Emory International Law Review

Lowering the “Efficacy” Threshold for Section 3(d) of the Indian Patents (Amendment) Act 2005: A Case for a Broader Scope
Andrew Q. Leba Special Content Editor, Emory International Law Review; J.D. Candidate, 2014, Emory University. I wish to give special thanks to my family—Bố, Mẹ, Hiền, and Thành—for their loving support in everything I do. I would also like to thank Professor Anne Rector for her patience, encouragement, and support with this paper. I would like to thank Professor Timothy Holbrook for helping me select this topic. Finally, I would like to thank Courtney Ginn, Jordan Kearney, Christopher Pitts, and the rest of the Emory International Law Review staff for their exceptional editorial help with this paper.

Introduction

For over thirty years, India, dubbed “the world’s pharmacy,” has enjoyed exponential growth. 1Lisa Shuchman, India Patent Authority Has Big Pharma Worried, Corp. Counsel (Oct. 15, 2012), . Its once-nonexistent domestic pharmaceutical industry has transformed into a global manufacturer of generic drugs, providing access to low-cost critical medication for its one billion-plus population. 2William Greene, The Emergence of India’s Pharmaceutical Industry and Implications for the U.S. Generic Drug Market 2–3 (Office Econ., U.S. Int’l Trade Comm’n, Working Paper No. 2007-05-A, 2007), available at http://www.usitc.gov/publications/332/working_papers/EC200705A.pdf; see also Population Reference Bureau, 2012 World Population Data Sheet 8 (2012), available at http://www.prb.org/pdf12/2012-population-data-sheet_eng.pdf. However, 2005 marked the beginning of an extraordinary new frontier for India’s generic drug industry and drug-hungry population. For the first time in India’s post-colonial history, India recognized that pharmaceuticals, foods, and chemicals were patent-eligible and entitled to protection from infringers. 3Janice 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, 495, 529 (2007).

The 2005 measures were widely lauded by multinational pharmaceutical companies (often referred to as “Big Pharma”) but were vehemently denounced by patient groups and global health advocates. Critics have characterized India’s new patent system as having “been passed at the cost of human health. It will make death much cheaper.” 4Devinder Sharma, When Death Becomes Cheap, Deccan Herald (Apr. 16, 2005), http://archive.deccanherald.com/Deccanherald/apr162005/editpage1614452005415.asp. However, large pharmaceutical companies and proponents of India’s patent system transformation counter that a robust system to protect pharmaceutical innovation is absolutely necessary because it allows drug firms to recover costly research and development investments needed to discover the next generation of drugs. 5See Mueller, supra note 3, at 533–36. After 2005 and a series of blows from Indian policies and decisions that rejected patentability of certain drugs, Big Pharma is determined to challenge India’s nascent patent regime. The competing interests of intellectual property rights and access to medicine for the impoverished in the developing world, as well as the future of generics drugs, have been laid out in the Novartis case, in which the Supreme Court of India determined the future of the patentability of pharmaceuticals by clarifying the scope of Section 3(d) of the Indian Patents Act. 6Novartis AG v. Union of India, Nos. 2706-2716 of 2013, at 2, 56–57 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

This Comment examines the history that led to India’s current patent system, the status of pharmaceutical patentability in India and the relevant case law, and the future of India’s patent system. Based on that analysis, this Comment recommends that India should reinterpret Section 3(d) of its Patents Act in a way that gives stronger protection to drug innovators. Part I discusses the history of the Indian patent system, and India’s entry into the global economy in adopting the Trade-Related Aspects of Intellectual Property Rights, and key provisions of India’s new patent system. Part II examines recent clashes and key legal decisions involving foreign pharmaceutical companies and Indian generic manufacturers since the 2005 amendments to India’s Patents Act. Part III recommends that India’s patent system give a broad interpretation to Section 3(d) of India’s Patents Act in light of the mechanisms already in place to weed out frivolous patents.

I. Background of India

Subpart I.A of this Comment explores the unique makeup of India’s population that has fueled India’s growth into an economic powerhouse. Next, Subpart I.B examines India’s cultivation of its domestic pharmaceutical industry and steps the Indian government took to weaken foreign pharmaceutical companies’ foothold in the Indian drug market. Building upon the previous section, Subparts I.C and D further delves into India’s most notable anti-Big Pharma measure—the Patents Act of 1970—and the consequences that ensued. Subparts I.E and F probes India’s desire to enter the global stage, its adoption of new intellectual property rights as a member of the World Trade Organization, the 2005 amendments to the Patents Act of 1970, including Section 3(d). Lastly, Subpart I.G analyzes the consequences of India’s newly amended patent system.

A. India: Demographics

India is a unique country because of its demographics, as well is its seemingly contradictory first-world and third-world characteristics. With a population of over 1.2 billion people 7India’s population was 1.259 billion as of mid-2012. 2012 World Population Data Sheet supra note 2, at 8. —approximately one-sixth of the world’s population 8The world’s population was 7.057 billion as of 2012. Id. at 2. —India has garnered considerable world-wide attention and interest from international investors and multinational corporations over the past two decades. India’s economic growth mirrors its population growth: It is one of the fastest growing economies in the world, at a rate of nearly six percent per year for the past three decades. 9Atul Kohli, Poverty Amid Plenty in the New India 79 (2012). Over the past twenty years, the size of India’s middle class has quadrupled to almost 250 million people, and one percent of the country’s impoverished class has crossed the poverty line every year. 10Gurcharan Das, The India Model, 85 Foreign Aff. 2, 2 (2006). In addition to India’s reputation as an English-speaking country, 38.6 percent of India’s university graduates earn a degree in the sciences, 11See Nat’l Council of Applied Econ. Research, India Science Report: Science Education, Human Resources, and Public Attitude Towards Science and Technology 7, fig.2.2 (2005), available at http://www.insaindia.org/pdf/India_Science_report-Main.pdf (showing that 38.6 percent of all bachelor degrees issued in India in 2004 were awarded to science majors, including majors in the natural sciences, engineering, medicine, and agriculture/veterinary sciences). allowing foreign businesses to draw from an educated workforce and establish domestic offices in India. According to the director of Bombay-based Alpic Securities Ltd., “[w]e have the technical manpower.” 12Amy Louise Kazmin, Now These Copycats Have to Discover New Drugs, Businessweek (Mar. 23, 1997), . These technically trained, English-speaking scientists also earn only one-fourth of the salaries of scientists in developed countries. 13Id. Additionally, in comparison to other rising countries, India benefits from a greater degree of political and social stability. The country’s “democracy, free press and civil society . . . provide a measure of political stability. . . . [Thus] the risks of social and political explosions in India are declining, while in China they may be rising.” 14Nicholas D. Kristof, Op-Ed., They’re Rounding the First Turn! And the Favorite Is . . ., N.Y. Times, Jan. 17, 2006, at A19.

Yet, alongside these positive developments, India’s government and institutions experience pervasive, systemic problems with corruption, cronyism, and bribery. 15See Corruption in India: A Rotten State, Economist, Mar. 12, 2011, at 18. What the Indian people called a “‘season of scams’ include[ed] the alleged theft of billions by officials behind last year’s Commonwealth games in Delhi; $40 billion in revenues lost from the crooked sale of 2G telecoms licenses; and over $40 billion stolen in Uttar Pradesh alone from schemes subsidising food and fuel for the poor.” 16Id. In fact, foreign businessmen rank corruption and bribery as the largest barrier to investment after India’s poor infrastructure. 17Id. “[T]here seems to be more [graft] . . . than ever, if only because India is getting richer fast, and the faster the economy grows, the more chances arise for mind-boggling theft.” 18Id.

Additionally, entrenched social exclusion and rising inequality in India have been a point of concern for many academics, activists, and legislators. 19World Bank. Poverty and Social Exclusion in India 1–2 (2011). Culturally rooted systems have perpetuated “inequality traps” along lines of tribe, caste, and sex, preventing many groups from benefitting from India’s economic rise. 20Id. at 2. Marginalized groups such as Dalits 21Dalits are at the bottom of India’s caste system. Members of India’s higher castes will not touch anything that has come in to physical contact with the Dalits. See India’s Dalits Still Fighting Untouchability, BBC News (June 27, 2012, 00:53 ET), http://www.bbc.co.uk/news/world-asia-india-18394914. and indigenous Adivasis 22The term “Adivasi” encompasses the indigenous groups of India. See Adivasi, Intercontinental Cry, http://intercontinentalcry.org/peoples/adivasi/ (last visited Feb. 7, 2014). continue to experience high child mortality rates, 23World Bank, supra note 19, at 11. political underrepresentation, 24Id. at 13. residential segregation, 25Id. at 16. lower benefits from education, 26Id. at 19–20 and lower wages. 27Id. at 20. According to a community correspondent, “[i]t’s like you are born with a stamp on your forehead and you can never get rid of it.” 28India’s Dalits Still Fighting Untouchability, supra note 21. Women face educational and health hurdles stemming from India’s cultural preference for males. 29World Bank, supra note 19, at 24. Violence against women in India is prevalent. Over one-third of Indian women have reported experiencing spousal violence. 30Id. at 26–27. A recent gang rape of a twenty-three-year-old-woman in New Delhi on December 16, 2012 sparked national outrage. 31Heather Timmons & Niharika Mandhana, Victim Dies After Gang Rape Galvanized India Over the Dangers That Women Face, N.Y. Times Int’l, Dec. 29, 2012, at A11.

Despite these third-world symptoms of corruption, poverty, and discrimination, industry leaders from manufacturing, information technology, and knowledge services, cognizant of diminishing returns in the Western market, are eager to tap India’s emerging and potentially lucrative market. 32See Mamta Kapur & Rajesh Pillania, Economic Environment and Challenges, in Doing Business in India 15 (Pawan S. Budhwar & Arup Varma eds., 2011).

B. India’s History in the Pharmaceutical Industry

To fully understand the Indian pharmaceutical industry’s success, it is necessary to understand the history of Indian pharmaceuticals, the origins of India’s patent system, and how that system facilitated the explosion of Indian generics. Although India is known for its information technology industry, 33 See India’s IT Sector to Grow Annually by 25–26 Pct, Says Narayana Murthy, Int’l Bus. Times (Jan. 24, 2011, 6:29 AM), http://www.ibtimes.com/india%E2%80%99s-it-sector-grow-annually-25-26-pct-says-narayana-murthy-258473 (“The IT industry has grown fast over the last 15 years. For example, the industry had about 150,000 employees in 1993, around 500,000 employees in 1999 and today, the industry employs around 2 million employees.”). the same factors that allowed India to cultivate that industry—an abundance of young, educated professionals, an English-proficient speaking workforce, and India’s refusal to recognize drug patents 34Greene, supra note 2, at 15. —has allowed India to become one of the largest and most developed pharmaceutical players in the developing world. 35See id. at 2–3 (“This allowed the domestic industry [to] build up considerable competencies and offer a large number of cheaper ‘copycat’ generic versions legally in India at a fraction of the cost of the drug in the West . . . .”). Additionally, India’s burgeoning, ethnically diverse population offers abundant opportunity for drug manufacturers to test new drugs. 36Kazmin, supra note 12. According to K. Anji Reddy, the founder of Dr. Reddy’s Laboratories Ltd., there are “all kinds of patients available just for the asking.” 37Id. India’s meager liability laws also provide a boon to pharmaceutical companies attempting to bring drugs to market quickly. 38Id. According to Sandip Basu, director of the National Institute of Immunology, “[w]e can afford to play with people’s health because we won’t be made to pay. . . . Animal tests are easier here, too.” 39Id. In the thirty years prior to Indian drug patent protection, India’s nascent pharmaceutical industry exploded into a global pharmaceutical leader, generating inexpensive, high-quality generic drugs. 40Green, supra note 2, at 2. In fact, India’s pharmaceutical industry has contributed significantly to the Indian economy as one of its fastest growing economic sectors 41Id. and now ranks near the top of the world’s emerging pharmaceutical markets. 42Indian Pharmaceutical Industry, India Brand Equity Found. (Feb. 2013) http://www.ibef.org/industry/pharmaceuticals.aspx. The industry is ranked third globally in terms of volume and tenth in terms of value. 43Id.; Ashwin Walunjkar, Indian Drug Outlook Favourable: ICRA & Moody’s, Econ. Times (June 20, 2012, 6:15 PM), http://articles.economictimes.indiatimes.com/2012-06-20/news/32335967_1_patent-protections-product-patent-regime-indian-market. The Indian pharmaceutical sector is expected to grow at a compound annual growth rate of fourteen to seventeen percent from 2012 to 2016. 44Indian Pharmaceutical Industry, supra note 42. By 2020, India’s pharmaceutical industry is expected to reach $45 billion from $18 billion as of 2012. 45Id. In fact, India’s largest pharmaceutical firm, Ranbaxy Laboratories Limited, has received a substantial amount of its business—almost fifty percent—from the United States. 46Patently Ambitious: The Global Ambitions of India’s Biggest Drug Firms, Economist (Sept. 4, 2013), . Despite this success, India’s road to becoming a pharmaceutical giant was rife with challenges.

