This article had appeared in The Hindu Business Line on Friday, Apr 16, 2004.
The Patents (Amendment) Bill, introduced in the Rajya Sabha on December 22, 2003, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS obligations under the WTO. The Bill, seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIP, brings forth the much anticipated regime change for the pharma industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for 20 years.
THE Patents (Amendment) Bill, 2003 was introduced in the Rajya Sabha on December 22, 2003. The Bill, when it comes into force, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS (Trade-Related Intellectual Property System) obligations under the World Trade Organisation.
The Bill is seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIPS; this period ends on December 31, 2004.
The Bill brings forth the much anticipated regime change for the pharmaceutical industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for a period of 20 years. Earlier, the term of process patent for a drug or medicinal substance was five years from the date of sealing of the patent, or seven years from the date of the patent, whichever was shorter.
End of reverse engineering
As of now, Section 5 of the Act, offers only a process patent for food, medicine or drug substances. The Act had specifically excluded product patents for these substances. This concession gave the Indian pharmaceutical companies a right to manufacture drugs patented elsewhere by employing a non-infringing process. The phenomenal growth of the Indian pharmaceutical industry into a Rs 19,700-crore industry is directly linked to the patent concessions it enjoyed. The good days may be coming to an end. The Bill omits Section 5. Thus, Indian companies will no longer to allowed to manufacture patented drugs by reverse engineering.
Some believe that the Bill shall only have a minimal impact on the industry as less than 5 per cent of the drugs available in the Indian market are copies of patented products. Added to this, it is possible for Indian companies to export drugs to Less Developed Countries (LCDs), which shall come into this regime only by 2016.
The Bill introduces Section 92 A, which deals with compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances. It is evident that this provision has been included to facilitate export of drugs to LCDs and elsewhere foreseeing situations such as the one faced by a drug company's HIV/AIDS drug in South Africa.
Unique provisions
As the patents law in India developed differently keeping in view the needs of the local consumers and producers, the Act in itself contained unique provisions not commonly found in the patent legislation of other countries.
One such provision is Section 3 of the Act which provides for the inventions that are not patentable. This Section enumerates 15 such non-patentable inventions which can be used as a ground in opposing a patent before its grant or in revocations proceedings after the grant. Another provision is Section 64 which gives 17 grounds on which a patent may be revoked after its grant. Interestingly, the Bill has not made any substantial change to the above two provisions.
EMRs to go
Understandably, the Bill omits Chapter IV A of the Act which deals with the transitions arrangement of granting Exclusive Marketing Rights (EMR) till the pending patent applications are processed.
The Bill provides for a transitional provision which states that every EMR shall continue to be effective with the same terms and conditions on which it was granted. Section 24 D of the Act provides that the government may, in public interest, sell or distribute the article for which EMR has been granted. The government may also, in public interest, direct that the article shall be sold at a regulated price. These two protections do not figure in the Bill.
The Bill retains the provision dealing with suits relating to infringement of EMRs now contained in Section 24E of Chapter IV A. As suits relating to infringement of EMRs would be treated as suits relating to infringement of patents under Chapter XVIII of the Act, the above grounds contained in Section 64 read with Section 3 could be raised as a counter-claim in a suit.
If the number of infringement suits filed in the recent past is any indication, it is very likely that the Indian courts shall witness a spate of patent related litigation post 2005.
The road ahead
Indian pharmaceutical companies have already devised innovative methods to meet the challenges of the new patent regime. They can continue to supply bulk drugs and active pharmaceutical ingredients (APIs) with the approval of the patent holder. The option of producing off-patent APIs is also open.
Another option would be to streamline the process of manufacture and to become the cheapest manufacturers of off-patent drugs. Given the distinction in reverse engineering that Indian companies have earned over the years, this prospect holds much promise.
The third option lies in licensing globally successful drugs in India. This shall, however, be subject to Chapter XVI of the Act which deals with Compulsory Licences and the desire of multinationals to team-up with Indian companies. Yet another option would be to position Indian companies as research and development centres for multinationals.
Thursday, July 28, 2005
Tuesday, June 21, 2005
Exclusive Marketing Rights — A monopoly without a right?
This article was published in The Hindu Business Line on Saturday, Mar 20, 2004.
