India’s patent office is refusing to respect many drug patents held by foreign pharmaceutical companies. This refusal is permissible under the 2005 amendment to the Indian Patents Act, which restricts the practice known as “evergreening.”
Which drug patents are evergreen?
Evergreening is a term used to describe the process by which minor changes are made to a product so that a company may patent it again. This is done to prevent competition from other manufacturers. In practice, this activity discourages the production of generic pharmaceuticals.
The Indian Patent Office argues that many drug manufacturers are not creating new drugs, but merely variations on existing drugs. Therefore, they refuse to respect patents that solely exist to extend a company’s monopoly.
India v. Novartis
Currently, India’s Supreme Court is judging a case between the Indian government and Novartis, a large Swiss pharmaceutical company.
Novartis manufactures Glivec, a cancer drug. Their drug patent on Glivec is respected in almost 40 countries, but not in India.
India contends that Glivec is an alteration to an existing drug, and therefore they do not need to respect that drug patent.
Patent Uncertainty in India
India offers two main rationales for avoiding these drug patents for two reasons: humanitarian concern and profit incentive. By disregarding international drug patents, India is able to manufacture generic versions of the drugs for a fraction of the cost.
For example, India recently won a lawsuit against Bayer, the German pharmaceutical company. This ruling effectively made Bayer’s patent for Nexavar, a cancer drug, unenforceable in India. India’s company, Natco, is now able to produce a generic version of the drug.
The difference in price between the two products is astounding. Bayer’s Nexavar costs $5,200 per month, while Natco’s generic drug would only cost $160.
This disparity informs the humanitarian justification for disregarding these drug patents. The average per capita income in India is only 81,960 rupees, or 1,514 US dollars. Even the generic product would be expensive for many Indians, but Bayer’s product would be inaccessible to many.
India’s generic drug manufacturers have an international impact. Over 80 percent of all African AIDS patients treated by Doctors Without Borders receive drugs sourced from Indian factories.
However, it is naive to ascribe predominantly humanitarian motivations to booming Indian pharmaceutical companies. The pharmaceutical field is highly profitable; India ranks among the world’s top countries in terms of the volume of drugs sold.
Indian companies are also expanding internationally. Indian companies are building bases in Europe – which may prove a further challenge for European IP reformers – and the United States, or buying stakes in companies overseas.
The Indian pharmaceutical market is consistently growing — by 10 percent a year. This is partly due to its refusal to enforce certain pharmaceutical patents.
India is able to produce generic drugs at extremely low costs. Natco Pharma, the company producing the generic version of Bayer’s drug, has a state-of-the-art factory on the outskirts of Hyderabad. The workers earn about 15,000 rupees, or $274, per month.
India and Patent Law: The Future
Based on previous successes against pharmaceutical giants Pfizer, Roche and Bayer, it seems likely that the Indian government will continue its current agenda against the practice of ‘evergreening’ patents.
That said, the Indian government’s refusal to adopt international legal norms may ultimately stifle innovation, as companies are less likely to invest in costly product development if they are unable to internationally enforce key patents. Long-term, India’s ambivalence towards international patents may have unforeseen consequences.