When India won its independence in 1947, Western multi-national corporations (“MNCs”) controlled approximately eighty to ninty percent of India’s pharmaceutical industry. 47Greene, supra note 2, at 2. The industry remained under the control of MNCs and highly import-dependent throughout the 1960s. 48Id. Even vital drugs such as insulin and penicillin were entirely imported. 49Mueller, supra note 3, at 510. Drug prices in India were among the highest in the world despite the country’s having an impoverished population. 50Id. at 509–10. By invoking the British Indian Patents and Designs Act of 1911, 51Id. at 507. The British and Indian Patents Act of 1911 created an Indian priority system that was within the British Empire’s system, where an Indian patent applicant “who had, within the previous twelve months, filed a patent application for the same invention in the United Kingdom was entitled to the benefit of the earlier United Kingdom filing date.” Id. The Act also permitted patenting of pharmaceutical products, which allowed MNCs to enforce patents against India’s domestic manufacturers. Id. at 508. Western MNCs were also able to suppress indigenous Indian pharmaceutical companies by preventing them from manufacturing drugs invented outside of India. 52Id.

However, during India’s post-colonial period, a cultural shift arose: The Indian government and its population began to shun what they perceived as foreign influence and intervention. 53See id. at 510–11. Manifestation of these anti-foreign sentiments came about through policies emphasizing Indian self-reliance through local production. 54See id. at 509–11. Additionally, due to the exorbitant prices of imported drugs and the desire to provide affordable drugs to a population clamoring for a higher standard of living, the Indian government wanted to shift from importation to domestic production of drugs. 55See id. at 514. In order to cultivate a domestic pharmaceutical industry, the Indian government established state-owned pharmaceutical companies, capped MNCs’ equity share in Indian pharmaceutical companies, and imposed price controls on specific formulations and bulk drugs. 56Id. at 546; Greene, supra note 2, at 2. The centerpiece of India’s pharmaceutical revolution was the creation of its first modern patent system, enacted in 1972. The new system reflected the country’s “deliberate choice to stimulate domestic drug manufacturing and reduce the price of medicines.” 57Mueller, supra note 3, at 514. The new patent system ushered in substantial changes to the old patent regime.

C. A New Age: India’s First Modern Patent System

With the stated goals of cultivating India’s nascent technological industry, fostering indigenous drug companies, and providing affordable drug access to everyone, 58Greene, supra note 2, at 2. then-Prime Minister Indira Gandhi’s administration repealed the British Indian Patents and Designs Act and enacted the India Patents Act, 1970 (the “1970 Act”) on April 20, 1972, creating the independent nation’s first robust and far-reaching patent system. 59Mueller, supra note 3, at 513–14. Justice Rajagopala Ayyangar, head of the Ayyangar Committee appointed to make recommendations for the 1970 Act, 60Gopakumar G. Nair, Impact of TRIPS on Indian Pharmaceutical Industry, 13 J. Int. Prop. Rts. 432 (2008). asserted that the patent system would spur innovation:

The theory upon which the patent system is based is that the opportunity of acquiring exclusive rights in an invention stimulates technical progress in four ways: first, that it encourages research and invention; second, that it induces an inventor to disclose his discoveries instead of keeping them as a trade secret; third, that it offers a reward for the expenses of developing inventions to the stage at which they are commercially practicable; and fourth, that it provides an inducement to invest capital in new lines of production which might not appear profitable if many competing producers embarked on them simultaneously. Manufacturers would not be prepared to develop and produce important machinery if others could get the results of their work with impunity. 61N. Rajagopala Ayyangar, Report on the Revision of the Patents Law 9 (1959).

Although the 1970 Act was modeled after the British patent system, it contained a significant twist reflecting the Indian populace’s belief about the role of patents. Incorporating Indian citizens’ demands for low-cost drugs, the 1970 Act prohibited patents on products relating to human health, such as “substances intended for use, or capable of being used, as food or as medicine or drug, or[] relating to substances prepared or produced by chemical processes.” 62 See P. Narayanan, Patent Law 7, 546 (3d ed. 1998). Essentially, the 1970 Act departed from all precedent by barring pharmaceutical products from being patentable subject matter.

However, “process” patents—patents for the making of such products—remained patentable. 63Mueller, supra note 3, at 513. In support of the 1970 Act’s lax view and loose protection of drug patents, Prime Minister Indira Gandhi explained to the World Health Assembly in Geneva in 1981 that “[a]ffluent societies are spending vast sums of money understandably on the search for new products and processes to alleviate suffering and to prolong life. In the process, the drug manufacture [sic] has become a powerful industry.” 64V.R. Krishna Iyer, Human Health and Patent Law, Frontline (Oct. 14, 2000), http://www.frontline.in/static/html/fl1721/17210790.htm. With regards to patents, she added: “My idea of a better ordered world is one in which medical discoveries would be free of patents and there would be no profiteering from life or death.” 65Id. Regardless of rhetoric from critics and advocates, the 1970 Act’s new provisions—the most notable being the provision barring the patentability of pharmaceutical products—had lasting effects on India’s domestic pharmaceutical industry and foreign MNCs.

D. Consequences of the Indian Patents Act of 1970

The 1970 Act had widespread consequences for both foreign MNCs and domestic Indian drug firms. The 1970 Act’s lax drug patent protections offered foreign MNCs few legal remedies to secure their patented pharmaceutical product inventions in the Indian drug marketplace. 66Greene, supra note 2, at 2. In fact, the Act left the door open for Indian drug companies to freely reverse engineer 67Arvind K. Bansal & Vishal Koradia, The Role of Reverse Engineering in the Development of Generic Formulations, Pharmaceutical Tech. (2005), available at http://www.pharmtech.com/pharmtech/article/articleDetail.jsp?id=173676 (engineering of a drug refers to the process of “[d]etermining the original drug’s excipient content and other formulation optimization steps” to create a generic version of the original drug). or copy foreign-patented drugs without paying any sort of licensing fee, so long as the “process” of manufacturing the drug was not copied 68Greene, supra note 2, at 2. and the drug was sold only in India. 69Mueller, supra note 3, at 514. This ability to copy existing drugs allowed India’s nascent domestic drug firms to build up significant competencies in the drug industry. 70Greene, supra note 2, at 2. Subsequently, Indian drug firms became proficient in manufacturing cheaper “copycat” generic drugs, patented and invented in other countries, to be sold legally in India at a fraction of Western prices. 71Id. at 2–3. The objectives of the new patent system were achieved, as drug manufacturing by domestic drug firms exploded and prices for drugs decreased. 72Mueller, supra note 3, at 514. In light of the lack of patent protection and increased competition from domestic firms, foreign pharmaceutical MNCs abandoned and discontinued investing in the Indian market. 73Greene, supra note 2, at 2. The share of foreign MNCs in India’s domestic drug market plummeted until they eventually comprised less than twenty percent of the domestic Indian market. 74Id. In the wake of this foreign firm exodus, local drug firms scrambled to fill the void. 75Id. By 1990, the Indian pharmaceutical industry was predominantly self-sufficient. 76Id. In a span of thirty-five years after the passage of the 1970 Act, the domestic Indian pharmaceutical industry recorded exponential growth, with the number of Indian drug firms soaring from 2257 to more than 20,000. 77Id. at 4.

Despite the economic boom in India’s domestic pharmaceutical industry, growth in certain areas was sorely lacking. India’s drug industry was not making new drug innovations or technological advancements in pharmaceuticals. 78See Sajeev Chandran, Archna Roy & Lokesh Jain., Implications of New Patent Regime on Indian Pharmaceutical Industry: Challenges and Opportunities, 10 J. Int’l. Prop. Rts. 269, 270 (2005). Almost no investments were made in research and development, as Indian drug firms focused primarily on making cheap, profitable generics from drugs already patented and invented outside of India. 79Id. According to Sajeev Chandran of the Birla Institute of Technology, drug innovation and R&D levels have been “abysmal”:

Over the last few decades, this contracted patent regime in India, recognizing only process patent[s], has had a negative impact on the development of professional expertise in new chemical entity development as potential therapeutic agent[s]. This in turn also gave lesser exposure to conducting advanced clinical trials and drafting patents and patent related litigation in the areas of new chemical entities, genetic engineering, combinatorial chemistry, natural products, agro-chemicals and agricultural products. . . . Recognizing this lack of drug innovation investment, he added that “[n]ow, the specific challenge before [the Indian Pharmaceutical Industry] is to start investing in basic R&D from the current abysmal level of less than 2% of total revenue to the world level of 8-10%.” 80Id. at 270, 280.

Although several Indian companies have increased research spending to roughly four to five percent of sales, the industry’s investment is still well below the typical fifteen percent of sales of Western MNCs. 81Kazmin, supra note 12.

E. Enter India’s Global Age

As India’s ambitions turned toward the global arena, outward considerations pressured India to change its stance on the patentability of drugs and pharmaceuticals. Although India has had a history of protectionist and central planning policies, India began opening up its capital markets and tearing down its barriers to imports in the early 1990s in an effort to integrate into the global economy. 82See Inv. & Tech. Promotion Div., Ministry of External Affairs, Gov’t of India, India’s Economic Reforms, India in Business, http://www.indiainbusiness.nic.in/economy/economic_reforms.htm (last visited Feb. 21, 2013). Led by former finance minister and current Prime Minister Manmohan Singh, the Indian government took measures to liberalize the country’s economy—freeing it up to additional traders and investors, abolishing licensing, 83India: In Search of a Dream, Economist (Sept. 29, 2012), http://www.economist.com/node/21563720. restructuring the role of government, and relying more on market forces. 84Inv. & Tech. Promotion Div., supra note 82. Over time, liberalization yielded stunning results. The economy bloomed. 85India: In Search of a Dream, supra note 83. A nascent but flourishing services industry generated elite, world-class companies. 86Id. Many facets of Indian life and the standard of living improved. 87Id. (“The economy boomed. Wealth and social gains followed, literacy soured, life-expectancy and incomes rose.”). The country also urbanized as Indians gradually migrated from villages to towns. 88Id.

1. India’s Membership in the World Trade Organization

India’s continued global ambitions and desire to reap the profits of Western markets led it to seek admission into the World Trade Organization (“WTO”). 89Kazmin, supra note 12, at 271. In seeking entry into the WTO, India faced a dilemma—WTO members are required to comply with the Agreement on Trade-Related Aspects of Intellectual Property (“TRIPS”). 90Nair, supra note 60, at 433. The purpose of TRIPS is to promote the innovation and transfer of technology for members’ mutual social and economic welfare. 91Id. at 435. To promote innovation, TRIPS establishes minimum levels of protection and enforcement of intellectual property rights, forbidding member countries from denying patents based on the patent’s field of technology. 92Id. at 433–35. As a result, WTO member countries are barred from categorically excluding patent protection for pharmaceuticals and health-related products or processes. Essentially, if India desired to join industrialized nations and obtain membership in the WTO, the Indian government would have to change its lax patent policy and adopt a baseline framework of patent protections for a variety of subject matter, including pharmaceuticals. 93Greene, supra note 2, at 3.

In light of these and other changes related to trade liberalization, India’s pharmaceutical industry was “full of panic” and had widespread “the sky is falling” and “doomsday” sentiments. 94Nair, supra note 60, at 433. India succumbed to pressure and agreed to adopt the baseline obligations under TRIPS, 95See Rishi Gupta, TRIPS Compliance: Dealing With the Consequences of Drug Patents in India, 26 Hous. J. Int’l L. 599, 603, 616 n.68 (2004). signing the TRIPS Agreement on April 15, 1994. 96Nair, supra note 60, at 435. In agreeing to comply with TRIPS, India finally became an official member of the World Trade Organization 97See Mueller, supra note 3, at 497. and was given ten years to come into full compliance with TRIPS. 98Id. at 518–19.

2. Harmonizing the 1970 Act with TRIPS: the 2002 and 2005 Amendments

To bring the 1970 Act into compliance with TRIPS, India made a series of amendments that were a groundbreaking win for foreign drug manufacturers. 99See Nair, supra note 60, at 435–36. In a 2002 amendment, India extended the patent term to a twenty-year monopoly for all fields of inventions from the date of application filing, 100Id. at 437. precluded the sale of generic copies of patented drugs during that twenty-year period, 101Id. and forbade discriminatory treatment of foreign applicants. 102Mueller, supra note 3, at 527. The amendments also made reverse engineering or copying of drugs patented after January 1, 1995 illegal. 103The Patents (Amendment) Act, 2002, No. 38 , § 24B, Acts of Parliament, 2002.

Yet India’s most dramatic transformation of the 1970 Act was still to come. In a 2005 amendment, India abolished the 1970 Act’s statutory prohibition against patent claims for “substances intended for use, or capable of being used, as food or as medicine or drug, or . . . relating to substances prepared or produced by chemical processes (including alloys, optical glass, semi-conductors and inter-metallic compounds).” 104Mueller, supra note 3, at 547 (quoting The Patent (Amendment) Act, 1999, No. 17, § 5, Acts of Parliament 1999. This amendment repealed special patent protection for “process” innovations and introduced Western-style patent protection for “product” innovations on pharmaceuticals, food, and such chemicals. 105The Patents (Amendment) Act, 2005, No. 15, § 5Articles of Parliament, 2005; Ranjit Devraj, India Swallows Bitter Bill, Asia Times Online (Mar. 24, 2005), http://www.atimes.com/atimes/South_Asia/GC24Df04.html. The Indian Patent Act, 1970 was amended by the Patents Amendment Ordinance, 2004 (Third Amendment), which was amended by the Patents Act, 2005. Press Release, Press Information Bureau, Gov’t of India, Important Changes Incorporated in the Patents (Amendment) Bill, 2005 As Compared to the Patents (Amendment) Bill, 2003 (Mar. 23, 2005), available at http://pib.nic.in/newsite/erelease.aspx?relid=8096. In the wake of the new amendments, India essentially ended thirty-plus years of unfettered protection for Indian pharmaceutical companies and greatly weakened the generics pharmaceutical industry’s power.

