On the heels of Novartis victory taming evergreening of patents on medicines, European Investment Clause proposals in EU-India FTA threaten to undo all gains
By Brook Baker, Senior Policy Analyst
The stunning reaffirmation of India's commitment to prevent evergreening of patent monopolies on medicines has been widely celebrated following the India Supreme Court's decision upholding the rejection of a secondary patent on Novartis' cancer medicine, Glivec. It is widely hoped that the willingness of Indian courts to fairly review and limit patent monopolies on medicines, as they are expressly allowed to do under the WTO TRIPS Agreement, will be repeated in the pending court review of India's first compulsory license to Natco on a Bayer cancer medicine, Nexavar.
However, India's efforts to preserve policy space so as to ensure access to medicines for all, both in India and in developing countries more broadly, is under threat because of an obscure provision that the EU is seeking in its pending trade negotiations with India. Under the so-called investment clause, foreign IP investors, like Novartis and Bayer, will be given rights to sue the Indian government directly whenever their expectations of profit are frustrated by government decisions and policies. Using loose standards like minimum standards of treatment, indirect expropriation, and national treatment, transnational corporations will be able claim that denying patents, granting oppositions, revoking patents, issuing compulsory licenses, and registering generics before patent expiration all violate their expectations for profit.
Threats like this used to be theoretical, but the theoretical has now become real. In November of 2012, Eli Lilly sued the government of Canada for $100 million under NAFTA's investment chapter because Canada had invalidated a patent on a medicine used to treatment attention deficit disorders. The patent was invalidated pursuant to requirements in Canadian patent law that an applicant must satisfy the promise of utility (in India called industrial applicability) by disclosing evidence pointing to a claimed benefit of the medical innovation.
Eli Lilly didn't like this ruling, so it is seeking to greatly expand the accepted meanings of minimum standards of treatment, indirect expropriation, and national treatment to argue that Canada should not be able to have a patent standard on utility and disclosure of utility that is any higher than that currently practiced in the US and EU. It argues further that it should not have to disclose information needed to satisfy patent requirements in Canada that is above and beyond what is required in clearinghouse, patent application forms filed pursuant to the Patent Cooperation Treaty.
If Eli Lilly can file this kind of expansive, topsy-turvy claim in Canada with respect to its decision to revoke a patent, what would prevent Novartis and Bayer to file claims against India because it has adopted strong protections against evergreening in section 3(d) of its Patents Act and allowed compulsory licensing in section 84? In fact, these are exactly the kinds of claims that a major international corporate law firm, Jones Day, is urging companies to file under existing investment clauses that India has ill-advisedly entered into.
Novartis and Bayer, and the rest of Big Pharma, are relentless in their search for monopoly rights and monopoly profits. The right to sue governments directly when their unquenchable thirst for profits is thwarted is a dangerous escalation of corporate power. These kinds of cases are expansive to defend (average cost to governments over $8 million/case) and have cost taxpayers globally nearly $3 billion and counting. Four hundred investor-state cases are currently pending, and pharmaceutical claims, once the floodgates are unlocked, will expand that number.
Indian trade negotiators should heed the demands of trade activists who are warning against the inclusion of an Investment Clause in the EU-India FTA, and particularly the right to bring such cases with respect to alleged IP infringements where the risk of expanded monopolies and reduced access has deadly consequences.
President Obama's 2014 Budget Won't Get Us to the End of AIDS Global Fund: Support Critical, Bilateral Programs Stymied by Cuts
Despite a commitment made by President Obama on December 1, 2011, his 2014 budget proposal puts funding for the President's Emergency Plan for AIDS Relief (PEFPAR), the foreign assistance program that provides much of the world's access to lifesaving AIDS medication and services, near record lows.
The budget that he presented to Congress continues last year's pre-sequester level for the Global Fund to Fight AIDS, TB and Malaria in the amount of $1.65 billion--an important step for this life-saving 3-disease international program. However, the budget proposes just over $4 billion for the bilateral US program, PEPFAR--about $70 million less than Congress passed last year (pre-sequestration).
Reaching the President's promise of an AIDS Free Generation and his smart analysis that spending now will save billions in the long run by halting new infections does not match up with this budget. To reach the tipping point in the epidemic we need to expand programs in Zimbabwe, Malawi, Democratic Republic of Congo, and many other countries, but now PEPFAR will not have the funds to do so.
