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Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Glivec and price controls

India needs a patent system that is based on protecting the rights of companies over their genuine intellectual property

On Monday, the Supreme Court turned down pharmaceutical giant Novartis’s appeal for patent protection for its anti-cancer drug Glivec. The court’s decision, relied on the absence of novelty or inventiveness under the Patents Act, 1970. In its order, the court said that Novartis’s “application for patent on the beta-crystalline salt does not meet any standard of novelty or inventiveness" and, therefore, the company cannot be given any patent for this drug.

Viewed purely from the perspective of upholding Indian law, the judgement cannot be faulted. Companies and innovators must pass the test of inventiveness to qualify for a patent. Seen from the perspective of drug discovery and the way the pharmaceutical sector is regulated in India, it raises difficult questions.

These are hard times for firms that invest huge sums in discovering new molecules and variants that promise better therapeutic options for diseases. India already has a compulsory licensing arrangement under which firms are given an exception to manufacture cheaper generic versions of new drugs.

That is not all. Reports also suggest that prices of drugs may be capped at the time of their launch, enabling the government to virtually effect price controls on medicines. At the moment, the National Pharmaceutical Pricing Authority regulates the prices of 348 bulk drugs. If price caps are initiated, virtually the entire spectrum of drugs could be subjected to price controls. This is reminiscent of the 1970s-style controlled economy, ignoring issues such as demand and supply, manufacturing costs and a patent owner’s right to recover costs and charge a premium for intellectual property.

Irrespective of the method chosen by the government to determine drug prices, it is sure to be at variance with the market price. The manufacturers of high-cost drugs are most likely to be affected since the new method will bring their prices closer down to that of smaller companies in the market.

On the matter of intellectual property itself, there exists very little clarity over the distinction between genuine intellectual property of firms and state-conferred production privileges on favoured enterprises—by outlawing competitors creating similar intellectual property independently. In this realm, the contours of intellectual property are defined based on the temporary goals of public welfare—lower drug prices for consumers, in this case—which gives the government enough room to impose arbitrary decisions undermining intellectual property.

With such arbitrary executive decisions, the incentives driving firms to invest in intellectual property are undermined. What is required is a patent system that is based on protecting the rights of companies over their intellectual property.

Does the Glivec judgement deliver a blow to intellectual property rights in India? Tell us at views@livemint.com

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