3. Reactions to India’s Recognition of the Patentability of Pharmaceuticals

Swift global criticism came soon after. The Global Campaign Against Indian Patents Amendment argued that it was critical that people not lose their supply of generic medicines and that India’s move towards increased patentability of drugs would be a huge setback to public health. 106See Devraj, supra note 105. A New York Times editorial lambasted India’s decision to comply with TRIPS, characterizing it as having “little to do with free trade and more to do with the lobbying power of the American and European pharmaceutical industries.” 107Editorial, India’s Choice, N.Y. Times, Jan. 18, 2005, at A20. The editorial highlighted implications to the world’s poor, adding: “India’s government has issued rules that will effectively end the copycat industry for newer drugs. For the world’s poor, this will be a double hit—cutting off the supply of affordable medicines and removing the generic competition that drives down the cost of brand-name drugs.” 108Id.

F. Key Provisions of India’s New Patent System

Despite these dramatic changes in India’s patent system, the system still did not fully mirror the patent regimes of Western countries and World Trade Organization members. In fact, India implemented certain safety valves in its amendments, to keep its patent system favorable to Indian generic drug manufacturers and provide low-cost drug access to its population. The provisions of the amended 1970 Act set a higher bar than Europe and the United States for approving patents, according to the head of the Indian Pharmaceutical Alliance, a Mumbai-based industry group. 109Geeta Anand, Drug Makers Decry Indian Patent Law, Wall St. J. (Feb. 11, 2010), available at http://online.wsj.com/article/SB10001424052748703455804575057621354459804.html. These provisions consist of: Section 2(1)(j)’s “inventive step,” Section 92A’s “compulsory licensing,” and—the most controversially—Section 3(d)’s “efficacy” requirement.

1. Section 2(1)(j) “Inventive Step”

The first key provision in the amendment, Section 2(1)(j), redefined “invention” as a “new product or process involving an inventive step and capable of industrial application.” 110The Patents (Amendment) Act, 2005, No. 15, § 2(1)(j), Acts of Parliament, 2005; Nair, supra note 60, at 436. The amendment further defined “inventive step” as involving “technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art.” 111Id. § 2(1)(ja).; Press Information Bureau, supra note 105. In essence, Section 2(1)(j) is an analog of the non-obviousness requirements of Western patent regimes.

2. Section 92A “Compulsory Licensing”

The next key provision, Section 92A, was incorporated with the intent to protect India’s domestic pharmaceutical industry and provide its population with access to low-cost drugs. It gives India broad discretion to allow compulsory licensing for exports of patented pharmaceutical products to Least Developed Countries (“LDCs”) that lack sufficient manufacturing capabilities. 112Id. § 92A; Press Information Bureau, supra note 105. “[C]ompulsory licenses allow third parties to exploit a patented invention without the consent of the patentee. They therefore deprive patentees of their most important right, i.e. the right to say ‘no’ to the exploitation of their invention by third parties.” 113Enrico Bonadio, Compulsory Licensing of Patents: The Bayer/Natco Case, 10 Eur Intell. Prop. Rev. 719, 720 (2012). In fact, “India’s compulsory licensing provisions are undoubtedly the broadest and most comprehensive of all the world’s patent systems.” 114Mueller, supra note 3, at 580. A compulsory license may be granted on grounds that go “much beyond national emergency and extreme[ly] urgent situations, public health cris[e]s and anti-trust situations,” 115Manojit Saha, Drug Patent: A Viagra for Indian Pharmaceutical Industry, Deccan Herald (Apr. 4, 2005), http://www.deccanherald.com/Deccanherald/Apr42005/93626200543.asp. including the unavailability of the patented invention at a “reasonably affordable price.” 116Mueller , supra note 3, at 580. As a result, the Indian government reserves the power to force a pharmaceutical company to license its patented drug to a generics manufacturing company. 117 Id.

3. Section 3(d) and the “Increased Efficacy” Requirement

The most controversial provision, and the highest source of concern for the pharmaceutical industry, is Section 3(d) of the Act. It is the Indian Patents Act’s principal section regarding patent eligibility. Further restricting the scope of patentability, particularly for pharmaceutical inventions, Section 3(d) states that a patent may not be granted for:

[T]he 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 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. 118The Patents (Amendment) Act, 2005, No. 15, § 3(d) Acts of Parliament 2005 (emphasis added); see also Press Information Bureau, supra note 105 (“Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”).

As discussed later, in a 2008 decision, the Madras High Court imposed a strict interpretation of “efficacy.” 119See discussion infra Part II.D. In order to pass Section 3(d)’s “efficacy” requirement, the drug must have “substantial therapeutic efficacy” or a “healing effect on the body.” 120Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 13 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121.

From this interpretation, patents will only be granted in India to those pharmaceutical products that possess significantly enhanced “efficacy.” 121See id. Thus, Indian drug patent law bars minor improvements on drugs, essentially banning evergreening, 122Evergreening, Eur. Generics Medicines Ass’n, http://198.170.119.137/gen-evergrn.htm (last visited Oct 19, 2012) (“Evergreening, in one common form, occurs when the brand-name manufacturer literally ‘stockpiles’ patent protection by obtaining separate 20-year patents on multiple attributes of a single product.”) by which drug firms participate in “redundant extensions and the creation of ‘next generation drugs’ which result in superfluous variation to a product and then patenting it as a new application.” 123Inderjit Singh Bansal et al., Evergreening—A Controversial Issue in Pharma Milieu, 14 J. Int. Prop. Rts. 299, 300 (2009). In effect, a drug patent holder may not restrict or prevent competition from generic manufacturers by baselessly extending the patent term.

In spite of the anti-competitive effect of these three provisions, foreign pharmaceutical companies showed renewed interest in India, as will be explored in the next sections.

G. Implications of India’s New Patent Regime

Before India’s accession to the TRIPS obligations, MNCs, which are heavily involved in research and development of drugs, were extremely hesitant to enter India’s heavily regulated, xenophobic, and unprotected pharmaceutical industry. 124Mueller, supra note 3, at 533. However, firms that had a foothold in India’s pharmaceutical realm prior to the 1970 Act desired an opportunity to reassert control of lost shares in India’s pharmaceutical market. 125See id. at 533 & n.237. Newer multinational corporations hungrily eyed a deeper, lasting entry into India’s pharmaceutical industry. 126Id. India became highly attractive to foreign MNCs as a result of India’s newfound protection of pharmaceutical patents, India’s shift to a liberalized economy from its old protectionist ways, and diminishing returns on MNCs pharmaceuticals in the West. 127The Drugs Industry: Battling Borderless Bugs, Economist (Jan. 7, 2012), http://www.economist.com/node/21542410. Emerging markets’ share of global drug spending is projected to jump from twelve percent in 2005 to twenty-eight percent in 2015. 128Id. Additionally, India’s rising incomes and rates of chronic disease are projected to possibly push sales of pharmaceutical drugs in India from $12 billion in 2010 to $74 billion in 2020. 129Indian Drug Patents: Taking Pains, Economist (Sept. 8, 2012), http://www.economist.com/node/21562226?fsrc=rss|bus; see also Aaron Smith, Report: Indian Drug Market to Reach $20B, CNNMoney.com (Aug. 22, 2007), http://money.cnn.com/2007/08/22/news/companies/india_pharma/index.htm. The opportunities in India became irresistible, and several MNCs have established domestic firms in India. 130MNCs that have entered into the fray include “Abbott Laboratories India Ltd., AstraZeneca Pharma India Ltd., Burroughs Wellcome India Ltd., E-Merck (India) Ltd., Glaxo India Ltd., Hoechst Marion Roussel Ltd., Novartis India Ltd., Pfizer Ltd., Sanofi Aventis, and Smithkline Beecham Pharmaceuticals (India) Ltd.” See Mueller, supra note 3, at 533–34.

II. The Renewed Clash of MNCs and India’s Patent System

A new drug war in India has begun to brew as the Indian government has not welcomed the MNCs with open arms. 131Shubham Batra, No Cartel, Says Govt on Pharma MNCs’ Local Buys, Indian Express (June 4, 2010), http://www.indianexpress.com/news/no-cartel-says-govt-on-pharma-mncs—local-buys/629397/ In fact, many MNCs have been met with stringent opposition by patient drug advocates and generics lobbyists. 132See Michael Factor, Indian Generic Pharma Companies Delay Patent Protection by Pre Grant Opposition Proceedings, IP Factor (Oct. 25, 2006, 7:51 PM), http://blog.ipfactor.co.il/2006/10/25/indian-generic-pharma-companies-delay-patent-protection-by-pre-grant-opposition-proceedings/ With pressure from these interest groups, as well as the Indian government’s interest in providing quality pharmaceutical products at a low cost to its populace, India has taken dramatic measures to promote the Indian domestic drug industry, such as instituting a $5.4 billion policy in July 2012 to provide free generics through doctors’ prescriptions and banning doctors from prescribing branded drugs. 133Henry Foy, RPT-India to Give Free Generic Drugs to Hundreds of Millions, Reuters (July 5, 2012, 9:25 AM IST), http://in.reuters.com/article/2012/07/05/india-drugs-idINL3E8I518S20120705. KPMG partner Chris Stirling, European head of Chemicals and Pharmaceuticals, stated that MNCs may need to rethink their global strategy: “Without a doubt, it is a considerable blow to an already beleaguered industry, recently the subject of several disadvantageous decisions in India. . . . Pharmaceutical firms will likely rethink their emerging markets strategies carefully to take account of this development, and any similar copycat moves across other geographies.” 134Id. He added: “The move will please the generics manufacturers who stand to gain substantially in competing for contracts.” 135Id.

More controversially, the Indian Patent Office and Indian courts have made a string of legal decisions barring MNCs from coveted patents on their drugs and pharmaceuticals. However, rather than abandoning expansion into India as MNCs did in India’s post-colonial era, these MNCs have vehemently challenged India’s drug patent laws, putting the nascent drug patent regime and its laws to the test. 136Drugs and Emerging Markets: Tripped Up, Economist (Sept. 8, 2012), http://www.economist.com/node/21562204. An examination will be made of the legal battles between foreign pharmaceutical MNCs and Indian domestic drug firms over the three key provisions of the new patent regime, culminating into a monumental patent showdown that substantially altered the landscape of Indian patent jurisprudence—Novartis v. Union of India.

A. Pfizer and Section 2(1)(j)’s “Inventive Step”

In 2007, Pfizer won patent protection for its drug Sutent, 137Tracy Staton, India Nixes Pfizer’s Patent on Cancer-Fighter Sutent, FiercePharma (Oct. 4, 2012), http://www.fiercepharma.com/story/india-nixes-pfizers-patent-cancer-fighter-sutent/2012-10-04. a cancer drug used to treat abnormal protein kinase activity. 138Rajiv Kr. Choudhry, Breaking News: Cipla Succeeds in Revoking Pfizer/Sugen’s Patent on Sunitinib, Spicy IP (Oct. 3, 2012), http://spicyipindia.blogspot.com/2012/10/breaking-news-cipla-succeeds-in.html. Soon after, Cipla and Natco, in a post-grant opposition to the Delhi patent office, challenged the grant of the patent. 139Staton, supra note 137. On September 24, 2012, in a win for the generics industry, the patent office revoked Pfizer’s Sutent patent. 140C.H. Unnikrishnan, India Revokes Patent for Pfizer’s Sutent, Livemint (Oct 5. 2012. 1:28 AM IST), http://www.livemint.com/Companies/nAHUvoEXEzEXXiC66jG6ZI/India-revokes-patent-for-Pfizers-Sutent.html. The Delhi Controller of Patents had found an “insufficient difference” between the chemical structure of Sutent and the compounds claimed in three prior patents disclosing molecules that modulate tyrosine kinase activity. 141Charlotte Harrison, Indian Patent Office Throws Out Sutent Patent, 11 Nature 824, 824 (2012). As a result, the invention claimed in Pfizer’s patent did not involve any “inventive step” and was obvious: Under Section 2(1)(j) of the Patents Act, 1970, Pfizer was not entitled to a patent for Sutent. 142Unnikrishnan, supra note 140.

Critics have lambasted the decision as erroneous because, “[i]n the chemical arts, even a slight variation can cause a diametrically opposite result.” 143Choudhry, supra note 138. Rajiv Choudhry of Saikrishna & Associates, a leading IP law firm in New Delhi, argued that the chemical arts can lead to unpredictable results, stating that “the Controller assumed that structurally similar compounds would result in similar activity, despite it being widely accepted among medical chemists—and indeed argued in the hearing—that this is almost never the case.” 144Harrison, supra note 141. A Pfizer spokesperson stated that the company was disappointed with the decision and plans to make an appeal, arguing that the “ruling may further deter innovative companies from engaging in local partnerships and investing in the healthcare industry in India.” 145India’s Patent Office Revokes Sutent Cancer Drug Patent, World Intell. Prop. R., (Feb. 14, 2013), http://www.worldipreview.com/news/india-s-patent-office-revokes-suten-cancer-drug-patent.

B. Bayer’s Compulsory License and Section 92A

In 2012, the Indian government continued on its anti-Big Pharma path. On March 9, 2012, India’s Controller of Patents forced Bayer’s drug Nexavar, used to treat advanced kidney cancer and liver cancer, into a compulsory license to Natco Pharma Ltd., a generics drug manufacturer. 146Vikas Bajaj & Andrew Pollack, India Orders Bayer to License a Patented Drug, N.Y. Times (March 12, 2012), http://www.nytimes.com/2012/03/13/business/global/india-overrules-bayer-allowing-generic-drug.html?_r=0. The move was unprecedented and marked the first time in the nascent patent regime’s history that India’s Controller of Patents utilized the compulsory licensing power created by the 2005 amendment. 147Id.

