India's generic pharmaceutical industry is currently in a phase of transition following the TRIPS Agreement. However, the issue here is whether, and in what condition, India's generics industry will survive to meet that vision of 2020.
I. On January 1, 2005, India becomes obligated further to Article 65.4 of the TRIPS Agreement to extend patent protection to pharmaceutical products.
II. There are several reasons why India's situation is unique among WTO Members and why the terms and implementation of the Patent Amendments Bill are especially important.
a. In the period of the GATT Uruguay Round negotiations, India already maintained a vibrant generic pharmaceuticals sector and was the country most likely to be affected by a change in the global pharmaceutical patent regime.
b. India employed a skilled negotiating team that bargained hard to secure the viability of its domestic pharmaceutical industry. The terms of the deal struck in Articles 65 and 70 of the TRIPS Agreement were India's response to pressures from the United States, Europe and Japan and their pharmaceutical industry constituency.
c. Alone among significant developing country producers of pharmaceuticals, India has taken advantage of the full extent of the TRIPS transition arrangements. By doing so, it has further encouraged the development of its generic pharmaceuticals sector, which is a principal supplier of low cost pharmaceuticals not only to its domestic market, but of much of the developing world.
d. It is the Indian pharmaceutical producers who demonstrated to the world that medicines to treat HIV-AIDS could be produced and sold at a fraction of the price being charged by the major Pharma companies, and opened
e. the door to the possibility of comprehensive treatment of those infected with HIV. Without the efforts of the Indian generics sector, it would not have been possible for President George W. Bush to announce in his State of the Union address two years ago that treatment around the world is now a possibility because medicines could be obtained for $300 per person per year, a figure that is now significantly lower.
III. The Uruguay Round Bargain
a.. Before considering the details of the Patents Amendment Bill it is important to understand the bargain that was struck by India in 1993, and which entered into force on January 1, 1995. India agreed that it would initiate pharmaceutical product patent protection on January 1, 2005. It also agreed to establish a so-called patent application "mailbox" under Article 70.8 that would allow the filing of pharmaceutical product patent applications during the ten year transition period. At the end of the transition, the applications would be taken out of the mailbox and reviewed. If the application met the TRIPS Agreement standards of patentability, as implemented in national law, a patent would be granted for the remainder of the patent term counted from the application filing date in India. During the transition period, a regime would also be instituted for the grant of so-called "exclusive marketing rights" or EMRs based on the fulfillment of certain criteria, including the grant of a foreign patent and the grant of marketing approval in India.
b. The essence of the bargain struck by India was that pharmaceuticals for which patents were granted abroad before January 1, 1995 would not be patented in India. Applications for inventions filed in India after January 1, 1995 would not be able to demonstrate novelty. (There may be borderline cases involving applications filed abroad prior to January 1, 1995, and filed in India within the one-year priority period or prior to publication. India did not join the PCT until 1998, and this eliminates certain potential complications with respect to the January 1, 1995 cut off date)
c. The other core element of the Uruguay Round TRIPS bargain is that patents should be granted for inventions that are new, involve an inventive step and are capable of industrial application, as well as being sufficiently disclosed. The TRIPS Agreement does not define novelty, inventive step or industrial applicability, and these are terms which have been and are applied by courts in different legal systems around the world, developed and developing, according to different rules and standards. However, there are certain core principles of patentability that can be looked at. d. India in its present Patent Act has attempted to be cautious in avoiding the grant of patents for inventions that do not meet reasonable standards of patentability. Thus, in Section 3(e) of the Patents Act, "mere admixture … of components" is not subject to patenting, and under Section 3(d) the "mere discovery" of a "new use for a known substance" is not patentable. This, of course, in addition to the present non-patentabi-lity of medicines under Section 5 of the Act.
e. To highlight a key point, it is important to be mindful of the two-fold nature of the forthcoming transition in India. First, all medicines developed after January 1, 2005 will be subject to patenting, provided they meet the criteria of patentability. Second, all pharmaceutical product applications being held in India's patent mailbox will be taken out and reviewed by patent examiners, and those for which the criteria of patentability are met will be granted patents (as well as applications which formed the basis for existing EMRs granted in India).
IV. The Patents (Amendment) Bill and Its Implications
a. The Patents Bill addresses the extension of patents to post-January 1, 2005 applications through elimination of the existing exception in Section 5 of the Act. (It proposes also to amend the reference to "mere" new use to "new use".) It also proposes to eliminate an important existing element of the procedure by which patents are examined and granted, and this involves the right of third parties to challenge the grant of a patent before it occurs - the so-called pre-grant opposition procedure.
b. The provisions regarding mailbox applications are friendly to patent applicants. At Clause 12, amending Section 11B, it generally provides for the shortening of the time period under which patents should be examined, encouraging the adoption of regulations shortening the present 18 month expectation. Clause 10, amending Section 11A, allows the patent applicant to request early publication of the patent, and then grants provisional rights to the patent holder based on the published application, as if the patent had been granted, although not allowing the commencement of infringement proceedings until the patent has been granted. This places the generics producer in the position of potentially paying damages for infringement from the date of early publication, which in the case of mailbox applications may be very shortly following January 1, 1995. This arrangement may create a situation threatening to generic producers.
