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Rumbles From Afar
It wasn't long ago that Big Pharma saw great opportunity in the developing world. Now it sees a painful patent war. Multinational drug companies are fighting to protect their intellectual property in a conflict that pits them against the governments of developing nations. It's a battle that illustrates the sometimes competing interests of companies' IP rights and poor people's access to medicine. And the conflict seems to be spreading.
The principal battleground is India, which has been dubbed "the world's pharmacy" because of its successful generic drug manufacturing industry. In recent years companies have watched the country's patent authority reject applications, dismiss infringement suits, revoke existing patents, and even order a pharmaceutical company to issue a compulsory license to a generic drug maker for one of its patented drugs. The world's largest drugmakers, which once thought that India would be a lucrative new market, now fear that generic drug makers will supplant their business there.
The most recent example occurred in November, when the Indian patent authority revoked a patent granted six years ago to Roche Holding AG for its hepatitis C drug Pegasys. It cited a lack of evidence that the drug was any better than existing treatments and its high price as reasons for the decision. The drug, which was granted a patent in 2006, was the first medicine to be protected in India.
The decision comes on the heels of another setback for the drug industry. In October, India revoked Pfizer Inc.'s patent for its cancer drug Sutent. In doing so, the patent authority reversed its 2007 decision granting patent protection on the drug, which is used to treat kidney cancer. It said the drug didn't involve the necessary innovation as claimed in the patent and was "hence not patentable" under local law. Also this year, an Indian court dismissed a patent infringement suit filed by Swiss drugmaker Roche against Indian generic drug maker Cipla Ltd. involving Roche's cancer drug Tarceva.
As if the patent issue weren't enough to put the pharma companies on edge, in March, India's patent office ordered Germany's Bayer AG to issue a license to an Indian generic drug maker to make and sell a copy of its patented cancer drug Nexavar and market it at one-thirtieth the cost. The move, which the Indian government said was necessary because Bayer was not making the drug affordable, marked the first time India had ever ordered a compulsory license of a patented drug.
Bayer has appealed the ruling to the country's Intellectual Property Appellate Board, but in May the board refused to stay the order to issue a license pending appeal, leaving the generic drug maker free to market the cancer drug.
The drug manufacturers are beside themselves. "The order of the Patent Controller of India damages the international patent system," says Bayer spokesperson Heather Levi Guzzi. "The limited period of marketing exclusivity made possible by patents ensures that the costs associated with the research and development of innovative medicines can be recovered."
International aid groups see it differently. They warn that if lower-cost generic drugs are not made available in these markets, inexpensive medicines to treat AIDS, cancer, and other diseases could disappear. "Then it's the patients who will suffer," says Aziz ur Rehman, a Geneva-based intellectual property adviser to Doctors Without Borders.
Patenting drugs is a relatively recent development in India. Until 2005, the country recognized only process patents for making pharmaceutical productsnot the actual products themselves. But it began extending patent protection to pharmaceuticals in an effort to adhere to the World Trade Organization's multilateral agreements on intellectual property. And once it adopted an expanded patent law, multinationals saw opportunity and began moving in.
It wasn't long, however, before the companies began to realize that India set a higher bar than Europe and the United States for approving patents. In 2006, for example, India rejected Swiss drugmaker Novartis's patent application for the drug Glivec, which is used to treat people suffering from leukemia. The decision was based on a section of India's patent law that prohibits a newer form of a known substance from receiving a patent unless it significantly improves the medicine's "efficacy."
Novartis insists that Glivec meets the criteria for patentability. Like the other drug companies, it argues that allowing generic drug makers to sell copies of its patented drugs will discourage innovation. "We strongly believe safeguarding incentives for innovation through the granting of patents leads to better medicines for patients without options," says Novartis spokeswoman Julie Masow.
Novartis appealed the patent office's decision, and the case has wended its way through the courts. India's Supreme Court heard the case in September, and it could issue a ruling before the end of the year.
International aid organizations fear that a ruling for the drug company would represent a big setback for the public. Says Rehman: "At the end of the day, it's the patients who suffer."
Since the Novartis fight began six years ago, other drug companies have lost big battles in India over top-selling and life-saving drugs. In 2009 India's patent authority rejected applications filed by Gilead Sciences for Viread, a widely prescribed drug used to treat HIV. In 2010 it revoked the local patent held by Roche on its antiviral drug Valcyte, which is used to treat HIV-AIDS patients and to prevent infection in patients who have received an organ transplant.
In response to the chorus of complaints, international aid groups say that the drugmakers are blowing the issue out of proportion by focusing on these losses. They point out that the majority of patent applications in India are not rejected, and the companies are profiting from their patents.
But Big Pharma has another concern. The recent compulsory licensing order in India sparked fears that other nations would follow its lead. Multilateral agreements have given poorer countries the right to order compulsory licenses when public health is at stake. And countries like Malaysia have made use of them in the past.
Subsequent developments suggest that these fears were not unfounded. In June, China overhauled its IP laws. The changes allow the Chinese government to issue compulsory licenses to local companies to produce generic versions of patented drugs during states of emergency or unusual circumstances, or when the public interest is at stake.
Three months later, the companies' worst fears were realized. The government of Indonesia overrode the patents on seven hepatitis and HIV drugs. The companies affected were Merck & Co., GlaxoSmithKline plc, Bristol-Myers Squibb Company, Abbott Laboratories, and Gilead. An estimated 310,000 people are living with HIV in Indonesia. The country justified its actions by citing the need to improve patient access. Now Big Pharma and international aid organizations are watching and waiting to see who fires next in this escalating intellectual property war.