The relevant provision, Section 92A, states that a compulsory license may be granted if an invention is unavailable to the public at a “reasonably affordable price.” 148Id. Invoking human and patient rights, the Controller held that, because Bayer priced its drug at $5404 a month, the drug was unaffordable and only benefitted a fraction of Indian patients with liver or kidney cancer. 149Id.; Bonadio, supra note 113, at 721; see also Indian Drug Patents: Taking Pains, supra note 129. Bayer had no sales of Nexavar in India in 2008, and only small quantities were sold in the following two years. 150Bonadio, supra note 113, at 721. Additionally, Natco argued that:

an Indian public sector worker would have to work for three and a half years to be able to buy a single month’s treatment at [Bayer’s drug] price. As the life expectancy of [patients needing this drug] is not more than four months, that worker would not have time to earn the money to purchase the drug. 151Id.

Bayer challenged the compulsory license, arguing that the price was reasonable and merely reflected research and development costs of the drug. 152Id. The Controller rejected that argument, taking the position that “reasonably affordable price” is to be construed solely with reference to the needs of the general public and not the needs or interests of the patentee. 153Id. at 721–22. Bayer could have avoided compulsory licensing if it had differentiated its drug pricing according to different economic and social strata in the Indian population. 154Id. at 721. Instead, Bayer sold its drug at a similar price to all patients around the world. 155Id. On September 14, 2012, in a major blow to Big Pharma, India’s Intellectual Property Appellate Board (“IPAB”) rejected Bayer’s plea on behalf of its cancer drug, affirming the compulsory license. 156R. Sivaraman, Bayer Plea Against Natco on Cancer Drug Dismissed, Hindu (Sept. 16, 2012), http://www.thehindu.com/news/national/article3901725.ece.

Despite the numerous setbacks for Bayer, the global pharmaceutical giant is determined to challenge India’s patent laws. Bayer appealed the decision of India’s IPAB not only to protect its drug Nexavar, but also to try to stymie future instances of compulsory drug licensing. 157See Shuchman, supra note 1. In the meantime, the generics manufacturer Natco is free to manufacture, market, and sell the drug. 158Id. In exchange for the compulsory license, Natco must pay Bayer a royalty fee of six percent of its net sales. 159Id. Additionally, Natco is required to sell the drug for 8800 rupees a month. 160Id. Notably, this price is significantly lower than the price of Bayer’s branded drug—only about three percent of the 280,000 rupees that Bayer normally charges to Indian patients. 161Id. As a last requirement, the IPAB held that Natco’s generic version of the drug can be used only in India and not abroad. 162Id.

Similarly, poorer developing countries, such as Indonesia, Thailand, and Malaysia, have justified compulsory license programs on public health ground, a right these countries obtained through multilateral agreements. 163Id. Notably, it was the Indonesian, Thai, and Malaysian governments that invoked the compulsory licenses and directed distribution of inexpensive generic drugs to their citizens. 164Id. In contrast, in the Bayer case, India’s compulsory licensing of Nexavar marked the first instance in which such a license was given to a private company rather than to a government. 165Id. Additionally, in the past, compulsory licenses have only been invoked for HIV and AIDS treatments, because of their epidemic nature. 166Id. In India, compulsory licensing was imposed on a drug used to treat cancer, establishing a new precedent as to what sort of drugs may justify compulsory licensing. 167See id.

Global drug companies are apprehensive that this precedent will open the gates for other such licenses to be granted in compulsory fashion throughout the developing world. 168Id. A Bayer spokesperson declared that the compulsory licensing order “damages the international patent system and endangers pharmaceutical research.” 169Id. Further, “[t]he limited period of marketing exclusivity made possible by patents ensures that the costs associated with the research and development of innovative medicines can be recovered.” 170Id. Shamnad Basheer, a professor at West Bengal National University of Juridical Sciences and an expert in legal issues surrounding Indian pharmaceuticals, counters, “I think [compulsory licensing is] the way forward. . . . In the entire debate about patents, this is the middle path.” 171Bajaj & Pollack, supra note 146.

C. Pharmaceutical MNC Patents and Section 3(d)

In addition to traditional strategies for challenging drug patents such as anticipation and Section 2(1)(j), Indian generic drug firms are learning how to use Section 3(d) as a powerful tool to invalidate drug patents. Indian drug firms and generics advocates invoked Section 3(d) during Hoffman-La Roche and Boehringer Ingelheim’s pursuit in obtaining drug patents for Valcyte and Nevirapine, respectively.

1. Hoffman-La Roche’s Valcyte Patent

In June 2007, the Chennai Patent Office granted a local patent to Swiss drug maker Hoffman-La Roche for Valcyte, an ester of an existing intravenous anti-viral drug—ganciclovir—which was invented in the 1980s. 172Latha Jishnu, Why Roche Lost a Patent Battle in India, Rediff (May 13, 2010), http://business.rediff.com/column/2010/may/13/guest-why-roche-lost-a-patent-battle-in-india.htm. Roche developed Valcyte in order to make the drug more orally bioavailable, or easier to be absorbed by the body as oral medicine 173Id. Bioavailability is “[t]he ability of a drug or other substance to be absorbed and used by the body. Orally bioavailable means that a drug or other substance that is taken by mouth can be absorbed and used by the body.” Bioavailable, NCI Dictionary of Cancer Terms, http://www.cancer.gov/dictionary?cdrid=44225 (last visited Jan. 18, 2012). Valcyte is primarily used to prevent infections in patients who have undergone organ transplants. 174Id. However, doctors also broadly use the drug to treat those affected by HIV-AIDS and help avert both blindness and death in such patients. 175Id.

Almost immediately after the patent was issued to Hoffman-La Roche, four Indian drug companies, Ranbaxy Laboratories, Cipla, Bakul Pharma, and Matrix Labroatories, plus a handful of patient groups, challenged the patent. 176Jishnu, supra note 172. Declaring the Valcyte patent invalid, the drug firm Cipla began manufacturing its own generic equivalent, Valcept, without Roche’s permission. 177Id. Almost three years after having first granted the Valcyte patent, the patent office revoked Hoffman-La Roche’s patent in a post-grant opposition motion under Section 3(d) of the Indian patent laws. 178Swiss Co Roche Loses Patent on Anti-Viral Drug Valcyte, Econ. Times (May 6, 2010, 2:14 AM IST), http://articles.economictimes.indiatimes.com/2010-05-06/news/28394772_1_patent-office-valcyte-patent-grants. Drawing upon the Madras High Court’s 2008 Novartis decision articulating a narrow “therapeutic efficacy” standard to satisfy Section 3(d), the patent office held that Hoffman-La Roche’s Valcyte did not pass muster. 179F. Hoffmann-La Roche AG v. Ranbaxy Laboratories Ltd., paras. 49, 57 (Office of the Controller General of Patents, Designs & Trade Marks, Apr. 30, 2010), available at http://www.ip-watch.org/weblog/wp-content/uploads/2010/05/valgancyclovir_decision_final.pdf; see also Shamnad Basheer & T. Prashant Reddy, The “Efficacy” of Indian Patent Law: Ironing Out the Creases in Section 3(d), 5 Scripted 232, 240–41, 243 (2008); Swiss Co Roche Loses, supra note 178. Despite the fact that Valcyte was created as a different ester for use as oral medicine, the patent office found that Valcyte was merely a variation of an existing drug and thus lacked the necessary “therapeutic efficacy” for patentability. 180F. Hoffmann-La Roche AG, para. 49–50; see also Jishnu, supra note 172.

The decision seems to suggest that increased bioavailability of the drug does not necessarily meet the “therapeutic efficacy” requirement of § 3(d). The patent office failed to even specify a level of bioavailability that would suffice as “substantial therapeutic efficacy.” 181Basheer & Reddy, supra note 179, at 240. Still, the ruling sent foreign drug companies a “firm message that India will not permit incremental drug innovations” and that “Section 3(d) of the patent law will be applied scrupulously.” 182Litha Jishnu, The Roche Test, Bus. Standard, (last updated May 13, 2010, 12:49 AM), http://www.business-standard.com/article/opinion/latha-jishnu-the-roche-test-110051300042_1.html.

2. Boehringer Ingelheim’s Nevirapine Patent

German drugmaker Boehringer Ingelheim (BI) sought a patent for a “hemi-hydrate solution” version of anti-retroviral Nevirapine. 183Shamnad Basheer, AIDS Patent Rejection: Differential Patentability Standard for Essential Drugs?, Spicy IP (June 29, 2008), http://spicyipindia.blogspot.com/2008/06/aids-patent-rejection-differential.html. This “hemi-hydrate solution” version facilitates increased stability of the compound, which allows for the creation of a syrup version of Nevirapine—useful for patients who find it difficult to take Nevirapine in other forms. 184Basheer, supra note 183. Additionally, the smaller particle size allowed for longer storage of the drug. 185Id. In 2006, AIDS patients groups filed pre-grant oppositions against BI’s patent application. 186Mukherjee, India Disapproves Anti-AIDS Drug Plea, Times of India, Jun. 21, 2008, at 20, available at http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JUFUvMjAwOC8wNi8yMSNBcjAyMDA0& Mode=HTML&Locale=english-skin-custom. In 2008, the Indian Patent Office ruled that BI was not entitled to a patent for Nevirapine Hemihydrate. 187Id. Relying on the 2008 Madras High Court decision, the patent office found that Nevirapine Hemihydrate’s advantages of longer storage and syrup-form did not constitute an increase in “therapeutic efficacy”:

Improved particle size stability means that someone who is able to make aqueous solution of Nevirapine Hemihydrate can store it for longer in the shelf. However the “therapeutic” effect of Nevirapine, whether in hemihydrate or anhydrous form or whether administered in aqueous, tablet, parenteral or any other dosage form would remain the same. 188Basheer, supra note 183.

As a result, Section 3(d) continued to be an effective powerful strategy to block large pharmaceutical companies from obtaining drug patents. As BI’s battle to secure a drug patent came to an end, Novartis’ battle continued to rage on.

D. The Patent Showdown: Novartis v. Union of India

In a landmark test case of what is patentable and how much protection MNCs can get from Indian generic competitors under India’s new patent regime, the Chennai patent board refused to grant Novartis, a Swiss-based drug giant, a patent for Glivec, the blockbuster cancer drug imatinib mesylate in 2006. 189Priya Shetty, Novartis Challenges India’s Patent Law, Nature (Mar. 21, 2012), http://www.nature.com/news/novartis-challenges-india-s-patent-law-1.10262. In response, in 2007, Novartis mounted a challenge to the constitutionality of Section 3(d), 190Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 1 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121; see also Shetty, supra note 189. which states that a patent may not be granted for substances that are not substantially more efficacious than earlier versions on which patents had expired. 191The Patents (Amendment) Act, 2005, No. 15, § 3(d), Acts of Parliament, 2005. Novartis simultaneously argued that Section 3(d)’s requirement for an invention to have “enhanced efficacy” was vague. 192See Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 3 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121. (Madras High Court Aug. 6, 2007). Without any guidelines as to the definition of “enhanced efficacy,” the patent office would, in essence, have “uncontrolled discretion” in determining what inventions met the “enhanced efficacy” standard. 193The court noted the potential dangers of construing “enhanced efficacy” without any guidelines to its meaning:[U]nless there are some guidelines in the amended section itself to understand the expression ‘enhancement of the known efficacy’ namely, what would be treated as ’enhanced efficacy’, an uncontrolled discretion is given to the Patent Controller to apply his own standards, which may not be uniform, in deciding whether there is enhancement of the known efficacy of that substance. Such wide discretion vested with a Statutory Authority without any guidelines to follow, would result in arbitrary exercise of power. In other words, the Patent Controller may be in a position to decide any case, based on his whims and fancies namely, whether there is enhancement in the known efficacy or not.Id.

The High Court rejected Novartis’ arguments and upheld Section 3(d). 194Id. para. 19. Most importantly, the High Court clarified that efficacy under Section 3(d) had a narrow meaning—specifically, a “therapeutic effect in healing a disease,” 195Id. para. 13. effectively denying Novartis of a patent on Glivec. 196Leena Menghaney, Question of Efficacy, Frontline (Apr. 21, 2012), http://www.frontline.in/static/html/fl2908/stories/20120504290802200.htm.

In the latest conflict of the over six-year-long pharmaceutical war, Novartis swiftly appealed the holding to the Indian Supreme Court, challenging the legal interpretation of Section 3(d). 197Shetty, supra note 189. A Novartis spokesman argued, “[w]e are being accused of evergreening. Having that concept applied to Glivec, which was one of the major breakthroughs in cancer therapies, is completely ridiculous.” 198Indian Drug Patents: Taking Pains, supra note 129. Another Novartis Spokesman added, “[w]e strongly believe safeguarding incentives for innovation through the granting of patents leads to better medicines for patients without options.” 199Shuchman, supra note 1.

Hearings for Novartis v. Union of India before the India Supreme Court began on September 11, 2012, determining the future of drug patents in India. 200Indian Drug Patents: Taking Pains, supra note 129. In a crushing blow to pharmaceutical MNCs, the India Supreme Court upheld the Madras High Court’s narrow interpretation of efficacy in Section 3(d):

Efficacy means “the ability to produce a desired or intended result.” Hence, the test of efficacy in the context of section 3(d) would be different, depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be “therapeutic efficacy.” The question then arises, what would be the parameter of therapeutic efficacy and what are the advantages and benefits that may be taken into account for determining the enhancement of therapeutic efficacy? 201Novartis AG v. Union of India, Nos. 2706-2716 of 2013, para. 180 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

In essence, the Court emphasized that the definition of efficacy must be viewed in a medicinal context: “therapeutic efficacy.” 202Id. at 91 (“What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.”). The Court clearly affirmed, “we have no doubt that the ‘therapeutic efficacy’ of a medicine must be judged strictly and narrowly.” 203Id.

