly (by evergreening[1]) and prevent generics from entering the market. [2]

The pharmaceutical sector has a critical role to play in assisting its customers with the introduction of novel pharmaceuticals onto the market, which aids in the improvement of patients’ health problems. The pharmaceutical business is involved in bringing numerous new drugs to market to treat a variety of ailments. The person who comes up with a new medicine is granted patent protection for a certain length of time in order to encourage additional innovation in the market, which in turn encourages competition among different businesses. According to studies, it takes more than ten years on average to bring a new medicine to market.[3]

The originator firms in the pharmaceutical industry invest a huge amount on their R&D in the expectation of reaping benefits of their efforts through patents. As obtaining these exclusive rights take a lot of time, the 20 year term of the patent is effectively reduced to around 10 years. This results in losses to the originator firm and acts as a deterrent for pharmaceutical companies to engage in better research for better medicines.

To grant any patent under the Indian Patents Act, 1970, there are certain criteria that are required to be met in order to make an invention patentable-

1. Novelty- The novelty of an invention is a crucial element in establishing its patentability. “Any invention or technology that has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of a patent application with complete specification, i.e., the subject matter has not fallen into public domain or that it does not form part of the state of the art.”[4] To put it another way, the uniqueness criterion stipulates that an innovation should never have been made public. It must be brand new, with no earlier works of the same or comparable nature.
2. Inventive Step (Non-obviousness)- “A characteristic of an invention that includes technological advance as compared to existing knowledge or has economic relevance or both, and that renders the invention not evident to a person versed in the art.”[5] This means that the innovation must not be evident to someone who is knowledgeable in the subject to which the invention pertains. It must be unique and not evident to a person skilled in the art.
3. Industrial applicability- Industrial applicability is defined as “the invention is capable of being manufactured or employed in an industry.”[6] This basically says that the innovation isn’t possible in the abstract. It must be applicable to any industry, implying that the innovation must have practical utility in order to be patentable.

Novartis AG v. Union of India

One of India’s historic rulings is Novartis AG v. Union of India, which was ruled by a two-judge panel of the Hon’ble Supreme Court of India. Novartis appealed IPAB’s rejection of its patent application for the Beta crystalline form of “Imatinib mesylate,” but the Supreme Court of India dismissed the appeal on the grounds that the said drug did not produce an enhanced or superior therapeutic efficacy when compared to the known substance, i.e., “Imatinib mesylate,” implying that the said drug did not require an inventive step.[7]

Facts of the case

On May 28, 1996, a medicinal scientist named Jürg Zimmermann received a US patent for a number of chemical derivatives (the “Zimmermann patent”), “including the molecule imatinib, which might be used to create anti-tumour drugs.[8] After further research revealed that the beta crystalline form of Imatinib[9] is more stable. It got a patent for its beta-crystalline form in the United States on May 17, 2005.”[10] “Novartis filed a patent application for the beta crystalline form of imatinib mesylate with the Chennai Patent Office on July 17, 1998. Novartis claimed that its product outperformed imatinib mesylate in its free-base form for a variety of reasons, including better storage and processing.” Because India’s patent legislation was in a transitional position when Novartis submitted their application, it was put on hold. The medicine is used to treat Chronic Myeloid Leukaemia (CML) and Gastrointestinal Stromal Tumours, according to the manufacturer (GIST). When Novartis sought for a patent in India, section 5 of the Patent Act, 1970 limited the award to techniques or processes rather than goods. Section 5 of the Patent (Amendment) Act of 2005 was repealed, allowing patents to be granted for items as well as techniques or processes.

The case concerning the “patentability of the beta crystalline form of Imatinib was heard by the Assistant Controller of Patents and Designs, and the application was refused”. The argument stated was that because there had been prior publication and there was no innovation, it did not fulfil the condition set out in Section 3(d) of the Indian Patents Act, 1970.[11] Novartis took the Assistant Controller of Patents and Designs’ decision to the Madras High Court, asking for an order declaring section 3(d) unconstitutional and in violation of the TRIPS agreement.[12] The Madras High Court referred the case to the Intellectual Property Appellate Board (“IPAB”), which found that Novartis could not be awarded a patent because of the higher requirement of inventive step contained in section 3(d) of the Indian Patents Act (“the Act”), 1970.[13]

The IPAB’s ruling intends to prevent current patented items from being “ever-greened” by making minor changes, as well as to offer Indian people easy access to life-saving drugs. In 2009, Novartis filed an SLP (Special Leave Petition) with the Indian Supreme Court, contesting the IPAB’s decision under Article 136 of the Indian Constitution.[14]

Issues

1. What is a known substance under the Act?
2. What is the meaning of efficacy under the Act?
3. Is a rise in bioavailability considered therapeutic efficacy?
4. Whether Novartis’ claimed invention “Beta crystalline form of imatinib mesylate” is more effective than the substance from which it was produced, i.e. “Imatinib mesylate”?

