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Does Indian patent law stifle innovation?
Business Standard
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August 24, 2007

Ultimately, the debate boils down to whether disallowing patents on incremental innovation will discourage firms from doing fresh research.

D G Shah, CEO, Vision Consulting Group

Section 3(d) forces firms to focus efforts on innovation and hardcore research instead of tinkering with known substances

The aggressive posture of the Geneva-based IFPMA and the Washington-based PhRMA on the Madras High Court Order rejecting the Novartis [Get Quote] challenge to Sec 3 (d) of the Indian Patents Act is not surprising because the Indian Patent Act will now become a model law for several developing countries, defeating the IFPMA and PhRMA objective of establishing a TRIPs-plus IPR regime.

They have threatened that their companies may not further invest in India and may deprive its people of their new research products.  However, their members made the maximum investment in India between 1970 (the year in which product patent was abolished) and 1995 (the year in which product patent was re-introduced). The decade thereafter (1995-2005) has witnessed their divestment of manufacturing facilities and decline in fresh investments.

Likewise, the threat of depriving Indians of new research products seems hollow. If they do not register their patents in India, the domestic industry has the proven capability to "reverse-engineer" the same and provide them at much lower prices. If they register the patent and do not work it, India's patent law has adequate mechanism to deal with such situations and ensure that the product is available to the needy.

More importantly, what is there in the new Section 3(d) that is causing heartburn? It creates a bar to differentiate discovery from invention. The patent applications that cannot cross the bar are treated as "trivial changes" not eligible for patents.

Novartis argued in the Madras high court that the bar be removed as it is not clearly defined.  This would have allowed trivial changes to slip through and be eligible for patents. The logical thing was to seek a clearer definition of the bar than seeking its removal. But obviously, that would not have served the purpose of those wanting to patent trivial changes.

Upset over the rules of the game that India introduced in compliance of its obligation under the TRIPS Agreement, those that have enjoyed unfettered freedom to extend their monopoly are now complaining about India not following their rules.

The commonly accepted international standards for the protection of intellectual property rights are embodied in the TRIPS Agreement, not in their rules. But they want to project their rules as "international standards" and claim that India is not complying with them!

The bar that distinguishes discovery from invention helps companies focus their attention on innovation and pursue hardcore research instead of tinkering with known substances and claiming patents for new forms (for example, syrup as against tablet) or new use (for example, obesity as against epilepsy) or combinations of known drugs.  This bar spurs researchers to achieve and demonstrate significant improvement in efficacy, thereby helping both the progress of science and benefitting the patient, not just the bottom line of the companies.

Ajit Dangi, Director General, Organisation of Pharmaceutical Producers of India

Sections of the local industry who argue against patents for incremental innovation are busy getting patents for their incremental innovation abroad!

The answer is undoubtedly yes.  The major inflexion point in the history of Indian pharma in the past 30 years is undoubtedly the Patent Act 2005 which now allows product patents. Unfortunately, by narrowing the definition of patentability only to NCEs (New Chemical Entities), the government has given a big blow to R&D and innovation. History has shown that medical progress has happened largely through incremental innovation.

While breakthrough innovations are important, they are rare in the medical field as in any other technological field. Incremental innovation takes many forms such as improving patient compliance through single dose instead of multiple dosage, new indications, new drug delivery systems such as transdermal patch or sustained/time release preparations, and so on.

All such inventions require substantial R&D investment, including clinical trials. In fact, India's strength lies in such incremental innovations and not in discovery research which requires deep pocketstypically a billion dollars and 10-12 years of painstaking research are required for discovering a new molecule.

Given India's abundance of scientific and technical manpower, Section 3(d) of the Patent Act will not only act as a barrier for innovation to our scientists, but will also have a negative impact on public health. For example, many biologicals such as vaccines which have a major role to play in preventive healthcare need to be stored and distributed through a  cold chain (2 to 8 degrees Celsius).

Maintaining a cold chain, particularly in remote areas, is a major challenge. If an Indian scientist develops a vaccine which is thermally stable and does not require cold storage, it will have a tremendous impact on access and hence public health. But such an "incremental innovation" will not pass the Indian patentability test because it will not improve the "efficacy" but only the "stability" of the product.

One can give several such examples of incremental innovations. Section 3(d) gives arbitrary powers to the government to decide what is innovation and what is "ever-greening".

Apart from stifling innovation, the current Indian patent law gives a wrong signal to the domestic as well as international investing community that India is not ready to assume its rightful place in the global economy. Some sections of the domestic lobby which argue against incremental innovation are surprisingly busy getting international patents for their incremental innovations. Dr Mashelkar Committee's Report gives an annexure which gives hundreds of such examples.

In conclusion, the Section 3(d) of the Indian patent law will not only act as a barrier for R&D and innovation, but it will also have a negative impact on public health and India's international image. If India has to move up from imitation to innovation, it needs to amend Section 3(d) of the Patent Act to allow patenting of incremental innovations.

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