III. The Way Forward: India Must Give a Broader Scope to the Efficacy Requirement of Section 3(d)

Subpart A of this Comment will lay out current competing interests between pharmaceutical MNCs and India’s needs. Subpart B will recap Section 3(d) jurisprudence and recommend that the efficacy requirement in Section 3(d) should be interpreted broadly. Next, Subpart C will argue that a broad interpretation of Section 3(d) will not be destructive to India’s generic drugs industry or patients. Building upon the previous sections, Subpart D asserts that a broad interpretation of Section 3(d) will actually be beneficial to India’s drug industry because it will steer India into drug innovation and ward off generic drugs competition from other countries.

A. Balance Between Drug Innovation and India’s Needs is Necessary

From the outcomes of the legal battles between the generics industry and Pfizer, Bayer, Hoffman-La Roche, and Boehringer Ingelheim, India has made clear to the world that it will aggressively protect its domestic generics industry. Pharmaceutical MNCs have yet to win a decisive battle in patenting their drug innovations. The Indian legal system has given no indication that it will provide MNCs with any sort of relief. Although the Indian government’s intent to secure low-cost life-saving drugs to its population is laudable, it is taking an extremely limited view.

Overzealous anti-patentee decisions could have a devastating effect on the future of India’s drug industry. Foreign drug companies now face a torrent of disincentives in bringing innovative drugs and investments to India. Research and development (“R&D”) costs for creating new drugs are exorbitantly high. Clinical trials testing the drug’s safety and effectiveness—which competing generics manufacturers can “free ride” on for regulatory approval of their own drug products—require immense investments. 204See Benjamin N. Roin, Unpatentable Drugs and the Standards of Patentability. 87 Tex. L.R. 503, 508 (2009). When accounting for the extraordinarily high failure rate of drugs during clinical trials evident in Big Pharma during the past decade, foreign drug firms spent on average $4 billion in research dollars for every drug that was approved. 205See John Carroll, High Price of Failure Drives Drug Development Costs Into the Stratosphere, FierceBiotech (Feb. 10, 2012), http://www.fiercebiotech.com/story/high-cost-failure-drives-drug-development-costs-stratosphere/2012-02-10; Matthew Herper, The Truly Staggering Cost of Inventing New Drugs, Forbes (Feb. 10, 2012, 7:41 AM), http://www.forbes.com/sites/matthewherper/2012/02/10/the-truly-staggering-cost-of-inventing-new-drugs/. AstraZeneca, plagued by clinical trial failures, has spent $12 billion in research money for every new drug approved, as much as the highest selling medicine ever generated in annual sales. 206Herper, supra note 205. Eli Lilly has spent $4.5 billion. 207Id. The main expenses involve costs and resources invested into drugs that fail and do not make it to market. 208Id. According to Forbes, “[i]t really does cost billions of dollars to invent new medicines for heart disease, cancer, or diabetes. The reality is that the pharmaceutical business is in the grip of rising failure rates and rising costs.” 209Id. As a result, without some sort of patent protection, pharmaceutical companies are “rarely willing to develop drugs.” 210Roin, supra note 204, at 505.

These high costs, in conjunction with the recent string of legal disincentives, could very well and stifle innovation and drive pharmaceutical MNCs permanently away from the Indian market. Factoring in rigorous competition from generics manufacturers, pharmaceutical companies are unable to recover R&D costs. 211Id. In the United States, drug firms regularly assess their R&D drug portfolio and abandon products with weak patent protection; as a result, many drugs fail to get to market and benefit the public. 212Id. Pharmaceutical companies may shift R&D investment to more profitable, non-life-saving products such as hair-loss drugs if costs for the former cannot be recouped. 213See Susan Fyan, Pharmaceutical Patent Protection and 3(d): A Comparative Look at India and the U.S., 15 Va. J.L. & Tech. 198, 217 (2010). The potential harm to the public from the loss of life-saving drugs is monumental.

According to the director general of the Organization of Pharmaceutical Producers of India, a trade group that represents major multinational drug companies, the Indian government’s policies “send the wrong signal to the foreign investors about unpredictability of the investment climate in India, the impact of which could be felt even beyond the pharmaceutical sector of the country.” 214Rumman Ahmed & Amol Sharma, Novartis in Fight for Cancer Pill, Wall St. J., Aug. 20, 2012, at B3. Moreover, executives at foreign drug companies believe that India will suffer if it refuses to either recognize patents that are widely accepted outside of India or protect patentees from copycat competitors. 215Geeta Anand, Drug Makers Decry Indian Patent Law, Wall St. J., Feb. 12, 2010, at B1–B2. Gregg Alton, executive vice president of corporate and medical affairs at Gilead Sciences insisted that “[i]f this science and innovation can’t be patented, it is sending a very strong message about how limited India’s patent protections are.” 216Id. Additionally, while the Indian generics industry is pushing hard to implement high barriers to obtaining pharmaceutical patents, this shortsighted view will prevent generics manufacturers from obtaining protection for their own inventions and pharmaceutical advancements if they choose to explore other routes to increase revenue—such as creating drugs. As a result, India’s technological talent and strength may be perpetually trapped in the copycat niche and unable to break out as Indian firms decide to not become innovators in the future.

A balance must be struck. India must provide some assurance to foreign drug companies that have invested billions in new drugs that their investments will be protected from uncompensated copying. India does not have to fully adopt Western-style patent regimes to reassure such companies. To achieve India’s goal of providing low-cost, accessible drugs to its people while also maintaining some semblance of certainty for MNCs and protection to new drugs they seek to patent, India should expand the categories covered under the “efficacy” requirement of Section 3(d) of the Patents Act rather than limit it to products that have a “therapeutic effect in healing a disease.” Other provisions in the Patents Act, such as the “inventive step” provision in Section 2(l)(j) and compulsory licensing in Section 92A, provide sufficient teeth to the Patents Act to keep frivolous patents from issuing.

B. What Should “Therapeutic Efficacy” in Section 3(d) Cover?

Paul Herrling, head of corporate research at Novartis in Basel, Switzerland, argued that the Novartis challenge to Section 3(d) is “about the rewarding of innovation where markets exist, not about impeding access to medicines for poor patients.” 217Shetty, supra note 189. Herrling contended:

We think that [Glivec] is a fundamental breakthrough in medicine. If 3(d) can be used to prevent the patenting of results of innovative biomedical research, it will certainly be a disincentive for both Indian research-based pharmaceutical companies and for foreign companies wanting to be active in India. This would be to the disadvantage of Indian patients. 218Id.

A minority of countries have a provision such as Section 3(d) requiring drug and health-related products to have “therapeutic efficacy” in order to be patentable. 219Argentina and the Philippines are some of the only countries that have followed India’s lead and adopted a similar provision to India’s Section 3(d), although a small number of other countries are considering adopting a similar provision. Patralekha Chatterjee, Novartis Loses Patent Bid: Lessons from India’s 3(d) Experience, Intell. Prop. Watch (Apr. 1, 2013, 11:41 PM), http://www.ip-watch.org/2013/04/01/novartis-loses-patent-bid-lessons-from-indias-3d-experience; Gireesh Chandra Prasad, Copycats Popping Patent Law Pill, Econ. Times (Aug. 13, 2007, 4:01 AM), http://articles.economictimes.indiatimes.com/2007-08-13/news/27677651_1_patent-law-section-3d-dg-shah. Despite the novelty of this provision, India did not define “efficacy” in its Patents Act, nor did it provide any guidelines to what may constitute “efficacy.” Additionally, beyond Novartis, there has been no precedent in the Indian court system that has clearly laid the breadth and scope of Section 3(d). 220Janice M. Mueller, Taking TRIPS to India—Novartis, Patent Law, and Access to Medicines, 356 New Eng. J. Med. 541, 542 (2007) (“The Novartis lawsuit is the first legal challenge to the most controversial safeguard [Section 3(d)], a provision against ‘evergreening’ that targets attempts to patent minor improvements to old drugs.”). For example, as discussed prior, although the Indian legal system took on the issue in Hoffman-La Roche’s bid for a patent, the patent office simply ruled out one criterion as falling under “therapeutic efficacy” of Section 3(d). 221F. Hoffmann-La Roche AG v. Ranbaxy Laboratories Ltd., paras. 49, 57 (Office of the Controller General of Patents, Designs & Trade Marks, Apr. 30, 2010), available at http://www.ip-watch.org/weblog/wp-content/uploads/2010/05/valgancyclovir_decision_final.pdf. Specifically, the patent office excluded a drug’s increased bioavailability as sufficient for meeting the efficacy requirement. 222Id.

One reason for the lack of case law is that Section 3(d) has been under-utilized and infrequently invoked. Because few guidelines exist for the meaning of “enhanced efficacy”, many litigants are perhaps unfamiliar with the strength of Section 3(d)’s exclusion mechanism and may just be beginning to understand how to use it in light of the recent Hoffman-La Roche, BI, and Novartis decisions. Since Section 3(d)’s introduction into the Patent Act in 2005, many uncertainties have swirled around the provision which influence litigants to use more traditional tools for patent exclusion, such as obviousness and anticipation. However, as seen in Novartis, Section 3(d) is becoming the primary means for generics manufacturers to exclude foreign drug companies from obtaining patent protection. 223See Fyan, supra note 213, at 216–17.

As noted earlier, the Madras High Court and India Supreme Court in Novartis implemented an extremely high standard to satisfy Section 3(d), finding that “efficacy” referred to “therapeutic efficacy”: the drug’s effect on healing the body of a disease. 224Novartis, Nos. 2706–2716 of 2013, at para. 180. Yet the courts provided little reasoning or justification for adopting that narrow definition of “therapeutic efficacy.” The Madras High Court relied on a medical dictionary definition, asserting:

The position therefore is, if the discovery of a new form of a known substance must be treated as an invention, then the Patent applicant should show that the substance so discovered has a better therapeutic effect. Darland’s Medical Dictionary defines the expression “efficacy” in the field of Pharmacology as ‘the ability of a drug to produce the desired therapeutic effect’ . . . . Dictionary meaning of “Therapeutic”, is healing of disease—having a good effect on the body. 225Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 13 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121.

The India Supreme Court affirmed the Madras High Court’s interpretation, eschewing the idea of assessing “efficacy” from the viewpoint of a person of ordinary skill in the art and relying on the testimony of two legal experts to define the scope of “therapeutic efficacy.” 226Novartis AG v. Union of India, Nos. 2706-2716 of 2013, paras. 180–96 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212. The Court’s incomplete reasoning left Section 3(d) jurisprudence in question. Rather than clarifying how rigid of an interpretation is required under the “therapeutic efficacy” definition, or even identifying a methodology to ascertain the definition of “therapeutic efficacy,” for future Section 3(d) cases, the Court stated that it need not make a pronouncement on the issue because Novartis failed to provide any evidence to the Court that its drug had any enhanced therapeutic efficacy. 227Id. paras. 187–189.

As a result, although Section 3(d) jurisprudence is still unclear, the Court’s decision to adopt a narrow interpretation of Section 3(d) is problematic. Although a narrow interpretation of Section 3(d) would provide drug manufacturers with notice that any drug must specifically have an increased healing effect on the body, such an interpretation does not serve the policies of India’s patent system, nor does it promote innovation.

This restrictive interpretation excludes too many possible improvements on a drug. For example, increased bioavailability, enhanced lipid solubility, increased heat stability of the chemical drug inside the body, increased shelf-life of the drug, improved drug delivery systems, drugs targeting protein kinases as therapeutic targets, and reduction of microbial growth would all likely fall outside the court’s narrow interpretation of “therapeutic efficacy.” These classes of drug improvements may lead to increased efficiency by allowing patients to take smaller doses of drugs, take fewer combinations of drugs, and prolong the maximal potency of the drugs. Such improvements also increase the chances that the drug will fulfill its desired purpose. But because these improvements do not result in an increased “healing effect” on the body, they do not meet Section 3(d)’s “efficacy” threshold.

Another example includes modification of a vaccine to withstand high temperatures for months—conditions that would destroy normal vaccines. 228Secretariat, World Intell. Prop. Org., Follow-on Innovation and Intellectual Property 8–9 (May 20, 2005) (working paper), available at http://www.wipo.int/export/sites/www/policy/en/global_health/pdf/who_wipo.pdf. This innovation was granted a U.S. patent in 2003. 229U.S. Patent No. 6,623,762 (filed Feb. 16, 2001); see also Secretariat, supra note 228, at 8–9. The advantages state: “By eliminating the need for refrigeration, the technology could save up to $300 million a year in global vaccine costs, which means another ten million children could be protected. Currently 50 percent of all vaccines may be wasted in part due to temperature damage.” 230Secretariat, supra note 228, at 9 (internal citations omitted). However, this advancement does not change the vaccine’s therapeutic function. As a result, these drug improvements and modifications only lead to “non-therapeutic” improvements insufficient to overcome Section 3(d) under Novartis and are unpatentable. A restrictive interpretation of “efficacy” as “therapeutic efficacy” fails to recognize the value of these beneficial and worthwhile advancements.