Judgement

Novartis’ appeal was denied in April 2013 by a two-judge bench of India’s Supreme Court, which ruled that the beta crystalline form of Imatinib Mesylate is a new variation of the well-known chemical Imatinib Mesylate, with well-established effectiveness. The Supreme Court made it crystal clear that “Efficacy” in section 3(d) refers only to “Therapeutic Efficacy” in the case of medicine, and that all other characteristics of the medication are irrelevant; “the properties that directly pertain to efficacy in the case of medicine are its therapeutic efficacy”. The Supreme Court concluded that “a 30 per cent increase in bioavailability qualifies as an enhancement in therapeutic efficacy under section-3(d) of the Act if the evidence is provided. The Supreme Court compared the efficacy of Beta Crystalline form of Imatinib Mesylate to that of Imatinib Mesylate based on flow properties, better thermodynamic stability, and lower hygroscopicity, and concluded that none of these properties contributes to an increase in therapeutic efficacy as defined by section-3(d) of the Act, and Novartis has not provided any document demonstrating that Beta Crystalline’s efficacy is greater.”[15]

Concept of efficacy

On analysing the case law at a fundamental level, it becomes clear that there exists a big lacuna in the Indian Patent legislation when it comes to defining the word ‘efficacy. It is pertinent to note that unlike other jurisdictions, Indian courts have taken a position of comparing efficacy with therapeutic effect. The big question is why the Indian government and courts are attempting to defend Section 3(d) without defining the term ‘efficacy’ in order to make the patent process easier. The concept of ‘invention/patentable subject matter’ may be examined using efficacy as a criteria. It can also be used in the context of a novelty or inventive step test.[16]

Article 27.1 of the Trade Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement ensures that patents are available to all products/processes, regardless of their origin, as long as they meet the three patentability requirements of novelty, inventive step, and utility. Exceptions and flexibilities to the patent-eligibility[17] requirements are provided in Articles 27.2 and 27.3. The word “patent-eligibility” refers to any inventions that, subject to restrictions, are designated under the TRIPS and national Acts as being eligible for a patent. When patent-eligible innovations meet the required national requirements of novelty, non-obviousness, and utility, they are deemed “patentable.” It’s possible that a patent-eligible subject matter isn’t patentable, and that a patentable subject matter isn’t patent-eligible.[18] Likewise, the inverse is true. Despite the ambiguity of the word “efficacy,” India is the only country that uses it as a patent-eligibility test, whereas other countries use it as a patentability test rather than a patent-eligibility test. This is connected to another issue: Section 3(d) muddles the application of both of these concepts. The ‘patent-eligibility category, which is concerned with patentability, includes Section 3(d). Section 3(d)’s increased effectiveness, on the other hand, comprises not only a non-obviousness/inventive step external patentability test but also an external patentability test of utility, i.e. improved utility above the previous art.[19]

In the case at hand of Novartis AG v, Union of India, the court did not rule out the possibility of patenting a new version of an existing molecule, nor did it rule out the possibility of increasing a drug’s bioavailability and efficacy. Rather, the court left open the question of whether higher effectiveness relates to the drug’s therapeutic impact or to its better safety and lower toxicity in a broader sense.[20] This clarification is critical for mollifying the anxieties of developed nations, who almost invariably see the implementation of TRIPS flexibilities in context as an attack on IP rights. For example, in 2013, the US government placed ten developing nations on its priority watch list for numerous claimed intellectual property violations.

Evergreening of Patents

Evergreening is often misunderstood, and the harm it poses may be overstated.[21] Evergreening is when a drug company obtains multiple patents that cover different aspects of the drug, such as the active ingredient, formulations, manufacturing methods, chemical intermediates, mechanisms of action, packaging, screening methods, and biological targets, to extend the “market exclusivity of a drug beyond the life of its original patent.”[22] Evergreening, on the other hand, is often defined as the process of obtaining a second patent for the same subject matter while a previous patent is still valid.[23] When the court in Novartis AG contrasted the beta crystalline form of imatinib mesylate to distant free-base imatinib, rather than imatinib mesylate[24], it demonstrated a weak comprehension of evergreening. Free-base imatinib lacked evergreening potential[25] because it could not be delivered as a medication to people in the first place. Novartis’ counsel said that free-base imatinib “would sit in the stomach like a stone and would pass out with no therapeutic benefit if taken in solid dose form.”[26] Even though free-base imatinib could not be used as a medicine, the court denied Novartis a patent for a product that would have benefited millions of people.[27] As a result, the court stated that “the change of an utterly inert material into one that genuinely causes an influence on the human body” might be considered evergreening.[28] This is concerning since the court’s interpretation of Section 3(d) barred the issuance of a patent for a therapeutic product that the Indian Legislature did not intend to exclude when it targeted evergreening.[29]

