The global debate on patented medicines versus generics has for decades elicited strong reactions—pharmaceutical multinationals oppose generic formulations on the ground that they unfairly cut market shares and profits generated by inventive pharmaceutical products, based on billions of dollars worth of research and trials.

Illustration: Jayachandran / Mint

The patented versus generics debate recently heated up in India when US-based pharmaceutical giant Bayer Corp., through its Indian subsidiary, filed a writ petition in the Delhi high court against the Union of India, the Drug Controller General of India (DCGI) and Cipla Ltd (Cipla) to prevent DCGI from accepting Cipla’s application for a generic version of its patented drug, Sorafenib Tosylate, used to treat kidney cancer. The court initially (in November 2008) passed an injunction stopping DCGI from processing Cipla’s application until a final order was passed.

Bayer’s position was that DCGI should not approve any application for a generic drug if the patent for the original drug is in force. Patent linkage, put simply, is a system whereby marketing approval for generic medicines is linked to the patent status of the original product.

Most legal commentators agree that India is not obliged by international law, including that of the World Trade Organization (WTO), to introduce patent linkage. While some countries, including the US, China, Canada and Australia, have incorporated patent linkage into their law, many others, including the European Union (EU), have not accepted it, without violating their obligations under WTO laws, including the agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).

Interestingly, the relevant US legislation, referred to as the Hatch Waxman Act, 1984, facilitated the early entry of generics into the market. Simultaneously, it incorporated mechanisms to protect patent rights on breakthrough drugs through a database of patented pharmaceuticals (published by the US Food and Drug Administration (FDA) in its Orange Book).

On the other hand, the EU has not incorporated patent linkage into its laws. It is a prominent user of the so-called Bolar exception to patent rights provided in Article 30 of the TRIPS agreement, which allows governments to make limited exceptions to the rights of patent holders in the “legitimate interest" of third parties, provided such exceptions do not “unreasonably" conflict with the patent holder’s right to “normal" exploitation of the patent. The EU Directorate General for Competition (DGC) recently noted that “patent linkage is considered unlawful" under the applicable EU regulations. DGC has noted that the generics industry has resulted in significant public health expenditure savings in Europe.

However, the EU’s comprehensive laws on data exclusivity provide patent holders with tools against the generics manufacturers.

India, which recently amended its patent laws to conform to TRIPS, does not recognize patent linkage and also uses the Bolar exception, making it one of the few countries to have withstood trade pressures for its long-standing public health policy. The Patents Act provides for “compulsory licensing" through section 84, whereby a licence to manufacture a generic version of a patented invention, including a drug, can be granted during the patent period of such drug on policy grounds. Also, as pointed out by Cipla, section 107A of the Patents Act (reflecting the Bolar exception) exempts from patent infringement any acts of making, using or even selling a patented invention, if such acts are necessary to develop/submit information under any relevant law.

Accordingly, the high court on 18 August 2009 dismissed Bayer’s writ petition, holding that there was no Parliament-mandated “drug-patent linkage" system in India or any legislative intent to place patent policing powers with agencies such as DCGI. It rejected Bayer’s submission that the generic drug proposed to be manufactured by Cipla would be a “spurious drug" under section 17B of the Drugs Act, differentiating between a generic drug manufactured under the relevant regulations/quality standards and a spurious drug. The court further rejected Bayer’s argument that a government authority such as DCGI cannot grant marketing approval where this would affect patent rights.

In dismissing the petition, the court likened it to the tactics used by anti-competitive pharmaceutical firms and criticized Bayer for trying to “tweak public policies through court mandated regimes".

While Bayer examines its options for appeal, it is for the Indian government to find a long-term strategy to balance public health policies with the concerns of pharmaceutical firms undertaking costly research to produce new drugs, and to preserve the spirit of the Indian patent law (which has historically encouraged public access to affordable medicines through generics).

This column is contributed by Shuchi Sinha of AZB & Partners, Advocates & Solicitors.

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