In addition, the narrow interpretation makes a mistaken assumption in assessing bioavailability of a drug and its purported “therapeutic effect.” For example, a particular drug may lower blood pressure. The only way to deliver this drug into the body is through mucosal administration, but this method provides no bioavailability or absorption by the body. A new modification of the drug, possessing the same lower blood pressure effects, allows oral administration of the drug into the body, which increases bioavailability or absorption into the body. Under the current interpretation of 3(d), since the oral version of the drug has the same “healing effects” as the mucosal administration version, it does not have any “therapeutic efficacy” and may not be protected by a patent. 231Novartis AG v. Union of India, Nos. 2706-2716 of 2013, paras. 180–81, 189–91 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

Further, interpreting “therapeutic efficacy” to only mean “healing effects” may result in perverse incentives for the pharmaceutical industry in the future. Rather than encouraging continual, incremental improvements on drugs, the narrow interpretation of Section 3(d) incentivizes drug innovators to pursue leaps in drug advancement in order to meet the “healing effect” requirement of 3(d) and thus obtain a patent. Given the exorbitant costs of bringing a drug to market, drug innovators will follow avenues that will give them more protection and certainty in recouping costs. This means that incremental improvements on drugs, although possessing desirable effects, will be bypassed due to their likely unpatentability. Access to new drugs that could benefit the public will be few and far between, given the time and resources necessary to develop drugs that truly provide an increased “healing effect” from diseases. Additionally, Shamnad Basheer, a law professor who filed an amicus brief to the court in Novartis, has said that “[i]t would be impractical for drug companies to seek patents only after they have conducted years of clinical trials that could provide definitive proof that updated drugs work better than their older versions.” 232Vikas Bajaj & Andrew Pollack, Patent v. Patient, N.Y. Times, Mar. 7, 2012,at B1, B5.

Given these considerations and those mentioned in Part III of this paper, India should adopt a less restrictive interpretation of “efficacy” in Section 3(d) that includes all the potential and beneficial effects that a new form of a drug may have, such as increased bioavailability, increased heat stability inside the body and outside the body for storage, light stability, and improved drug delivery systems. 233Basheer & Reddy, supra note 179, at 240; see Dhanalakshmi Iyer, Analysis of Section 3(d) of Indian Patent Act, IP Frontline (Apr. 9, 2012), http://www.ipfrontline.com/depts/article.aspx?id=26756&deptid=4#. A less restrictive, plain-meaning interpretation of the scope of “efficacy” is entirely consistent with Section 3(d). The Cambridge Dictionary cites “efficacy” to mean “an ability, especially of a medicine or a method of achieving something, to produce the intended result” and provides a synonym of “effectiveness.” 234Efficacy Definition, Cambridge Dictionaries Online, http://dictionary.cambridge.org/dictionary/british/efficacy?q=efficacy (last visited Oct. 5, 2013). The Indian courts should adopt this definition of “efficacy.”

Some of the most important and renowned inventions produced by Indian drug companies have been inventions that, although efficacious, possess no therapeutic qualities. 235Basheer & Reddy, supra note 179, at 261. For example, CIPRO, a drug manufactured by India’s Ranbaxy, involves an innovative drug delivery system that allows a patient to take just one pill of the drug a day. 236Id. Yet, it does not have “therapeutic efficacy” under the current interpretation. More importantly, an expansive interpretation of Section 3(d) that allows patents on drugs that are safer and easier to use will encourage drug innovators to make continual improvements on drugs, protect worthwhile advancements in drugs, and allow drug innovators to recoup costs related to expensive R&D.

C. A Broad Interpretation of Section 3(d) is Not Fatal to India’s Generics Industry or Patients

Many critics argue that interpretation of “efficacy” in Section 3(d) must remain narrow. According to a spokesperson for Médecins Sans Frontières, a broad interpretation of “efficacy” in Section 3(d) would “‘have a chilling effect’ production of generic drugs in India, affecting ‘all other essential and life-saving drugs, including those for AIDS and TB treatment.’” 237Shetty, supra note 189. Other NGOs are stepping up political pressure by holding demonstrations at Novartis company sites in the United States and protesting at a Novartis shareholder conference in Switzerland. 238Kevin E. Noonan, Indian Supreme Court to Rule on Gleevec Patent, Patent Docs (Mar. 12, 2012), http://www.patentdocs.org/2012/03/indian-supreme-court-to-rule-on-gleevac-patent.html.

However, such criticisms are overstated. A broader interpretation of Section 3(d) is not fatal to the generics industry, nor will it foreclose access of drugs to India’s population. Beyond Section 3(d), India still has in place strong safety valves that will filter out frivolous pharmaceutical patents. For example, India’s Patents Act requires patent seekers to demonstrate that their innovation is nonobvious, not anticipated, and possesses an “inventive step” under Section 2(l)(j). 239The Patents (Amendment) Act, 2005, No. 15, § 2(1)(j), Acts of Parliament, 2005. In fact, the Indian Patent Office has sparingly used Section 3(d) to reject patent applications. In 2011, the Indian Patent Office rendered ninety-seven decisions on patent applications. 240Rajiv Kr. Choudhry, 2011 at the IPO: A Summary of Controller’s Decisions, Spicy IP (Dec. 30, 2011, 6:19 PM), http://spicyip.com/2011/12/2011-at-ipo-summary-of-controllers.html. Of those ninety-seven patent applications, almost half were revoked or rejected for failing to meet Section 2(1)(j)’s “inventive step” requirement, 241Specifically, forty-fourt patent applications out of ninety-seven were revoked or rejected for failing to meet Section 2(1)(j)’s “inventive step” requirement. Id. proving that India’s patent regime has sufficient teeth outside of Section 3(d). As mentioned earlier, Pfizer failed to obtain a patent for Sutent for failing to meet Section 2(1)(j)’s “inventive step” in 2012. 242See supra Part II.A. Additionally, India has considerable leverage in protecting its generic industry and providing drug access to its people through its compulsory licensing provision in Section 92A, which was recently used against Bayer’s drug Nexavar. 243India Rejects Bayer Plea Over Compulsory Licence, World Intell. Prop. R. (Apr. 3, 2013), http://www.worldipreview.com/news/india-rejects-bayer-plea-over-compulsory-licence.

Critics’ concerns that a broad interpretation of Section 3(d) will keep vital drugs out of the hands of the poor may also be alleviated. Many large pharmaceutical companies have implemented donation programs where they provide drugs free of charge to those who need it. For example, Novartis provides Glivec at no cost to more than ninety-five percent of patients in India. 244Kaustubh Kulkarni & Ben Hirschler, Showdown for Big Pharma in India’s Highest Court, Chicago Tribune (Aug. 20, 2012), http://articles.chicagotribune.com/2012-08-20/lifestyle/sns-rt-us-novartis-indiabre87i09m-20120819_1_glivec-generic-drugs-patent-office. Additionally, negotiations with big drug makers have paved the path for tiered pricing regimes where drugs are offered at different prices and calculated using formulas based on average income per head, leading to lower prices in poor countries. 245AntiretroviralV Drug Prices, Avert, http://www.avert.org/antiretroviral-drug-prices.htm (last visited Feb. 7, 2014). According to BI’s chairman,

Preferential pricing is the only way how we can meet both conflicting needs in the fight against AIDS. We can refinance our high research and development costs for innovative, new treatments by the established price system in industrialised countries and can offer affordable medicines to patients in poor countries who otherwise cannot afford antiretroviral medication. 246Keith Alcorn, Boehringer Cuts Nevirapine Price for Developing World, Aidsmap (May 15, 2007), http://www.aidsmap.com/Boehringer-cuts-nevirapine-price-for-developing-world/page/1427267/.

A stronger argument against broadening Section 3(d) is that pharmaceutical companies may use the more expansive provision to promote evergreening of their drugs by making simple, incremental modifications to earlier, existing drugs already patent protected. As a result, India would face a scenario in which companies obtain multiple, successive patents that can then be lengthened for an additional twenty years over and over again. However, this argument fails to recognize the reality that the earlier form of the drug, once it is off-patent, can be used, reverse-engineered, and sold without constraints of the patent monopoly power. 247Noonan, supra note 238. A case in point: The drug omeprazole was first sold as Prilosec and was subsequently modified and then sold as Nexium. 248Id. Yet, omeprazole works sufficiently and has been available as a generic drug to U.S. patients for almost ten years. 249 Id. Both drugs are approved for nearly the same conditions. 250Prilosec vs. Nexium, eMedTV, http://gerd.emedtv.com/prilosec/prilosec-vs.-nexium.html (last visited Feb. 7, 2014). Patients do not have to take Nexium to treat their afflictions. 251Noonan, supra note 238. At least in the United States, fears of evergreening have not yet come to fruition. 252Jonathan J. Darrow, Debunking the “Evergreening” Patents Myth, Harv. L. Rec., Dec. 8, 2010 at 6. Thus, current criticisms should not overshadow the potential benefits of an expansive definition of “therapeutic efficacy.” A broader interpretation of Section 3(d) will bring a stronger balance to the Patents Act and protect the kinds of drugs that will lead to future pharmaceutical breakthroughs.

D. A Less Restrictive Interpretation of Section 3(d) is Good for India’s Domestic Drug Industry

Many argue that Indian drug firms’ ability to obtain patents in India is irrelevant and unimportant to its R&D incentives. 253See Sudip Chaudhuri, Is Product Patent Protection Necessary in Developing Countries for Innovation: R&D by Indian Pharmaceutical Companies After TRIPS 15 (Indian Inst. of Mgmt., Kolkotta, Working Paper No. 614, 2007); see also Basheer, supra note 183, at 264. Indian drug firms’ primary markets are in developed countries such as the United States and European countries, where Indian firms already enjoy access to patent protection. 254Basheer, supra note 183, at 264. As a result, Indian drug firms’ rate of innovation is unaffected by increased patent protection 255Id. in India since the Indian market makes up such a small percent of their revenues.

However, this line of thinking assumes that Indian drug firms can perpetually operate in this environment. It neglects potential dramatic shifts in drug demand and competition around the world. Foreign pharmaceutical MNCs are already experiencing diminishing returns in developed markets, which means Indian drug firms will likely feel the same effects. 256See Nalinakanthi V., Don’t Overdose on MNC Pharma Stocks, Hindu Bus. Line (Apr. 27, 2013), http://www.thehindubusinessline.com/features/investment-world/dont-overdose-on-mnc-pharma-stocks/article4660940.ece. In contrast to developed markets, future revenues and non-linear growth will be realized in emerging markets such as India, where much untapped demand resides in its rural population. 257Basheer, supra note 183, at 264.

In addition, Chinese pharmaceutical companies are posing serious competition to Indian pharmaceutical companies in developed countries, threatening to usurp Indian market share. In India, Chinese drug firms are beating its Indian counterparts at their own game. Major Chinese pharmaceutical companies have flooded low priced drug formulations into the Indian market. 258Ramesh Shankar, Cheaper Import of Chinese Formulations Threaten Indian Formulation Producers, PharmaBiz.com (Feb. 29, 2008, 8:00 IST), http://pharmabiz.com/NewsDetails.aspx?aid=43714&sid=2. In certain cases, “quoted prices [for Chinese drugs] are more than half of the prices prevailing in India.” 259Id. If India continues to box itself into making generics, fueled by the anti-patent measures it has pushed for decades, India will lose its status as the world’s “pharmacy.”

India’s generics industry miracle will not last forever. India must adapt. The solution lies in investing more in R&D and creating its own innovative drugs. This idea gives rise to the scrutiny of India’s restrictive and anti-patent reading of Section 3(d). As mentioned earlier, a narrow interpretation of “efficacy” in Section 3(d) will make it harder for Indian drug firms to obtain pharmaceutical patents, discouraging them from investing substantially in R&D to outcompete China. 260See supra Part III.B. A more balanced, permissive patent regime with a less restrictive interpretation of Section 3(d) would reward pharmaceutical innovation to Indian drug firms and incentivize investments in R&D.

Conclusion

Various competing interests are being played out between Indian generics manufacturers and foreign pharmaceutical companies in India’s patent wars. Lives, both present and future, hang in the balance. It is undeniable that patents incur costs to the public. Patented drugs tend to cost considerably more than generics throughout the patent’s term of protection. However, without patents, a substantial number of drugs would likely fail to develop, and the immense social benefits of those drugs would fail to materialize. India must interpret its laws in a way that will square the public’s interest in gaining access to low-cost, life-saving drugs with the need to promote, incentivize, and protect innovations.

One approach is to give teeth to its patent protection system by lowering Section 3(d)’s extremely high standard for “efficacy.” Rather than narrowly interpreting a drug’s “efficacy” to mean effectiveness in healing the body of a disease, India’s courts should give a plain-meaning definition to “efficacy” such that a new form of an existing drug that yields advantageous properties, such as enhanced bioavailability, temperature stability, or delivery, will be considered “efficacious” and thus patentable. Giving broad scope to Section 3(d) will encourage drug innovators to continue to make incremental improvements and advancements in medicine. Additionally, a less restrictive reading of Section 3(d) will bring some balance to a patent system that has been overwhelmingly anti-patent holder.

India’s interest in protecting its generics industry and providing access to low-cost, life-saving drugs for its people will not suffer from this broader reading because of the Patent Act’s “inventive step” and compulsory licensing provisions. Companies such as Novartis must collaborate and cooperate with developing countries like India to promote access to their life-saving drugs. But, a patent system like India’s, with weak protections and provisions that stifle innovation, is not the answer. Although foreign pharmaceutical companies seem to be the likely beneficiaries of a less restrictive Section 3(d) in the short-term, in the long-term, that interpretation will encourage an already-vibrant Indian generics industry to innovate and become leaders in scientific advancement.

Footnotes

1Lisa Shuchman, India Patent Authority Has Big Pharma Worried, Corp. Counsel (Oct. 15, 2012), .