Conclusion

The omission of the court to define what forms adequate evidence of enhanced efficacy creates a significant deal of ambiguity for pharmaceutical firms seeking supplementary patents in the future.[30] The court determined that “whether or not an increase in bioavailability leads to an increase in therapeutic efficacy in each specific scenario must be declared and confirmed by scientific facts.” Despite the fact that the court concluded Novartis had failed to provide sufficient research data, it did not define what kind or magnitude of computation would be required to establish enhanced effectiveness.[31] Even if a specified amount of data is sufficient to show enhanced effectiveness, asking drug makers to do it so early in the drug development process is ludicrous.[32] In an amicus brief to the court in Novartis AG, Shamnad Basheer, a law professor at West Bengal University of Juridical Sciences, wrote, “It would be unrealistic for pharmaceutical manufacturers to seek patents only after they had already undertaken years of rigorous trials capable of providing conclusive evidence that latest updated drugs perform effectively than their earlier versions.”[33] Pharmaceutical companies typically apply for patents numerous years before they can even launch a medicine.[34] Obtaining a patent encourages drug firms to perform clinical studies in order to obtain data on efficacy since it assures that such data will not be used by other parties.[35] As a result, mandating proof of efficacy at the point of patenting might stymie the innovation of many effective medications.[36]

Due to the financial benefits of engaging in India’s rapidly expanding pharmaceutical industry, Novartis AG’s move is unlikely to deter international pharmaceutical companies from entering the Indian market. However, if Courts in India continue reading Section 3(d)’s enhanced-efficacy criteria rigidly, it may stymie crucial pharmacological advances that, although not exerting a curative impact, ensure to benefit people in all countries.

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End Notes

[1] Explained later in the paper

[2] Mohammad S. Palwala, “India: A Study On: Novartis AG v. Union of India”, (Oct. 28, 2021, 10:26 PM) https://www.mondaq.com/india/patent/826478/a-study-on-novartis-ag-v-union-of-india

[3] Ian C. Read, “Why Society Needs a Vibrant Pharmaceutical Industry: Improving Patients’ Lives”; (Oct. 28, 2021, 10:34 PM) https://www.linkedin.com/pulse/20140612143605-322581966-why-society-needs-a-vibrant-pharmaceutical-industry-improving-patients-lives

[4] Indian Patents Act, 1970, § 2(1), No. 39, Acts of Parliament, 1970

[5] Id. at § 2(ja)

[6] Id. at § 2(ac)

[7] PALWALA, supra note 2

[8] Novartis AG v. Union of India, AIR 2013 SC 99-100, 102.

[9] Imatinib Mesylate is marketed in India as Gilvec

[10] Id. at 103

[11] Novartis case, ¶ 14

[12] Id., ¶ 15

[13] Id., ¶ 17

[14] Id., ¶ 21-22

[15] Id., ¶ 97-98

[16] Id., ¶ 190

[17] Basheer S, “The efficacy of Indian patent law: Ironing out the creases in Section 3(d)”, 5 (2) SCRIPTed, 232 (2008).

[18] Aditya Kant, “An Attempt at quantification of ‘efficacy’ factors under section 3(d) of the Indian Patents Act”, (18) Journal of IPRs, 303-315 (2013).

[19] Basheer S, “India’s tryst with TRIPS: The Patents (Amendment) Act 2005”, 1 Indian Journal of Law & Technology, 15-46 (2005)

[20] Novartis case, ¶ 191

[21] Dorothy Du, “Novartis AG v. Union of India: “Evergreening, Trips, and Enhanced Efficacy under Section 3(d)”, 21 J. INTELL. PROP. L. 223, 247 (2014)

[22] Joanna T. Brougher, “Evergreening Patents: The Indian Supreme Court Rejects Patenting of Incremental Improvements”, 19 J. COM. BIOTECH. 54, 55 (2013)

[23] supra note 22 at 239

[24] Novartis case, ¶ 175

[25] Jodie Liu, “Compulsory Licensing and Anti-Evergreening: Interpreting the TRIPS Flexibilities in Sections 84 and 3(d) of the Indian Patents Act”, 56 HARV. INT’L L.J. 207, 220 (2015)

[26] Novartis case, ¶ 176

[27]  R. Jai Kishan et. Al., “Novartis Loses Glivec Patent Battle in India”, WALL ST. J. (2013)

[28] supra note 26 at 225

[29] Id.

[30] Andrew Q. Leba, “Lowering the “Efficacy” Threshold for Section 3(d) of the Indian Patents (Amendment) Act 2005: A Case for a Broader Scope”, 28 EMORY INT’L L. REV. 649, 675-76 (2014).

[31] Id. at 678

[32] supra note 22 at 250

[33] supra note 31 at 669

[34] supra note 22 at 251

[35] Id.

[36] Id.

Author: Kinjal Gupta