[Ip-health] Deconstruction of Novartis's defense of its challenge to the India patent regime

[B.Baker@neu.edu]

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A deconstruction of Novartis=E2=80=99s defense of its challenge to the Indi=
a patent=0D
regime.=0D
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Brook K. Baker, Northeastern U. School of Law, Program on Human Rights and=
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the Global Economy, Health GAP, February 7, 2007=0D
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Given the barrage of negative publicity that Novartis has received as a=0D
result of campaigns contesting its effort to overturn India=E2=80=99s stric=
t new=0D
patent regime, Novartis has issued a three-page defense of its lawsuit.=0D
http://www.novartis.com/downloads/about-novartis/Novartis_position-Glivec_G=
leevec_patent_case_india.pdf.=0D
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This defense contains one truth, numerous half truths, and several flat out=
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lies:=0D
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Truth:  Novartis seeks secure access to middle-income consumers via=0D
patent-based monopoly rights.=0D
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=E2=80=9CIn India, Novartis is faced with a globalization dilemma that=0D
characterizes many emerging economic powers today: two markets within one=
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country. India has a booming middle class on one hand, and a vast number of=
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extremely poor people on the other.=0D
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[W]e take affluent India seriously as a formidable power with all the=0D
rights and obligations that such status brings with it. As a consequence,=
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we seek to establish effective protection for pharmaceutical innovation in=
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India.=E2=80=9D=0D
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Half-truths:  Novartis does seek monopoly rights in the India market and it=
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does compete with Indian companies, but it faces no realistic threat that=
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patent-free Indian generics would be shipped to its patent-protected=0D
markets in North America, Europe and Japan.=0D
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=E2=80=9C[I]t is clear that we seek business opportunities in India=E2=80=
=99s growing=0D
economy. We also compete with Indian companies globally in attractive=0D
markets, and the export of copies of our products into richer countries is=
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a major concern to us.=E2=80=9D=0D
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Rich countries have stringent border controls, drug registration=0D
procedures, and prescription practices that preclude import and sale of=0D
generic versions of patented medicines.  If Novartis=E2=80=99s complaint we=
re true,=0D
the U.S. would be flooded with cheaper generic versions of AIDS medicines=
=0D
(or even of Glivec, which has been produced and sold at 1/10 the cost in=0D
India), but, of course, it is not.=0D
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Half-truth:  For Novartis, patents are truly non-negotiable, but it is not=
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true that the patent system is the best or only way of promoting research=
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and development.=0D
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=E2=80=9CProtecting innovation is the foundation for massive R&D investment=
s made=0D
by the pharmaceuticals industry that are vital to medical progress.=0D
Companies can continue to bring improvements and innovations to patients=0D
and societies only with effective patent laws. For a research-based company=
=0D
such as Novartis, patents are not negotiable.=E2=80=9D=0D
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The public sector, especially in the United States, contributes significant=
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resources to the basic research that is the foundation of many=0D
pharmaceutical innovations.  Moreover, under the patent regime, incentives=
=0D
for innovation are diverted from true social need towards block-buster=0D
drugs (sales over $1 billion a year) and me-too drugs (minor variations=0D
developed primarily to extent an existing patent monopoly or to gain market=
=0D
share from a competing block-buster drug).  Similarly, patent-based=0D
monopoly rights divert pharmaceutical research away from preventative=0D
innovations, like vaccines, and towards every-day medicines for chronic=0D
diseases that primarily impact rich consumers in rich markets.  As a=0D
consequence of this perverse set of patent-based incentives, there is very=
=0D
little research into the diseases that primarily affect poor people in the=
=0D
global south.=0D
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In addition, there are many viable alternatives to the existing=0D
patent-regime with respect to global public goods like medicines.  Prize=0D
funds, research and development treaties, and more robust and targeted=0D
public investment in research are but a few of the proposals under=0D
discussion that could reduce or eliminate the bloated sales forces and=0D
supra-competitive profits that make drugs so expensive.=0D
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Half truth:  Novartis now, belatedly supports one narrow set of=0D
TRIPS-compliant flexibilities for accessing cheaper medicines, but it is=0D
concurrently challenging another perfectly lawful flexibility, namely=0D
defining scope of patentability so as to prioritize public health and to=0D
increase access to medicines.=0D
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=E2=80=9COur case does not challenge provisions that provide for access und=
er=0D
international trade agreements, specifically the TRIPS and the Doha=0D
Declaration.  These flexibilities allow production for export under=0D
compulsory licenses that have been issued for public health reasons. They=
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have been put in place to allow poor countries to safeguard access to=0D
medicines that do not have sufficient local production capacity. In fact,=
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political agreement on the Doha flexibilities has been reached in order to=
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mitigate impact of TRIPS implementation in India.=0D
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Novartis supports the TRIPS conditions that promote access for developing=
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countries.=E2=80=9D=0D
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Novartis confirms its new-found loyalty to one-narrowly defined TRIPS=0D
flexibility =E2=80=93 compulsory licenses issued under the August 30, 2003,=
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Paragraph 6 Implementation Decision.  In this regard it is important to=0D