2William Greene, The Emergence of India’s Pharmaceutical Industry and Implications for the U.S. Generic Drug Market 2–3 (Office Econ., U.S. Int’l Trade Comm’n, Working Paper No. 2007-05-A, 2007), available at http://www.usitc.gov/publications/332/working_papers/EC200705A.pdf; see also Population Reference Bureau, 2012 World Population Data Sheet 8 (2012), available at http://www.prb.org/pdf12/2012-population-data-sheet_eng.pdf.

3Janice 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, 495, 529 (2007).

4Devinder Sharma, When Death Becomes Cheap, Deccan Herald (Apr. 16, 2005), http://archive.deccanherald.com/Deccanherald/apr162005/editpage1614452005415.asp.

5See Mueller, supra note 3, at 533–36.

6Novartis AG v. Union of India, Nos. 2706-2716 of 2013, at 2, 56–57 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

7India’s population was 1.259 billion as of mid-2012. 2012 World Population Data Sheet supra note 2, at 8.

8The world’s population was 7.057 billion as of 2012. Id. at 2.

9Atul Kohli, Poverty Amid Plenty in the New India 79 (2012).

10Gurcharan Das, The India Model, 85 Foreign Aff. 2, 2 (2006).

11See Nat’l Council of Applied Econ. Research, India Science Report: Science Education, Human Resources, and Public Attitude Towards Science and Technology 7, fig.2.2 (2005), available at http://www.insaindia.org/pdf/India_Science_report-Main.pdf (showing that 38.6 percent of all bachelor degrees issued in India in 2004 were awarded to science majors, including majors in the natural sciences, engineering, medicine, and agriculture/veterinary sciences).

12Amy Louise Kazmin, Now These Copycats Have to Discover New Drugs, Businessweek (Mar. 23, 1997), .

13Id.

14Nicholas D. Kristof, Op-Ed., They’re Rounding the First Turn! And the Favorite Is . . ., N.Y. Times, Jan. 17, 2006, at A19.

15See Corruption in India: A Rotten State, Economist, Mar. 12, 2011, at 18.

16Id.

17Id.

18Id.

19World Bank. Poverty and Social Exclusion in India 1–2 (2011).

20Id. at 2.

21Dalits are at the bottom of India’s caste system. Members of India’s higher castes will not touch anything that has come in to physical contact with the Dalits. See India’s Dalits Still Fighting Untouchability, BBC News (June 27, 2012, 00:53 ET), http://www.bbc.co.uk/news/world-asia-india-18394914.

22The term “Adivasi” encompasses the indigenous groups of India. See Adivasi, Intercontinental Cry, http://intercontinentalcry.org/peoples/adivasi/ (last visited Feb. 7, 2014).

23World Bank, supra note 19, at 11.

24Id. at 13.

25Id. at 16.

26Id. at 19–20

27Id. at 20.

28India’s Dalits Still Fighting Untouchability, supra note 21.

29World Bank, supra note 19, at 24.

30Id. at 26–27.

31Heather Timmons & Niharika Mandhana, Victim Dies After Gang Rape Galvanized India Over the Dangers That Women Face, N.Y. Times Int’l, Dec. 29, 2012, at A11.

32See Mamta Kapur & Rajesh Pillania, Economic Environment and Challenges, in Doing Business in India 15 (Pawan S. Budhwar & Arup Varma eds., 2011).

33 See India’s IT Sector to Grow Annually by 25–26 Pct, Says Narayana Murthy, Int’l Bus. Times (Jan. 24, 2011, 6:29 AM), http://www.ibtimes.com/india%E2%80%99s-it-sector-grow-annually-25-26-pct-says-narayana-murthy-258473 (“The IT industry has grown fast over the last 15 years. For example, the industry had about 150,000 employees in 1993, around 500,000 employees in 1999 and today, the industry employs around 2 million employees.”).

34Greene, supra note 2, at 15.

35See id. at 2–3 (“This allowed the domestic industry [to] build up considerable competencies and offer a large number of cheaper ‘copycat’ generic versions legally in India at a fraction of the cost of the drug in the West . . . .”).

36Kazmin, supra note 12.

37Id.

38Id.

39Id.

40Green, supra note 2, at 2.

41Id.

42Indian Pharmaceutical Industry, India Brand Equity Found. (Feb. 2013) http://www.ibef.org/industry/pharmaceuticals.aspx.

43Id.; Ashwin Walunjkar, Indian Drug Outlook Favourable: ICRA & Moody’s, Econ. Times (June 20, 2012, 6:15 PM), http://articles.economictimes.indiatimes.com/2012-06-20/news/32335967_1_patent-protections-product-patent-regime-indian-market.

44Indian Pharmaceutical Industry, supra note 42.

45Id.

46Patently Ambitious: The Global Ambitions of India’s Biggest Drug Firms, Economist (Sept. 4, 2013), .

47Greene, supra note 2, at 2.

48Id.

49Mueller, supra note 3, at 510.

50Id. at 509–10.

51Id. at 507. The British and Indian Patents Act of 1911 created an Indian priority system that was within the British Empire’s system, where an Indian patent applicant “who had, within the previous twelve months, filed a patent application for the same invention in the United Kingdom was entitled to the benefit of the earlier United Kingdom filing date.” Id. The Act also permitted patenting of pharmaceutical products, which allowed MNCs to enforce patents against India’s domestic manufacturers. Id. at 508.

52Id.

53See id. at 510–11.

54See id. at 509–11.

55See id. at 514.

56Id. at 546; Greene, supra note 2, at 2.

57Mueller, supra note 3, at 514.

58Greene, supra note 2, at 2.

59Mueller, supra note 3, at 513–14.

60Gopakumar G. Nair, Impact of TRIPS on Indian Pharmaceutical Industry, 13 J. Int. Prop. Rts. 432 (2008).

61N. Rajagopala Ayyangar, Report on the Revision of the Patents Law 9 (1959).

62 See P. Narayanan, Patent Law 7, 546 (3d ed. 1998).

63Mueller, supra note 3, at 513.

64V.R. Krishna Iyer, Human Health and Patent Law, Frontline (Oct. 14, 2000), http://www.frontline.in/static/html/fl1721/17210790.htm.

65Id.

66Greene, supra note 2, at 2.

67Arvind K. Bansal & Vishal Koradia, The Role of Reverse Engineering in the Development of Generic Formulations, Pharmaceutical Tech. (2005), available at http://www.pharmtech.com/pharmtech/article/articleDetail.jsp?id=173676 (engineering of a drug refers to the process of “[d]etermining the original drug’s excipient content and other formulation optimization steps” to create a generic version of the original drug).

68Greene, supra note 2, at 2.

69Mueller, supra note 3, at 514.

70Greene, supra note 2, at 2.

71Id. at 2–3.

72Mueller, supra note 3, at 514.

73Greene, supra note 2, at 2.

74Id.

75Id.

76Id.

77Id. at 4.

78See Sajeev Chandran, Archna Roy & Lokesh Jain., Implications of New Patent Regime on Indian Pharmaceutical Industry: Challenges and Opportunities, 10 J. Int’l. Prop. Rts. 269, 270 (2005).

79Id.

80Id. at 270, 280.

81Kazmin, supra note 12.

82See Inv. & Tech. Promotion Div., Ministry of External Affairs, Gov’t of India, India’s Economic Reforms, India in Business, http://www.indiainbusiness.nic.in/economy/economic_reforms.htm (last visited Feb. 21, 2013).

83India: In Search of a Dream, Economist (Sept. 29, 2012), http://www.economist.com/node/21563720.

84Inv. & Tech. Promotion Div., supra note 82.

85India: In Search of a Dream, supra note 83.

86Id.

87Id. (“The economy boomed. Wealth and social gains followed, literacy soured, life-expectancy and incomes rose.”).

88Id.

89Kazmin, supra note 12, at 271.

90Nair, supra note 60, at 433.

91Id. at 435.

92Id. at 433–35.

93Greene, supra note 2, at 3.

94Nair, supra note 60, at 433.

95See Rishi Gupta, TRIPS Compliance: Dealing With the Consequences of Drug Patents in India, 26 Hous. J. Int’l L. 599, 603, 616 n.68 (2004).

96Nair, supra note 60, at 435.

97See Mueller, supra note 3, at 497.

98Id. at 518–19.

99See Nair, supra note 60, at 435–36.

100Id. at 437.

101Id.

102Mueller, supra note 3, at 527.

103The Patents (Amendment) Act, 2002, No. 38 , § 24B, Acts of Parliament, 2002.

104Mueller, supra note 3, at 547 (quoting The Patent (Amendment) Act, 1999, No. 17, § 5, Acts of Parliament 1999.

105The Patents (Amendment) Act, 2005, No. 15, § 5Articles of Parliament, 2005; Ranjit Devraj, India Swallows Bitter Bill, Asia Times Online (Mar. 24, 2005), http://www.atimes.com/atimes/South_Asia/GC24Df04.html. The Indian Patent Act, 1970 was amended by the Patents Amendment Ordinance, 2004 (Third Amendment), which was amended by the Patents Act, 2005. Press Release, Press Information Bureau, Gov’t of India, Important Changes Incorporated in the Patents (Amendment) Bill, 2005 As Compared to the Patents (Amendment) Bill, 2003 (Mar. 23, 2005), available at http://pib.nic.in/newsite/erelease.aspx?relid=8096.

106See Devraj, supra note 105.

107Editorial, India’s Choice, N.Y. Times, Jan. 18, 2005, at A20.

108Id.

109Geeta Anand, Drug Makers Decry Indian Patent Law, Wall St. J. (Feb. 11, 2010), available at http://online.wsj.com/article/SB10001424052748703455804575057621354459804.html.

110The Patents (Amendment) Act, 2005, No. 15, § 2(1)(j), Acts of Parliament, 2005; Nair, supra note 60, at 436.

111Id. § 2(1)(ja).; Press Information Bureau, supra note 105.

112Id. § 92A; Press Information Bureau, supra note 105.

113Enrico Bonadio, Compulsory Licensing of Patents: The Bayer/Natco Case, 10 Eur Intell. Prop. Rev. 719, 720 (2012).

114Mueller, supra note 3, at 580.

115Manojit Saha, Drug Patent: A Viagra for Indian Pharmaceutical Industry, Deccan Herald (Apr. 4, 2005), http://www.deccanherald.com/Deccanherald/Apr42005/93626200543.asp.

116Mueller , supra note 3, at 580.

117 Id.

118The Patents (Amendment) Act, 2005, No. 15, § 3(d) Acts of Parliament 2005 (emphasis added); see also Press Information Bureau, supra note 105 (“Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”).

119See discussion infra Part II.D.

120Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 13 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121.

121See id.

122Evergreening, Eur. Generics Medicines Ass’n, http://198.170.119.137/gen-evergrn.htm (last visited Oct 19, 2012) (“Evergreening, in one common form, occurs when the brand-name manufacturer literally ‘stockpiles’ patent protection by obtaining separate 20-year patents on multiple attributes of a single product.”)

123Inderjit Singh Bansal et al., Evergreening—A Controversial Issue in Pharma Milieu, 14 J. Int. Prop. Rts. 299, 300 (2009).

124Mueller, supra note 3, at 533.

125See id. at 533 & n.237.

126Id.

127The Drugs Industry: Battling Borderless Bugs, Economist (Jan. 7, 2012), http://www.economist.com/node/21542410.

128Id.

129Indian Drug Patents: Taking Pains, Economist (Sept. 8, 2012), http://www.economist.com/node/21562226?fsrc=rss|bus; see also Aaron Smith, Report: Indian Drug Market to Reach $20B, CNNMoney.com (Aug. 22, 2007), http://money.cnn.com/2007/08/22/news/companies/india_pharma/index.htm.

130MNCs that have entered into the fray include “Abbott Laboratories India Ltd., AstraZeneca Pharma India Ltd., Burroughs Wellcome India Ltd., E-Merck (India) Ltd., Glaxo India Ltd., Hoechst Marion Roussel Ltd., Novartis India Ltd., Pfizer Ltd., Sanofi Aventis, and Smithkline Beecham Pharmaceuticals (India) Ltd.” See Mueller, supra note 3, at 533–34.

131Shubham Batra, No Cartel, Says Govt on Pharma MNCs’ Local Buys, Indian Express (June 4, 2010), http://www.indianexpress.com/news/no-cartel-says-govt-on-pharma-mncs—local-buys/629397/

132See Michael Factor, Indian Generic Pharma Companies Delay Patent Protection by Pre Grant Opposition Proceedings, IP Factor (Oct. 25, 2006, 7:51 PM), http://blog.ipfactor.co.il/2006/10/25/indian-generic-pharma-companies-delay-patent-protection-by-pre-grant-opposition-proceedings/

133Henry Foy, RPT-India to Give Free Generic Drugs to Hundreds of Millions, Reuters (July 5, 2012, 9:25 AM IST), http://in.reuters.com/article/2012/07/05/india-drugs-idINL3E8I518S20120705.

134Id.

135Id.

136Drugs and Emerging Markets: Tripped Up, Economist (Sept. 8, 2012), http://www.economist.com/node/21562204.

137Tracy Staton, India Nixes Pfizer’s Patent on Cancer-Fighter Sutent, FiercePharma (Oct. 4, 2012), http://www.fiercepharma.com/story/india-nixes-pfizers-patent-cancer-fighter-sutent/2012-10-04.

138Rajiv Kr. Choudhry, Breaking News: Cipla Succeeds in Revoking Pfizer/Sugen’s Patent on Sunitinib, Spicy IP (Oct. 3, 2012), http://spicyipindia.blogspot.com/2012/10/breaking-news-cipla-succeeds-in.html.

139Staton, supra note 137.

