Beyond the Novartis judgement

Adopting a deliberately antagonistic attitude towards the Big Pharma is not the solution.

5825499906_ecaceb48cb_b In an eagerly awaited judgment, the Supreme Court has ruled against pharmaceutical giant Novartis rejecting its patent application for Glivec, a drug commonly used in the treatment of some leukemia’s and gastrointestinal cancers. The Court essentially decided that Glivec didn’t represent a new invention and fell afoul of the much-discussed section 3(d) of the Indian Patents Act which holds that “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance” is not patentable.

The Supreme Court’s decision has been widely welcomed by patient advocates as well the Indian pharmaceutical industry. They not only believe that the Court has slapped down attempts at ‘evergreening’ but the judgment is a resounding victory for India’s poor.

Such celebrations may be premature. For instance, the Court was careful to point out that that all incremental innovations are not automatically barred under section 3(d). Whether an incremental innovation qualifies for patent protection would have to be established on a case-to-case basis though there is little doubt that it would have to clear a high legal bar. On similar lines, the court ruled that its decision should not be construed as a blanket repudiation of the “fundamental change brought in the patent regime by deletion of section 5 from the Parent Act.” However, the Indian judges are often as susceptible to populism as politicians and whether future courts respect the carefully elucidated principles in the extant judgment remains to be seen. On the other hand, the court’s decision may further vitiate the investment climate in India. With India desperate to attract foreign investments, the government would have to tread carefully to assuage such concerns.

Unfortunately, this debate has largely ignored the real crisis: The major pharmaceutical companies have little interest in developing drugs for conditions which primarily afflict the poor in India and other developing countries. For instance, according to the World Health Organization, India has the highest tuberculosis (TB) burden in the world with over 2.2 million cases reported in 2011. Due to poverty and the indiscriminate use of first line antitubercular drugs, there are increasing incidences of multidrug resistance (MDR-TB) and even extreme drug resistant tuberculosis (XDR-TB). And yet, bedaquiline, a new drug recently approved by the US FDA is the first genuine breakthrough in the fight against TB in nearly 50 years! And then there is the whole class of diseases known as neglected tropical diseases (NTD)which include conditions like ascariasis and lymphatic filariasis. They are endemic in the Indian subcontinent but are almost completely ignored by major drug companies.

How can India incentivise the pharmaceutical companies to develop drugs which cater to its needs? Big Pharma would no doubt posit that this is precisely why India needs a liberal patent regime. The argument is straightforward: The drug development process is massively expensive and inherently risky and it is essential that pharmaceutical companies recoup their costs. In theory, this creates a virtuous cycle encouraging further innovation and discovery of new compounds.

There are two problems with this argument. First, while the Indian drug market is likely to experience high growth in the near future, it will remain small by global standards. In any case, as a middle income country India can ill-afford the high drug prices routine in the more developed markets of the West. Why would then Big Pharma invest in developing drugs specifically targeted for India and other developing countries? Even Indian companies prefer reverse engineering to investing in basic R&D as the risks are much lower and profits relatively secure. For instance, Dr Reddy Laboratories has previously licensed promising diabetic compounds to Novartis for human trials and further development.

Second, a liberal patent regime may damage the Indian pharmaceutical industry, which largely relies on generic medicines. In recent years, India has emerged as the “pharmacy of the world” exporting generic medicines to poor countries in Asia and Africa. In many cases, this has facilitated lower prices for branded drugs– for instance, the Western drug companies dramatically cut prices for antiretroviral drugs (HAART therapy) after Cipla introduced its own generic version. Consumers and cash-strapped governments in poor countries benefit from the ability of companies like Cipla and Ranbaxy to deliver generics at the fraction of the cost demanded by the Big Pharma.

What is the solution then? In 2004, the Indian government launched the Drug Development Promotion Board (DDPB) to promote collaborations between research centers and the pharmaceutical industry. DDPB also provides soft loans for clinical trials to develop drugs targeted at neglected diseases. However, DDPB has experienced limited success due to the usual bureaucratic delays, small budgets and the limited technical expertise available with Indian companies.   In addition, DDPB relies almost exclusively on proposals developed by the pharmaceutical industry and has failed to take a proactive role.

An alternative model that India should consider is the one adopted by the Medicines for Malaria Venture (MMV). Funded largely by the Bill & Melinda Gates Foundation, MMV is a Public-Private Partnership that aims to facilitate the development of new antimalarial drugs. Similar mission-oriented ventures targeted at specific diseases with funding from the Indian government in collaboration with academic research centers and pharmaceutical companies may present an attractive policy option. If properly structured, this model can be beneficial for all stakeholders. The government can ensure that public health needs are met while the pharmaceutical companies are assured of a certain degree of risk-sharing. To encourage Big Pharma to participate in such ventures, the government can offer enhanced patent protection if truly promising compounds are developed while still ensuring some degree of cost-control.  A particular advantage of this model is that it addresses the argument that India is not paying its fair share and relying purely on coercive tools to address its growing public health crisis.

Adopting a deliberately antagonistic attitude towards the Big Pharma is not the solution. It is motivated by pecuniary concerns but then so are the Indian pharmaceutical companies (Or any other private venture for that matter). Without getting entangled in ideological debates on whether health is a public good, it is clear that that India needs increased public spending on healthcare which remains one of the most privatised systems in the world. India should invest in basic drug development, properly align incentives particularly its patent regime to address market failures, and then let the markets deliver.

Photo: Arturo Castelllanos