note that Novartis previously joined 38 other drug companies and trade=0D
associations in challenging South Africa=E2=80=99s completely lawful Medici=
nes and=0D
Controlled Substance Act that would have permitted parallel importation.=0D
Maybe it now concedes the error of that 1998-2001 challenge to a lawful=0D
TRIPS flexibility, but even now it erroneously implies that compulsory=0D
licenses can only granted pursuant to the August 30 Decision.=0D
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But more importantly, Novartis=E2=80=99 lawsuit directly challenges another=
 key=0D
TRIPS-compliant flexibility, namely the right to strictly define novelty,=
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inventive step, and industrial applicability =E2=80=93 the baseline standar=
ds of=0D
patentability =E2=80=93 so as to exclude patents for minor variations of ex=
isting=0D
chemical entities, for new uses of know chemical entities, and for mere=0D
combinations of existing entities.  Novartis and other drug companies want=
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to impose the same loose standards of patentability for India and other=0D
developing countries that they have gained in the IP-crazed courts and=0D
legislature of the U.S. and Europe.  There is in fact a great deal of=0D
variability of patent standards between countries, and India=E2=80=99s stri=
cter=0D
definition is completely permissible under existing TRIPS standards.=0D
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Lie:  The Mashelkar Committee report did not directly address, let alone=0D
hold, that certain provisions of the India Patent Act were non-compliant=0D
with TRIPS.=0D
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=E2=80=9CMany of the points we have raised around India=E2=80=99s patent la=
ws have been=0D
corroborated by the recent Mashelkar Committee report on patent issues in=
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India. The Government-established Mashelkar Committee voiced its views in=
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favor of incremental innovation and held that certain provisions of the=0D
Indian Patent Act are not compliant with international agreements,=0D
specifically WTO=E2=80=99s TRIPS agreement (Trade-related Aspects of Intell=
ectual=0D
Property Rights).=E2=80=9D=0D
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The Mashelkar Committee in India was tasked with determining =E2=80=9Cwheth=
er it=0D
would be TRIPS compatible to limit the grant of patent for pharmaceutical=
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substances to new chemical entity or to new medical entity involving one or=
=0D
more inventive steps.=E2=80=9D  This definition would be even more restrict=
ion than=0D
the version of section 3(d) of the Act that Novartis is challenging.  The=
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only thing that the Mashelkar Committee actually said about the current=0D
India=E2=80=99s Patent Act is that =E2=80=9CThere is a perception that even=
 the current=0D
provisions in the Patents Act could be held to be TRIPS non-compliant.=E2=
=80=9D=0D
(=C2=B65.11.)   A =E2=80=9Cperception=E2=80=9D is not a =E2=80=9Cholding.=
=E2=80=9D=0D
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Lie:  Research-based pharmaceutical companies like Novartis do not make=0D
their investment decisions based on monopoly marketing rights in developing=
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country markets =E2=80=93 which has been produced and sold at 1/10 the cost=
 in=0D
India in rich country markets where their medicines enjoy even higher=0D
standards of intellectual property protection.=0D
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=E2=80=9CKnowing we can rely on patents in India benefits government, indus=
try and=0D
patients because research-based organizations will know if investing in the=
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development of better medicines there is a viable long-term option.=E2=80=
=9D=0D
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Many research-based drug companies are exploring and cementing strategic=0D
sub-licensing partnerships with Indian drug companies given their=0D
comparative cost advantages in manufacturing for global sales and given=0D
prospects for lower-cost clinical trials in India.  However, drug companies=
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make 90% of their global sales in the U.S., Canada, Europe, and Japan.=0D
India comprises only 1.3% of the global market.  Does Novartis really want=
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people to believe that its going to make fundamental investment decisions=
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based on 1.3% of the global market instead of the 90%?  It will set up shop=
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in India in order to make even more profits in rich country markets not=0D
because of higher patent standards in India.=0D
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Donations are not an adequate defense:  The best defense that Novartis=0D
mounts is that because poor people can=E2=80=99t afford its drug it gives m=
uch of=0D
it away in poor countries like India.=0D
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=E2=80=9CIn 2006, our access-to-medicines program reached 33.6 million pati=
ents.=0D
Novartis spent USD 755 million last year alone. ...  The Glivec=0D
International Patient Assistance Program (GIPAP) is one of the most=0D
far-reaching patient assistance programs every implemented on a global=0D
scale.  In India, 99% of patients who receive Glivec receive it free from=
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Novartis [6,600 people].=E2=80=9D=0D
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However, corporate donations are not a sustainable solution:  (1) they are=
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frequently hard to access, (2) they are revocable, (3) they are not offered=
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across the broad spectrum of patented medicines that poor people need, and=
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(4) they are designed primarily to forestall generic competition by=0D
removing market incentives.=0D
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Novartis=E2=80=99s efforts to sanitize its efforts to eviscerate the heart =
of=0D
India=E2=80=99s stringent patent regime are, in the end, indefensible.  Its=
 defense=0D
of its cancer-drug patent today will undermine access to medicines for=0D
HIV/AIDS, for heart disease, for diabetes, in fact for every new medicine=
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needed by desperately poor people in developing countries.  Charity does=0D
not hide avarice.  By protecting its =E2=80=9Cfundamentals=E2=80=9D =E2=80=
=93 its non-negotiable,=0D
patent-right aspirations =E2=80=93 Novartis is revealing the cold and cruel=
 logic=0D
of Big Pharma:  profits over people; letting poor people die is less=0D
important than selling to middle-class Indians.