THE grant of Exclusive Marketing Right (EMR) to Novartis ("Exclusive Marketing Rights — Novartis gets stay against 6 firms", Business Line, January 24) and the delay in granting EMR to Eli Lilly ("Eli Lilly's ED drug likely to face clone's onslaught", Business Line, February 15, 2004) have raised several controversial issues.
For Novartis, the grant means that it can exclusively sell or distribute its patented anti-cancer drug Glivec containing the active ingredient Imatinib mesylate, which is the subject matter of EMR. This move has affected six Indian pharmaceutical companies which have been manufacturing Imatinib mesylate at one-tenth its price, under different trade names. For Eli Lilly, the delay would result in the loss of profits over its patented drug, Cialis.
The impact of WTO
The Dunkel Draft — the predecessor to the Trade Related Intellectual Property Rights (TRIPS) Agreement — proposed that all countries that did not offer product patents for pharmaceutical and agricultural chemical products as on January 1, 1995 have to provide a means for accepting applications for such inventions (called the `mailbox'), apply applicable priority rights and provide exclusive marketing rights (EMRs) for such products.
The developing countries had a choice between EMR and product patents and many opted for the latter. As one of the chief opponents of TRIPS, India opted for the interim arrangements of `mailbox' and EMR.
Under Article 65.4 of the TRIPS, developing countries that did not have product patents were to get 10 years to comply with patent provisions in the pharmaceutical and agricultural chemical sectors. But in view of Articles 70.8 and 70.9, these countries did not get even one day's transition, as they had to accept product patent applications through the `mailbox' and EMR.
The concept of EMR has its origin in a US legislation — the Hatch-Waxman Act, 1984, which granted a five-year market exclusivity period for an innovative drug. This provision was meant to protect drugs that either enjoyed no patent protection or had less than five years of protection left at the time of approval.
Not surprisingly, the issue of EMR was brought up by the US before the panel of the WTO's Dispute Settlement Body. The issue in United States vs. India (1997) was whether the Indian Patents Act, 1970 (Act) had established a mechanism that adequately preserved novelty and priority with respect to patent applications covering pharmaceutical and agricultural chemical inventions, given that under the Act substances classified as "food, medicine or drug" were entitled to process patent and not product patent protection.
The WTO panel concluded that India did not comply with its obligations under Article 70.8(a) of the TRIPS Agreement and violated its obligation to provide EMR during the transitional period under Article 70.9. The WTO Appellate Body upheld the panel's conclusions.
Consequently, the Act was amended in 1999 granting product patents for pharmaceuticals from January 1, 2005. As a prelude to full implementation in 2005, the Act provided that applicants may immediately receive EMR, a patent-like right governed by conventional patent doctrines.
EMRs: Legal implications
EMRs were introduced as an effective way to stall imitation of patented products by the local industry. It is only a privilege granted in anticipation of a patent right. EMRs offer rights similar to that of patents.
The right to make or use an invention may not be commercially viable without the right to sell or distribute the product. EMRs are even stronger than patents as the right of a national patent office to grant or reject the right is severely circumscribed.
Chapter IV-A of the Act lays down certain preconditions that have to be met before EMRs are granted. Before a claim is made, an application for the same invention should have been filed in a WTO member-country on or after January 1, 1995.
The patent grant and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India. Moreover, the approval to sell or distribute the invention should have been granted by the authority specified in this behalf.
If these conditions are satisfied, the EMR shall be granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents, whichever is earlier. The grant of EMR would mean that the patent-like protection would be extended to the product even before the patent application is processed.
Disastrous consequences
This interim arrangement can have disastrous consequences. In the event of the patent application failing to materialise in the form of a grant, it would mean that the EMR holder, in most cases pharma MNCs, , obtain a monopoly in selling and distributing products during the period of grant of EMR.
More sinisterly, it could mean exclusive exploitation of new markets without the backing of a right to do so. It is submitted that the Government should demand some security against such exploitation before granting EMR.
The grant of EMR results in a right stronger than that of a patent grant. Compared to a patent, the procedure involved in getting an EMR is much easier and without any provision for opposition of such a grant. India's belief that EMR obligation is weaker than that of product patents is misplaced. As the procedure for granting EMR does not have any review mechanism to check abuse, it can, in effect, offer a monopoly more rigid than that of patents.
THE grant of Exclusive Marketing Right (EMR) to Novartis ("Exclusive Marketing Rights — Novartis gets stay against 6 firms", Business Line, January 24) and the delay in granting EMR to Eli Lilly ("Eli Lilly's ED drug likely to face clone's onslaught", Business Line, February 15, 2004) have raised several controversial issues.