We are grateful that the President's budget includes increases for the Global Fund to Fight AIDS, TB and Malaria, but both of these programs work together. We can't fully fund one with cash from the other and actually make progress towards an AIDS free generation.
A study released in 2011, called HPTN 052, showed that AIDS treatment was 96% effective in preventing the spread of HIV. This led the U.S. to change it's official policy to seek an "AIDS free generation" on November 8, 2011. AIDS activists had hoped that the change in official policy would be illustrated in the budget. President Obama needs to put his money where his mouth is.
By Professor Brook K. Baker, Senior Policy Analyst
Novartis, its fellow Big Pharma multinationals, Chambers of Commerce, and PhRMA have all roundly denounced India's Supreme Court's decision invalidating Novartis' patent application for Glivec (Gleevec in the United States) and its affirmation of strict anti-evergreening standards of patentability and inventive step in India. As usual, Big Pharma cannot tell the truth about what India has done, what international intellectual property rules require, and what the impact of this decision will be on product introductions in India and innovation of new medicines. Because journalists continue to carry Pharma canards and since observers are anxious to understand whether India's decision is legal or purely instrumental to advance industrial policy in favor of Indian generics, I debunk the major myths with what I hope are convincing facts.
Myth 1: India was obligated to issue a patent on Glivec because it is a superior medicine and because 40 other countries have done so.
Fact: Prior to the effective date of the WTO TRIPS Agreement (January 1, 1995), there was no provision in international law whatsoever requiring any country in the world to grant patents on pharmaceutical products. None. Accordingly, India lawfully adopted a patent law in 1970 that refused to grant patents on pharmaceutical or food products.
When India signed the TRIPS Agreement and became a member of the WTO, it was not required to retroactively grant patents on pharmaceutical products that had been invented before the effective date of the TRIPS Agreement (subject only and arguably to a 1-year grace period for filing after a first application elsewhere).
The initial patent on the active pharmaceutical ingredient in Glivec, imatinib, had first been filed in the U.S. in in April of 1993. That application was later withdrawn and a second application was filed on April 28, 1994, but it had a so-called priority date back in 1992. Accordingly, India was under no obligation whatsoever to recognize this first application, not only because a patent application on it was never filed in India but because India had lawfully declined to grant pharmaceutical product patents at the time of invention.
Thus, it is completely irrelevant that other countries granted patents on the first Glivec patent application. Likewise, it is irrelevant that that Novartis continued to research and modify that compound and that Glivec is an excellent cancer medicine. Everyone agrees it's an excellent cancer medicine, but that doesn't mean it is automatically or retroactively entitled to a patent monopoly.
Myth 2: India was obligated to issue a patent on Glivec's "improved beta crystalline form of imatinib mesylate" discovered/invented in 1997 because it was a new medicine and 40 other countries granted a patent.
Fact: This is the crux of the Indian Supreme Court's decision upholding the strict standards on inventive step and standards of patentability that India adopted in section 2(1)(j) and (ja) and section 3(d). India had flexibility under Art. 1.1 of the TRIPS define strict standards for novelty, inventive step, and industrial applicability. It chose to limit evergreening of pharmaceutical patents by preventing patents on new form, uses, dosages, formulations, and combinations of known medicines or know substances. The "beta crystalline" patent application that Novartis filed in India in 1998, with a 1997 priority date, fell squarely in the middle of the prohibited category. It was purportedly a "new form" of the previously invented substance imatinib and its salt imatinib mesylate.
Even if the beta-crystalline form was the optimized active pharmaceutical ingredient in Glivec (a fact that Novartis did not claim either to the Food and Drug Administration in the United States nor drug regulatory authorities in India), that does not make the modification of the previously known substance patentable.
Novartis claims in its press statements that because Glivec was never marketed using imatinib in its original form and that its beta crystalline form was not a modification of an existing medicine is specious. The Indian Patent Act section 3(d) refers to modification of "known substances," not just known existing medicines.
Myth 3: Novartis' new and improved beta crystalline form of imatinib mesylate showed increased efficacy – it was a "better" drug.