c. There are some very troubling aspects of the mailbox situation that give rise to serious risks to the Indian generics sector. Although the contents of the mailbox applications are not known, it has been widely reported that 4000 applications with respect to pharmaceutical products have been filed (plus an additional 3000 with respect to agricultural chemical products.) Because most or all of the new chemical entities that constitute today's first line antiretroviral treatments were patented abroad before January 1, 1995, it has been assumed that generic versions of such drugs would be remain available from Indian generics producers after January 1, 2005. However, the large number of mailbox applications gives reason to speculate as to whether there are minor variations on the initial new chemical entity patents that are filed, and which the applicants will use to challenge existing first line ARV products. These include applications concerning polymorphs and formulations, routes of administration, and so forth. It is common practice in the OECD countries for originators to file multiple patent applications on minor variations of new chemical entities seeking to extend the effective term of the patents - so called "evergreening" practices. Whether or not the patents secured by these applications are found to be valid in litigation, their mere presence is a significant deterrent to entry of generics into the market.
d. And consider the potential problem of combinations. The development by Indian generic producers of low cost fixed dose combination ARV treatments has been a boon to people throughout the developing world. But certain ARV combinations were patented by originator companies post-January 1, 1995, and mailbox applications may have been filed for these combinations. It is possible that the patent applications filed in India's mailbox will seek to circumvent the Patents Act restriction on combinations by asserting claims for subject matter other than the mere admixture of known substances, such as new routes of administration. While such combinations may be perfectly obvious ways to enhance patient adherence to treatment, there may be considerable possibility for litigation over such claims.
e. And, to be clear, the mailbox application situation does not only affect ARVs. The mailbox has been open for ten years. The number of new chemical entities for which pharmaceutical patents are granted each year is small, perhaps 25. Over a ten year period, NCEs would account for perhaps 250 patent applications. What, then, constitute the remaining 3750 pharmaceutical patent applications in India's mailbox? How many of them claim minor variations on molecules already being produced by the Indian generics industry?
f. The risk cannot be quantified because, outside the Indian Patent Office, we do not know what is in the mailbox. But there seems to be a significant risk that a large number of patent applications could be published, and a large number of patents granted, so that Indian generics producers will be subject to a flood of inhibitions and eventual infringement litigation.
g. The problem of evergreening based on minor changes and the risks raised by elimination of the pre-grant opposition procedure are relevant also to patent applications first filed after January 1, 2005
V. Ameliorating the Impact of the Transition on Indian Industry
a. To be clear, it is the interests of the Indian medicines consumer and consumers throughout the developing world that we must bear in mind.
b. What follows are the three main suggestions, two of which have already been put forward by the Indian Pharmaceutical Alliance.
i. The Patents Act should retain its pre-grant opposition procedure to allow third parties to challenge the basis for issuing a patent. Once the patent is granted, the holder may institute infringement litigation and place the generics producer in a very costly defensive posture.
1. The TRIPS Agreement does not in any way prevent the use of a pre-grant opposition procedure. In Article 62.2, it provides only that procedures for the grant of IPR not impose unreasonably delays.
2. In the case of the Amendments Bill, retention of the pre-grant opposition procedure would need to be integrated with provisions encouraging early publication and review of applications.
ii. Second, the Patents Act could be clarified to address the potential grant of patents on minor changes to new chemical entities so as to prevent the use of ever greening techniques.
iii. Third, the provisions that authorize the patent applicant to request early publication and obtain provisional protection should be reconsidered in connection, at the least, with mailbox applications.
iv. Clause 49 of the Amendments Bill addressing implementation of the August 30, 2003 WTO Decision on Implementation of Paragraph 6 requires a technical amendment because importing countries are not necessarily required to issue compulsory licenses.
VI. WTO Dispute Settlement
a. All of the foregoing suggestions are consistent with the TRIPS Agreement, but because of pressure from U.S. PhRMA or EU Pharma, it is possible that claims might be asserted that India's January 1, 2005 implementation is inconsistent with the TRIPS Agreement. Let us assume that the U.S. and EU might take India to WTO dispute settlement. Such an action requires an initial period of consultation, the formation of a panel, proceedings and decision by the panel, potential appeal to the Appellate Body, hearings and decision. Up to that point, the procedure requires approximately two years. Then assume solely for the sake of argument that India were to lose in dispute settlement. It would have a reasonable period in which to bring its system into compliance. The reasonable period is presumed to be fifteen months, though it can be longer or shorted depending on the circumstances. Only after a country fails to bring its rules into compliance within a reasonable period of time may the complaining party suspend concessions.
b. WTO Members are well known to use dispute settlement to their tactical advantage and, as a sophisticated actor at the WTO, there is no reason why India should consider itself exceptionally averse to use of the dispute settlement process as a means to validate its decision-making.
VII. It is difficult to predict with certainty the impact of the January 1, 2005, TRIPS transition on the Indian generic pharmaceuticals sector because there are a substantial number of unknowns. However, it seems apparent that the Indian generics industry is facing a difficult period. It would seem to be in the best interests of India and its people, as well as individuals throughout the developing world in need of medicines, to manage this transition in a way that avoids severe disruption to the supply of important medicines.
- (Extracted and reproduced from the speech by Frederick M. Abbott at IndiaChem 2004, Mumbai on November 4, 2004)
(Dr F Abbott, professor of international law at the Florida State University College of Law, is an expert on patents and public health.)