For Novartis, the grant means that it can exclusively sell or distribute its patented anti-cancer drug Glivec containing the active ingredient Imatinib mesylate, which is the subject matter of EMR. This move has affected six Indian pharmaceutical companies which have been manufacturing Imatinib mesylate at one-tenth its price, under different trade names. For Eli Lilly, the delay would result in the loss of profits over its patented drug, Cialis.
The impact of WTO
The Dunkel Draft — the predecessor to the Trade Related Intellectual Property Rights (TRIPS) Agreement — proposed that all countries that did not offer product patents for pharmaceutical and agricultural chemical products as on January 1, 1995 have to provide a means for accepting applications for such inventions (called the `mailbox'), apply applicable priority rights and provide exclusive marketing rights (EMRs) for such products.
The developing countries had a choice between EMR and product patents and many opted for the latter. As one of the chief opponents of TRIPS, India opted for the interim arrangements of `mailbox' and EMR.
Under Article 65.4 of the TRIPS, developing countries that did not have product patents were to get 10 years to comply with patent provisions in the pharmaceutical and agricultural chemical sectors. But in view of Articles 70.8 and 70.9, these countries did not get even one day's transition, as they had to accept product patent applications through the `mailbox' and EMR.
The concept of EMR has its origin in a US legislation — the Hatch-Waxman Act, 1984, which granted a five-year market exclusivity period for an innovative drug. This provision was meant to protect drugs that either enjoyed no patent protection or had less than five years of protection left at the time of approval.
Not surprisingly, the issue of EMR was brought up by the US before the panel of the WTO's Dispute Settlement Body. The issue in United States vs. India (1997) was whether the Indian Patents Act, 1970 (Act) had established a mechanism that adequately preserved novelty and priority with respect to patent applications covering pharmaceutical and agricultural chemical inventions, given that under the Act substances classified as "food, medicine or drug" were entitled to process patent and not product patent protection.
The WTO panel concluded that India did not comply with its obligations under Article 70.8(a) of the TRIPS Agreement and violated its obligation to provide EMR during the transitional period under Article 70.9. The WTO Appellate Body upheld the panel's conclusions.
Consequently, the Act was amended in 1999 granting product patents for pharmaceuticals from January 1, 2005. As a prelude to full implementation in 2005, the Act provided that applicants may immediately receive EMR, a patent-like right governed by conventional patent doctrines.
EMRs: Legal implications
EMRs were introduced as an effective way to stall imitation of patented products by the local industry. It is only a privilege granted in anticipation of a patent right. EMRs offer rights similar to that of patents.
The right to make or use an invention may not be commercially viable without the right to sell or distribute the product. EMRs are even stronger than patents as the right of a national patent office to grant or reject the right is severely circumscribed.
Chapter IV-A of the Act lays down certain preconditions that have to be met before EMRs are granted. Before a claim is made, an application for the same invention should have been filed in a WTO member-country on or after January 1, 1995.
The patent grant and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India. Moreover, the approval to sell or distribute the invention should have been granted by the authority specified in this behalf.
If these conditions are satisfied, the EMR shall be granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents, whichever is earlier. The grant of EMR would mean that the patent-like protection would be extended to the product even before the patent application is processed.
Disastrous consequences
This interim arrangement can have disastrous consequences. In the event of the patent application failing to materialise in the form of a grant, it would mean that the EMR holder, in most cases pharma MNCs, , obtain a monopoly in selling and distributing products during the period of grant of EMR.
More sinisterly, it could mean exclusive exploitation of new markets without the backing of a right to do so. It is submitted that the Government should demand some security against such exploitation before granting EMR.
The grant of EMR results in a right stronger than that of a patent grant. Compared to a patent, the procedure involved in getting an EMR is much easier and without any provision for opposition of such a grant. India's belief that EMR obligation is weaker than that of product patents is misplaced. As the procedure for granting EMR does not have any review mechanism to check abuse, it can, in effect, offer a monopoly more rigid than that of patents.
Tuesday, May 24, 2005
Welcome to all!
Dear All,
I have just started a dedicated blog on pharmaceutical patents. I hope to post my first piece soon.
Feroz Ali
I have just started a dedicated blog on pharmaceutical patents. I hope to post my first piece soon.
Feroz Ali
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