140C.H. Unnikrishnan, India Revokes Patent for Pfizer’s Sutent, Livemint (Oct 5. 2012. 1:28 AM IST), http://www.livemint.com/Companies/nAHUvoEXEzEXXiC66jG6ZI/India-revokes-patent-for-Pfizers-Sutent.html.

141Charlotte Harrison, Indian Patent Office Throws Out Sutent Patent, 11 Nature 824, 824 (2012).

142Unnikrishnan, supra note 140.

143Choudhry, supra note 138.

144Harrison, supra note 141.

145India’s Patent Office Revokes Sutent Cancer Drug Patent, World Intell. Prop. R., (Feb. 14, 2013), http://www.worldipreview.com/news/india-s-patent-office-revokes-suten-cancer-drug-patent.

146Vikas Bajaj & Andrew Pollack, India Orders Bayer to License a Patented Drug, N.Y. Times (March 12, 2012), http://www.nytimes.com/2012/03/13/business/global/india-overrules-bayer-allowing-generic-drug.html?_r=0.

147Id.

148Id.

149Id.; Bonadio, supra note 113, at 721; see also Indian Drug Patents: Taking Pains, supra note 129.

150Bonadio, supra note 113, at 721.

151Id.

152Id.

153Id. at 721–22.

154Id. at 721.

155Id.

156R. Sivaraman, Bayer Plea Against Natco on Cancer Drug Dismissed, Hindu (Sept. 16, 2012), http://www.thehindu.com/news/national/article3901725.ece.

157See Shuchman, supra note 1.

158Id.

159Id.

160Id.

161Id.

162Id.

163Id.

164Id.

165Id.

166Id.

167See id.

168Id.

169Id.

170Id.

171Bajaj & Pollack, supra note 146.

172Latha Jishnu, Why Roche Lost a Patent Battle in India, Rediff (May 13, 2010), http://business.rediff.com/column/2010/may/13/guest-why-roche-lost-a-patent-battle-in-india.htm.

173Id. Bioavailability is “[t]he ability of a drug or other substance to be absorbed and used by the body. Orally bioavailable means that a drug or other substance that is taken by mouth can be absorbed and used by the body.” Bioavailable, NCI Dictionary of Cancer Terms, http://www.cancer.gov/dictionary?cdrid=44225 (last visited Jan. 18, 2012).

174Id.

175Id.

176Jishnu, supra note 172.

177Id.

178Swiss Co Roche Loses Patent on Anti-Viral Drug Valcyte, Econ. Times (May 6, 2010, 2:14 AM IST), http://articles.economictimes.indiatimes.com/2010-05-06/news/28394772_1_patent-office-valcyte-patent-grants.

179F. Hoffmann-La Roche AG v. Ranbaxy Laboratories Ltd., paras. 49, 57 (Office of the Controller General of Patents, Designs & Trade Marks, Apr. 30, 2010), available at http://www.ip-watch.org/weblog/wp-content/uploads/2010/05/valgancyclovir_decision_final.pdf; see also Shamnad Basheer & T. Prashant Reddy, The “Efficacy” of Indian Patent Law: Ironing Out the Creases in Section 3(d), 5 Scripted 232, 240–41, 243 (2008); Swiss Co Roche Loses, supra note 178.

180F. Hoffmann-La Roche AG, para. 49–50; see also Jishnu, supra note 172.

181Basheer & Reddy, supra note 179, at 240.

182Litha Jishnu, The Roche Test, Bus. Standard, (last updated May 13, 2010, 12:49 AM), http://www.business-standard.com/article/opinion/latha-jishnu-the-roche-test-110051300042_1.html.

183Shamnad Basheer, AIDS Patent Rejection: Differential Patentability Standard for Essential Drugs?, Spicy IP (June 29, 2008), http://spicyipindia.blogspot.com/2008/06/aids-patent-rejection-differential.html.

184Basheer, supra note 183.

185Id.

186Mukherjee, India Disapproves Anti-AIDS Drug Plea, Times of India, Jun. 21, 2008, at 20, available at http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JUFUvMjAwOC8wNi8yMSNBcjAyMDA0& Mode=HTML&Locale=english-skin-custom.

187Id.

188Basheer, supra note 183.

189Priya Shetty, Novartis Challenges India’s Patent Law, Nature (Mar. 21, 2012), http://www.nature.com/news/novartis-challenges-india-s-patent-law-1.10262.

190Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 1 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121; see also Shetty, supra note 189.

191The Patents (Amendment) Act, 2005, No. 15, § 3(d), Acts of Parliament, 2005.

192See Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 3 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121. (Madras High Court Aug. 6, 2007).

193The court noted the potential dangers of construing “enhanced efficacy” without any guidelines to its meaning:[U]nless there are some guidelines in the amended section itself to understand the expression ‘enhancement of the known efficacy’ namely, what would be treated as ’enhanced efficacy’, an uncontrolled discretion is given to the Patent Controller to apply his own standards, which may not be uniform, in deciding whether there is enhancement of the known efficacy of that substance. Such wide discretion vested with a Statutory Authority without any guidelines to follow, would result in arbitrary exercise of power. In other words, the Patent Controller may be in a position to decide any case, based on his whims and fancies namely, whether there is enhancement in the known efficacy or not.Id.

194Id. para. 19.

195Id. para. 13.

196Leena Menghaney, Question of Efficacy, Frontline (Apr. 21, 2012), http://www.frontline.in/static/html/fl2908/stories/20120504290802200.htm.

197Shetty, supra note 189.

198Indian Drug Patents: Taking Pains, supra note 129.

199Shuchman, supra note 1.

200Indian Drug Patents: Taking Pains, supra note 129.

201Novartis AG v. Union of India, Nos. 2706-2716 of 2013, para. 180 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

202Id. at 91 (“What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.”).

203Id.

204See Benjamin N. Roin, Unpatentable Drugs and the Standards of Patentability. 87 Tex. L.R. 503, 508 (2009).

205See John Carroll, High Price of Failure Drives Drug Development Costs Into the Stratosphere, FierceBiotech (Feb. 10, 2012), http://www.fiercebiotech.com/story/high-cost-failure-drives-drug-development-costs-stratosphere/2012-02-10; Matthew Herper, The Truly Staggering Cost of Inventing New Drugs, Forbes (Feb. 10, 2012, 7:41 AM), http://www.forbes.com/sites/matthewherper/2012/02/10/the-truly-staggering-cost-of-inventing-new-drugs/.

206Herper, supra note 205.

207Id.

208Id.

209Id.

210Roin, supra note 204, at 505.

211Id.

212Id.

213See Susan Fyan, Pharmaceutical Patent Protection and 3(d): A Comparative Look at India and the U.S., 15 Va. J.L. & Tech. 198, 217 (2010).

214Rumman Ahmed & Amol Sharma, Novartis in Fight for Cancer Pill, Wall St. J., Aug. 20, 2012, at B3.

215Geeta Anand, Drug Makers Decry Indian Patent Law, Wall St. J., Feb. 12, 2010, at B1–B2.

216Id.

217Shetty, supra note 189.

218Id.

219Argentina and the Philippines are some of the only countries that have followed India’s lead and adopted a similar provision to India’s Section 3(d), although a small number of other countries are considering adopting a similar provision. Patralekha Chatterjee, Novartis Loses Patent Bid: Lessons from India’s 3(d) Experience, Intell. Prop. Watch (Apr. 1, 2013, 11:41 PM), http://www.ip-watch.org/2013/04/01/novartis-loses-patent-bid-lessons-from-indias-3d-experience; Gireesh Chandra Prasad, Copycats Popping Patent Law Pill, Econ. Times (Aug. 13, 2007, 4:01 AM), http://articles.economictimes.indiatimes.com/2007-08-13/news/27677651_1_patent-law-section-3d-dg-shah.

220Janice M. Mueller, Taking TRIPS to India—Novartis, Patent Law, and Access to Medicines, 356 New Eng. J. Med. 541, 542 (2007) (“The Novartis lawsuit is the first legal challenge to the most controversial safeguard [Section 3(d)], a provision against ‘evergreening’ that targets attempts to patent minor improvements to old drugs.”).

221F. Hoffmann-La Roche AG v. Ranbaxy Laboratories Ltd., paras. 49, 57 (Office of the Controller General of Patents, Designs & Trade Marks, Apr. 30, 2010), available at http://www.ip-watch.org/weblog/wp-content/uploads/2010/05/valgancyclovir_decision_final.pdf.

222Id.

223See Fyan, supra note 213, at 216–17.

224Novartis, Nos. 2706–2716 of 2013, at para. 180.

225Novartis AG v. Union of India, Nos. 24759–24760 of 2006, para. 13 (Madras H.C. Aug. 6, 2007), available at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=11121.

226Novartis AG v. Union of India, Nos. 2706-2716 of 2013, paras. 180–96 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

227Id. paras. 187–189.

228Secretariat, World Intell. Prop. Org., Follow-on Innovation and Intellectual Property 8–9 (May 20, 2005) (working paper), available at http://www.wipo.int/export/sites/www/policy/en/global_health/pdf/who_wipo.pdf.

229U.S. Patent No. 6,623,762 (filed Feb. 16, 2001); see also Secretariat, supra note 228, at 8–9.

230Secretariat, supra note 228, at 9 (internal citations omitted).

231Novartis AG v. Union of India, Nos. 2706-2716 of 2013, paras. 180–81, 189–91 (India Apr. 1, 2013), available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.

232Vikas Bajaj & Andrew Pollack, Patent v. Patient, N.Y. Times, Mar. 7, 2012,at B1, B5.

233Basheer & Reddy, supra note 179, at 240; see Dhanalakshmi Iyer, Analysis of Section 3(d) of Indian Patent Act, IP Frontline (Apr. 9, 2012), http://www.ipfrontline.com/depts/article.aspx?id=26756&deptid=4#.

234Efficacy Definition, Cambridge Dictionaries Online, http://dictionary.cambridge.org/dictionary/british/efficacy?q=efficacy (last visited Oct. 5, 2013).

235Basheer & Reddy, supra note 179, at 261.

236Id.

237Shetty, supra note 189.

238Kevin E. Noonan, Indian Supreme Court to Rule on Gleevec Patent, Patent Docs (Mar. 12, 2012), http://www.patentdocs.org/2012/03/indian-supreme-court-to-rule-on-gleevac-patent.html.

239The Patents (Amendment) Act, 2005, No. 15, § 2(1)(j), Acts of Parliament, 2005.

240Rajiv Kr. Choudhry, 2011 at the IPO: A Summary of Controller’s Decisions, Spicy IP (Dec. 30, 2011, 6:19 PM), http://spicyip.com/2011/12/2011-at-ipo-summary-of-controllers.html.

241Specifically, forty-fourt patent applications out of ninety-seven were revoked or rejected for failing to meet Section 2(1)(j)’s “inventive step” requirement. Id.

242See supra Part II.A.

243India Rejects Bayer Plea Over Compulsory Licence, World Intell. Prop. R. (Apr. 3, 2013), http://www.worldipreview.com/news/india-rejects-bayer-plea-over-compulsory-licence.

244Kaustubh Kulkarni & Ben Hirschler, Showdown for Big Pharma in India’s Highest Court, Chicago Tribune (Aug. 20, 2012), http://articles.chicagotribune.com/2012-08-20/lifestyle/sns-rt-us-novartis-indiabre87i09m-20120819_1_glivec-generic-drugs-patent-office.

245AntiretroviralV Drug Prices, Avert, http://www.avert.org/antiretroviral-drug-prices.htm (last visited Feb. 7, 2014).

246Keith Alcorn, Boehringer Cuts Nevirapine Price for Developing World, Aidsmap (May 15, 2007), http://www.aidsmap.com/Boehringer-cuts-nevirapine-price-for-developing-world/page/1427267/.

247Noonan, supra note 238.

248Id.

249 Id.

250Prilosec vs. Nexium, eMedTV, http://gerd.emedtv.com/prilosec/prilosec-vs.-nexium.html (last visited Feb. 7, 2014).

251Noonan, supra note 238.

252Jonathan J. Darrow, Debunking the “Evergreening” Patents Myth, Harv. L. Rec., Dec. 8, 2010 at 6.

253See Sudip Chaudhuri, Is Product Patent Protection Necessary in Developing Countries for Innovation: R&D by Indian Pharmaceutical Companies After TRIPS 15 (Indian Inst. of Mgmt., Kolkotta, Working Paper No. 614, 2007); see also Basheer, supra note 183, at 264.

254Basheer, supra note 183, at 264.

255Id.

256See Nalinakanthi V., Don’t Overdose on MNC Pharma Stocks, Hindu Bus. Line (Apr. 27, 2013), http://www.thehindubusinessline.com/features/investment-world/dont-overdose-on-mnc-pharma-stocks/article4660940.ece.

257Basheer, supra note 183, at 264.

258Ramesh Shankar, Cheaper Import of Chinese Formulations Threaten Indian Formulation Producers, PharmaBiz.com (Feb. 29, 2008, 8:00 IST), http://pharmabiz.com/NewsDetails.aspx?aid=43714&sid=2.

259Id.

260See supra Part III.B.

Special Content Editor, Emory International Law Review; J.D. Candidate, 2014, Emory University. I wish to give special thanks to my family—Bố, Mẹ, Hiền, and Thành—for their loving support in everything I do. I would also like to thank Professor Anne Rector for her patience, encouragement, and support with this paper. I would like to thank Professor Timothy Holbrook for helping me select this topic. Finally, I would like to thank Courtney Ginn, Jordan Kearney, Christopher Pitts, and the rest of the Emory International Law Review staff for their exceptional editorial help with this paper.