Fact: As the Indian Supreme Court confirmed, section 3(d)'s standard of enhanced efficacy requires that the revised medicines show significantly enhanced therapeutic efficacy when involving a medicine that treats human disease. Novartis only offered evidence of better flow properties, improved temperature stability, and reduced hygroscopy. None of these physical features affect treatment as such. Similarly, Novartis offered some after-the-fact evidence on increased bio-availability but it did so in comparison to imatinib only not imatinib myselate, the appropriate comparison. Even then, increased bioavailability does not directly equate, on its own, with enhanced therapeutic efficacy.
Accordingly, contrary to its claims, Novartis offered no relevant evidence whatsoever that its secondary patent application on Glivec showed enhanced efficacy as required by section 3(d).
Myth 4: India is just favoring its generic industry by this ruling.
Fact: Of course, this ruling will benefit Indian generic companies because they are fully capable of manufacturing generic imatinib mesylate to global standards. However, this ruling also means that companies in countries where Glivec is not patented could also manufacture and export to India. Novartis claims that its patent in Glivec is protected in 40 countries, but that means it does not have a patent in many others. With no patent bar in a country of production and no patent bar in India, a generic company in any of those countries could also benefit from the denial of the India patent on Glivec.
Myth 5: This decision means that India does not respect intellectual property rights and that it is impossible to get a patent on a medicine in India.
Fact: Contrary to this claim, India's Patent Act clearly allows patents on medicines that are either brand new (don't involve a known substance) or are modified sufficiently to offer enhanced efficacy in the treatment or prevention of human illness. Studies show that there have been hundreds of patents on medicines in India since it revised its Patent Act in 2005. In fact, those studies show that India has probably been too lenient in grating weak patents and that it has not properly been applying section 3(d) to weed out evergreening patents. In sum, it is not impossible to get a patent on medicines in India, you simply have to meet lawful strict standards on what is inventive and patentable.
Myth 6: Neither Novartis or other drug companies will patent their medicines in India or bring new medicines to the market.
Fact: Novartis officials made this sad-face prediction on April 1 but by April 2 they had withdrawn this claim and clarified that they would still seek patents in India. And every other Big Pharma company will do so both to gain access to the world's third largest market by volume (one that is growing at an annual rate of 15-20% and that will have $49-$74 billion a year in sales by 2020) and to block Indian generic companies from producing either for the domestic market or the export market (where India is now the largest volume exporter of generics in the world). Big Pharma companies will continue to seek patent monopolies on truly novel medicines and those with major therapeutic improvements - full stop. They will seek to sell to India's growing middle-class and to middle–classes in other countries that Indian generics might otherwise supply.
What Big Pharma won't be able to do is to file new patent applications over and over again on minor modifications and thereby gain many added years of monopoly protections and supra-competitive profits. They'll still make money, but not as much as they had hoped for.
Myth 7: Pharma won't do any future research and development in India or invest in India.
Fact: Big Pharma doesn't site its research and development facilities based on whether there is a maximalist patent regime there or not. Big Pharma does R&D for a global market, not for a particular country. For example, drug companies don't do diabetes research for Indian diabetics in India and for British diabetics in the UK. They site their research facilities where there are good scientists, good infrastructure, favorable taxes, etc. Moreover, Big Pharma companies are buying up Indian generics, contracting manufacturing, and doing clinical trials in India hand over fist. Maybe they're not currently siting their latest greenfield R&D facilities in India, but you can't bet such decisions have nothing to do with India's patent regime.
Myth 8: The Novartis decision undermines the global search for new medicines.
Fact: Of all the canards, this is probably the most ludicrous. Big Pharma makes the vast majority of its profits on sales to rich patients in rich countries. Nearly 75% of global drugs sales by dollar volume in 2011 was in Europe, North America, and Japan. Indian sales comprised less that 2% of global sales. Drug giants do not make R&D decisions or shut down promising drug candidates because they didn't squeeze a little extra profit out of small market.
To the contrary, drug companies waste a lot of research dollars now trying to evergreen existing medicines instead of focusing on truly innovative medicines. They spend nearly 2 1/2 times on marketing and administration as they spend on R&D. Despite the "risks" of R&D they still retain more in profits than they actually spend each year on R&D.
