- Wealth PMS
I’m on vacation, in Goa for a few days so posting will be slow this week.
Goa is my favourite place to holiday. And even after two kids, the costs of a five-star, meals included holiday remain roughly the same, although people say it’s cheaper to fly to Bangkok. To me this is the only reason to ever bother to earn money – the enjoying life part of the game.
We drove to Goa. Some parts of the drive are new to me – the toll booths, the completed highways (I’ve seen them in various states of construction in the last 10 years), the “double” roads (medians were absent earlier), the beach park in Karwar and so on.
But much about the drive was like things were frozen in time. Like the drive from Hubli to Karwar, through the edge of the Dandeli forests, were just the same: a two lane highway with trees on either side, and the air smelling of, well, forest. The winding roads from the Goa-Karnataka border all the way to Palolem/Canacone were just like they always were; just that with two kids in the car, it felt worse. And the fact that Goa just totally relaxes me for some unfathomable reason (i.e. even without the beer) – frozen in time.
And when I sit back and think, I realize that a lot of our thinking is frozen in time too.
A couple of days back, the swiss patent firm Novartis was refused a patent in India on Glivec, its blockbuster anti-cancer drug, which has made serious news. The Novartis India CEO has said this is a blow to innovation in India, and will probably have to reconsider introducing other patented drugs here. Global pharma companies fear that other countries will go down this route. But the argument has changed from an understanding of what the heck the issue is, to a “patents are good’ or “patents are bad” debate.
Patents are a small-term monopoly of a product or process granted to an innovator, so that, in exchange for making the details of the product or process public, the innovator gets exclusive rights for a few years. Note very carefully, the grant of a patent is only for what is revealed. The reason is: with more stuff becoming public after the patent “expires”, mankind benefits.
Pharma companies have successfully worked around this logic by extending patents through “evergreening”, a process in which a small addition is made to a product which allows them to demand a patent for further exclusivity. In Glivec’s case, the base compound (Imatinib mesylate) was judged to not have been improved upon substantially in the patent – which effectively means Novartis was attempting to evergreen their patent for exclusivity. This is simply a case which has gone through multiple courts since 2006, and all of them have ruled that Novartis has not “innovated” in whatever they have added to the compound to make it Glivec.
What this does is huge for Natco Pharma and Cipla, both of whom produce Generic Glivic at less then 10% of what Novartis sells at (which is more than Rs. 100,000 for a monthly dose). And not so good, apparently, for Novartis.
But this is a consequence. The main issue is not whether India is rejecting drug patents for their high price. The issue is that the courts have ruled there is not sufficient innovation to make this a separate patent, which means the original patent expires anyhow. There is nothing in the ruling that says patents are bad, or price points are bad.
In a way, we have frozen ourselves in time. The judgement, while sounding good for socialist causes or for “developing economies”, is actually a sound capitalist regulatory mechanism that should be done in western countries also (evergreening is a crime against what patents were intended for).
Big pharma is noticeably scared, but they can’t ignore India. India has “compulsory licensing” where if a company doesn’t produce a drug, overprices it, or does not let Indians import it, other Indian pharma companies can be granted a license to produce it anyway. Bayer saw that against them last year with Nexavar; Natco Pharma was given a license to produce the generic version at a fraction of the cost. Soon, two more cancer drugs from Briggs-Meyer and Roche will probably be compulsorily licensed. So if Novartis chooses not to introduce drugs in India, Indian pharma companies may be told they can build a generic.
About this stopping innovation – it is Novartis that is stopping innovation, not the Indian law. By forcing companies to show real innovation – and how much constitutes real innovation has to be decided in court – Indian law respects the efforts of real innovators and penalizes those that stymie progress by extending monopolies inappropriately.
This is not outrageous – in fact, such a ruling could easily have been in a US or European court and it wouldn’t cause this much outrage. What is frozen in time is the world’s thinking that India is a backward country where the courts couldn’t recognize innovation if you hit them on the head with an Apple Slide-To-Unlock feature.
They couldn’t be more wrong.