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On Vacation: Stepping Back in Time

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.

  • prabee says:

    Deepak,
    Njoy the holiday,Can you get info of how good Goa is to visit in May and also if you can lend some tips on place you stayed and other options,will be great

  • Amit M says:

    Brilliant post!
    Even I was under the (wrong) impression that the patent was denied purely on the grounds of making the drug affordable here. It’s amazing how the PR machine of big business goes about painting them as ‘victims’ the moment they don’t get away with something. (Always find it hilarious when a multi-billion dollar MNC with an army of lawyers tries portray itself as the ‘wronged party’.)
    Pity that most newspapers don’t go into these issues in such depth; of course it’s easier to do some ‘Google journalism’, dumb things down and reduce everything to “right” or “wrong” and then open it to ‘debate’ (via SMS-vote of course).
    Thank you for this article, cleared so many things up for me! (And you’ve done a far better job with this than most leading English-dailies in the country!)

  • Ravi Shankar says:

    Insightfully straight as always 🙂 ! Superb!

  • Adheer says:

    “About this stopping innovation – it is Novartis that is stopping innovation, not the Indian law. ”
    I disagree with you on this one. Although Novartis priced Glivec too high and nobody would sympathize with them, how is Novartis stopping innovation ?
    Novartis did not stop Indian companies from investing millions of dollars in R&D and coming up with new drug molecules !! Glivac (Imatinib) was discovered (formulated) in 1997 and received FDA approval in 2001.
    What were all these Indian pharma companies doing then ? Same thing as they are doing today – using molecules discovered by others to produce low cost generics. No innovation then … no innovation now.
    Indian companies, be it IT, pharma or services are not interested in R&D and innovation. Their USP is lower costs / price. The modus operandi of Indian companies is to produce services or manufacture goods that are invented by others at lower costs.
    Which Indian invention / innovation have you been using lately ?
    Cellphones ? Software ? Medical devices ? Digital Electronics ? Robotics ? Office automation ? Vehicles ?
    What innovation are our universities, labs producing ? India’s forte is low cost, not innovation.
    It is the government that has stifled innovation. When South East Asia (Taiwan) and China were boosting their electronics / semi-conductor industries our Government more or less killed it.
    Now we barely have any technology to produce ICs. We are content producing passive components (resistors and capacitors).
    Novartis’ pricing model is flawed, but it is we who are stifling innovation ourselves.

    • This is not about price, Adheer. It is about the fact that patents are SUPPOSED to expire. Novartis is trying to evergreen the patent and thus, stopping innovation by others discovering better drugs by building on top of Glivec’s compounds as they go off patent. This has nothing to do with the price at all.
      Indian companies ARE doing investments in both R&D and clinical trials, including cos like Biocon, Reddys and Ranbaxy.
      About innovation in India, there’s stuff that’s coming around, but that’s not the discussion. The fact that much about our cellphones is copied (heck, here even China is not innovative, truly speaking) is not of concern here – neither is the drug’s price.
      The point is: Novartis did not innovate with this particular patent application, and was rightfully rejected. This could have happened to any Indian company too.

      • Murty says:

        As far as Innovation in India is concerned, one should understand the subject matter of Intellectual Propert Rights, which are given very little prominence in India. this is one of the reason of LITTLE Innovation in India, as fas as Adheer’s concerns.
        The TRIZ software, helps you to get a Product or Process gets patented. But the BIG BRO won’t allow you to do so…. It is fact. Every other trial of getting a patent registered would be strongly opposed by the dominant US laws, which very well understand how to get roayalty out of a Patent.I came to know how difficult it would be to get a patent registered.
        Apart from that, Do not think that it is not possible in India, but the RED TAPE won’t encourage you. This you can correlate to the BRAIN DRAIN. Mr. Adheer might not be aware of the fact that the people who are responsible for these patents were not the US Aborigines, but people like us. One such example was the contribution of one Mr. Remala R Rao, from Warangal, who( I did not cross checked though) is responsible for more than 120 PATENTS for Microsoft. Many of the Pharma /IT /Other Companies abroad take the help of OUR brains, while we are a worried lot with SELF PITY.

        • Murty says:

          Adheer, take the case of Glenmark Vs MSD for example.
          However, I understand your agony ,about the little innovation in India, but Scientific Reseach in India is restricted to ACADEMIC , say to theoritical reseach alone. The Government is bothered about impressing some external agencies, and the majority of the contracts are being handled by unmindful politicians, and if you look at the Budget allocation to the S&T, we can understand our plight.
          For the latest Gadgets, in your question, look at them carefully. The Gadget might be a Foriegn one , but the technology behind these gadgets is significantly Indian. Ever heard about Servers of SUNMICRO SYSTEMS? The Micro chips of the Chinese Heauwai Systems? The Applications of APPLE etc? Only a few examples. Body is Foriegn, PHIR BHI DIL HAI HINDUSTHANI…..

      • Adheer says:

        “The point is: Novartis did not innovate with this particular patent application, and was rightfully rejected. This could have happened to any Indian company too.”
        You have got it completely wrong here. Novartis probably tried their best and could not come up successful new variants.
        Secondly, the patent was rejected not because Novartis did not innovate. The Comptroller General of Patent and Design had denied patent to Glivec on several grounds including its alleged failure to meet stipulations 3(b) of the Indian Patent Law. Section 3(b) bars patents for products that are against public interest and do not demonstrate enhanced efficacy over existing products.
        The CGPD further stated that Glivec was an extension of an existing patent Zimmerman (1993). Now, funny thing is Intellectual Property Appellate Board (IPAB) uses the Zimmerman patent of 1993 as a basis for rejecting Glivec – but India does not recognize the Zimmerman patent.
        Now, you argue that Novartis did not innovate. India did not recognize the Zimmerman patent, so what stopped Indian companies from “innovating” based on this 1993 Zimmerman patent.
        Hey … we do not innovate. We are only interested in producing low cost generics. Who wants to spend millions (if not billions) in R&D ?
        India’s pharma industry is worth around $30B. Novartis R&D spending is $10B. The R&D expenditure of top-3 pharma companies are more than the size of India’s pharma industry.

        • First, the judgment states clearly that the reason for rejection under 3b is that the compound was not demonstrably different. It is not just a statement, there was a lot of evidence considered. And even from people in the industry this seems to be a case of evergreening.
          Second, Indian companies may be innovating even now on it, but it could take 10 years or more before it sees approvals. You have no idea that this is not happening.
          Third, the fact remains that they lost a real case based on evergreening, not because the price was high. Perhaps it is worrying that india has compulsory licensing, to pharma companies like Bayer which might appear unfair. Novartis, though lost in a fair judgment.

  • Himanshu says:

    Another fact is that drug companies spend more on marketing then on R&D globally. This clearly means that they are not short of funds for innovation and are in no need of further patents. Big Pharma spends close to 14% on R&D while marketing and administration commands 31% of their sales.So no big pharma is not the victim at all…..

  • Lincoln says:

    Very nicely written. It is very important to look at the law from the spirit of the the law rather than just the words. Someone should go and question how those 40 countries issued patents to something which was not an innovation.