In sum, the Novartis decision will have little or nothing to do with Big Pharma's R&D efforts. But this doesn't mean that continuing innovation isn't important. Nonetheless, it makes little sense to hold poor patients and poor countries hostage for 20 years selling monopoly protected medicines at prices they can't afford. We need a better system for investing in therapeutically targeted innovation, with a variety of push and pull mechanisms, and a better system for sharing global R&D costs that is delinked from the market for selling "generic" medicines at low-cost with minimal mark-ups.
Myth 9: India is engaged in other unlawful IP practices such as issuing compulsory licenses.
Fact: India has issued one compulsory license on an extraordinarily expensive cancer medicine sold by Bayer. Some other high-price cancer medicines are under review to see if India wants to issue government use license (licenses that will leave the lucrative private sector to Big Pharma). However, TRIPS Article 31 specifically allows for compulsory licenses as does the 130 year old Paris Convention as does the 2001 Doha Declaration on the TRIPS Agreement and Public Health. Virtually all countries, including the United States, have compulsory licensing rules on the book. Such licenses are not limited to emergencies or infectious diseases, despite what Pharma officials say (and the press uncritically reports). Such licenses can even favor local producers.
Myth 10: Novartis was litigating on principle - all that Big Pharma wants is a fair chance to earn enough money to make the next generation of life-saving medicines.
Fact: Big Pharma and its enablers in Europe and the US are ruthlessly trying to expand its patent and data monopolies through court suits, free trade agreements, diplomatic pressures, and biased technical assistance. The US in its Trans Pacific Partnership Agreement negotiations is trying to mandate patent standards that would require patents on new forms, uses, and formulations of existing medicines - in essence outlawing section 3(d). It is also trying to obtain separate monopolies on clinical trial data and win mandatory extensions of patent terms. The EU sought many of the same terms in direct free trade negotiations with India but has not been successful in most of its efforts. But it is still seeking investor right and IP enforcement rules that will strengthen Pharma's hand. For example, investor clause rules in NAFTA are currently being used by Eli Lilly to extort $100 million from Canada from having revoked a patent on an ADHD medicine pursuant to well-established national law. Eli Lilly, through private non-reviewable arbitration, is claiming that its reasonable expectations of monopoly profits are being frustrated and that Canada has to have US style levels of protection. It's important to note in this regard that investor–state dispute resolution, if adopted in India, would have permitted Novartis to bring the same kind of claim against India regardless of what the Supreme Court had ruled.
Pharma does not want an even playing field. It wants longer, broader, and stronger monopolies. It persists in promoting medicines off label, hiding adverse results, bribing foreign regulators, and funding Congress and the executive to fight its battles and to expand its empire.
These ten myths, in one form or another, are creating a fog-bank of disinformation in the wake of the historic Novartis decision. In sum, the Indian Novartis decision is both legal and wise – it reduces the risk of unwarranted patent monopolies and speeds access to low cost generic medicines of assured quality, both in India and elsewhere. The panicked reaction of Novartis, Big Pharma and their apologists is the tantrum of a bully who is frustrated because it wanted freedom to steal more candy on the playground. The press should do a much better job directly confronting Pharma's myths or at least soliciting opposing views.
Analysis: India’s Supreme Court Upholds Strict Patent Standards and Patients’ Right to Access to Affordable Medicines
Court dismisses unmeritorious court challenge by drug giant Novartis
By Professor Brook Baker, Health GAP
April 1, 2013. In a stunning victory for poor patients throughout the developing world, the Indian Supreme Court today ruled against a Novartis challenge of a denial of a patent on its cancer medicine Glivec. The Court upheld strict standards in the India Patents Act thereby limiting pharmaceutical monopolies and speeding access to more affordable generic medicines. The Indian generic industry, the pharmacy of poor in the Global South that supplies over 80% of AIDS medicines for the 8 million people in low- and middle-income countries, will not have to delay introduction of medicines year after year as Big Pharma evergreens its patent monopolies by seeking new 20 year patents on minor variations to existing medicines.
Novartis, the Swiss pharmaceutical giant that challenged section 3(d) of the Indian Patents Act, had one goal in mind – to expand its pharmaceutical empire and price impunity in India and the countries that imports Indian generic medicines. Novartis said that it was appealing an adverse decision on the patentability of Glivec as a matter of principle – and that principle was to maximize profits and to pave the way for a flood of easy-to-get patents on medicines. Novartis tried every legal trick in the book. It first challenged the constitutionality of India’s strict prohibitions against unwarranted patents and its compliance with the WTO TRIPS Agreement that establishes baseline global standards for intellectual property protections. That case was thrown out by the Madras High Court in 2007. For five additional years, Novartis pursued a second challenge in appeals at the Indian Patents Office and in the courts of India asking that the challenged provision be reinterpreted to allow successive patents on minor tweaks to existing medicines.
But the Supreme Court of India held firm, ruling that the Indian Patents Act was clear on its face and in its intentions. Indian parliamentarians wanted to allow new patents only in special circumstances where a revised medicine offered significant enhancements to the treatment or prevention of human illness but not for routine changes such as those that extend shelf life, improve solubility, extend or shorten uptake in the body, or the like. Taking cognizance of India’s duty to protect the health and wellbeing of its citizens and recognizing the pivotal role India plays in supplying other countries as well, the India Supreme Court found the Novartis challenge not only unmeritorious, but bordering on frivolous. Specifically, the Court held that Novartis’ application satisfied neither the requirements defining inventions (with respect to inventive step) nor the requirements of section 3(d) of the Act.
This ruling is important not just because it augers well for the continued enforcement of strict standards of patentability in India, but also because it shows that courts can and should stand up to attempts to extend transnational corporate power and monopolies on medicines. It is a cottage industry for Big Pharma drug companies to sue developing countries to try to change legal rules that thwart their quest for profits. There are several such cases still pending in India, including a Bayer case challenging the issuance of a compulsory license on a cancer medicine and a Pfizer case challenging the denial of one of its patent applications. The Novartis ruling is also important because several countries have followed India’s lead and adopted comparable strict patenting standards as a key flexibility under international law.
Novartis, in response to the adverse ruling, has threatened to take its marbles and go home. Paul Herrling, Novartis’ former head of research and development, is on record saying that Novartis may no longer bring its new medicines to the market in India. This is a hollow threat. Big Pharma continues to file patents on all of its truly new medicines in India because Indian law allows such patents and there’s plenty of money to be made off of India’s growing middle class. As proof, hundreds of patents on medicine have been granted in India since its patent law was revised to become compliant with international standards in 2005. What Novartis and other companies can’t do, is file for new patents on revised version of older medicines, which comprise 90-plus percent of Pharma filings globally.
Although India, its generic industry, and patients around the world have won a key victory in the fight for affordable access to life-saving medicines, Big Pharma and its supporter in US and EU trade offices will not stop pressuring and threatening India and other countries to allow longer, stronger, and broader patent and data monopolies on medicines. Indian policy makers, health advocates, and courts must continue to remain vigilant in trade negotiations and elsewhere to resist intellectual property proposals that encroach on fulfillment of the right to health.
 The text of the Supreme Court’s decision is available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212.
 Paragraph 194: “[T]he case of the appellant appears in rather poor light and the claim for patent for beta crystalline form of Imatinib Mesylate would only appear as an attempt to obtain patent for Imatinib Mesylate, which would otherwise not be permissible in this country.”
 Novartis warns India over drug patent, Financial Times (March 31, 2013), available at http://www.ft.com/intl/cms/s/0/c377e20a-99eb-11e2-83ca-00144feabdc0.html#axzz2PCguK9ie the case of the appellant appears in rather poor light and the claim for patent for beta crystalline form of Imatinib Mesylate would only appear as an attempt to obtain patent for Imatinib Mesylate, which would otherwise not be permissible in this country.
12 brave Kenyan AIDS activists, organized by Maureen Milanga as AIDS Law Project/Health GAP Fellow, and Jacque Wambui as a Health GAP / AVAC Fellow, birddogged Prime Minister Raila Odinga with help from HG Director of Global Campaigns, Paul Davis, at the final rally of the CORD Coaltion. The AIDS activists got the Prime Minister, the Vice President and the Minister of Medical Services each one-on-one for several minutes early during the rally and he committed to providing free Anti-Retroviral Treatment for all people living with HIV and 15% of the national budget toward health!
Activists then got front-and-center at the huge rally in Nyayo Stadium in front of 100,000 supporters and held up signs demanding free AIDS drugs for all. He took a look at them and quickly spoke in support of our demands. PLHIV in Kenya thank the Prime Minister for hearing them and agreeing to their demands.