Changes to drug patent rules could affect India’s vast generic medicine industry, drive up costs

Nandita Venkatesan (33) lost 90% of her hearing in both ears in her fight against drug-resistant tuberculosis in November 2013, two days after her 24th birthday. It was a side effect of the drug kanamycin, which was administered to her daily for 100 days through a painful injection.

“As TB survivors, we (she and South African TB survivor Phumeza Tisile) wanted to protect others from the loss of hearing and feeling the horrible side effects of the TB medicines,” she told IndiaSpend.

When she heard that Johnson and Johnson was trying to extend their patent on bedaquiline, a drug that can be used to treat drug-resistant TB and is safer and more effective than kanamycin, she decided to oppose the application. With the help of Medecins sans Frontieres, an international humanitarian medical aid organisation, she filed her opposition to Johnson and Johnson’s application with India’s patent office. The patent office declined Johnson and Johnson’s application for a new patent on the drug in March 2023.

Had she not done that, generic or affordable versions of the drug would not have been available in the market until 2027. The price for the drug came down after the patent period ended, and the drug has been available through the Global Drug Facility since July 2023, and can now be produced by manufacturers in India.

Key sections of the Patent Rules 2003 that enabled the development of the generic drug industry in India and provided life-saving drugs to patients of cancer, TB and AIDS, or acquired immunodeficiency syndrome caused by the human immunodeficiency virus, worldwide are likely to be amended, as per the draft patent rules uploaded by the commerce ministry in August 2023. The last date for submission of comments was September 23 after which the amendments to the rules will be passed without discussion in parliament, as per Leena Menghaney, a lawyer and Global Intellectual Property Advisor with the Medecins sans Frontieres Access Campaign.

The change in the rules would help reduce pendency of patent applications, but “the manner in which the changes came about, without adequate information on the people consulted, and the data on the basis of which these changes are made, leaves a lot of space for improvement”, said IP lawyer Swaraj Paul Barooah.

In this explainer, IndiaSpend unpacks the proposed amendments and their effects on India’s drug exports and public health.

Opposing patent application

A patent gives the innovator exclusive rights over their product for a fixed period of time. While a high number of patents can be desirable, it is the quality of patents that matters more, according to Barooah.

“It’s like spreading oil on the roads to make cars go faster. The speed of travel may increase, but we can’t claim that the roads or cars have improved, and soon we may see this leading to more car crashes instead of smoother traffic,” he explained.

To protect against a situation in which the patent examining officer awards a patent to an innovation that is not new or beneficial to the public, patent regimes in at least 18 countries besides India allow an interested party to challenge the patent application before the patent is granted.

Such challenges are a minuscule proportion of the patents published in India: In 2021-’22, 481 pre-grant opposition applications were filed compared to 69,613 patent applications published (before they were granted) in the same period.

As per the current patent rules, anyone can file a pre-grant opposition application without having to pay a fee. Post-grant opposition includes a fee. If the proposed amendments to the patent laws are passed, the fees for pre-grant applications will be more than Rs 40,000 for an application like the one filed by Venkatesan, according to Venkatesan. The fee would vary based on the application, including its length, the complexity of the product, how early the petitioners want a hearing, and so on, said Medecins sans Frontieres at a press conference on September 14.

“Back in 2019, when I filed my pre-grant opposition application, this amount was a month’s salary for me,” she said, adding that she would have surely reconsidered the application if she had to forgo a month’s salary. “It’s like the Supreme Court charging us money to file a public interest litigation,” the Mumbai-based data journalist explains.

In addition, Rule 55 of the Patent Rules, 2003, which allowed anybody to oppose a patent application, will be amended to include a “maintainability” clause. This means that the patent office will first decide whether the person is allowed to file a pre-grant opposition, based on their discretion, explained Barooah. “In its present form, the rules do not include allowing for an appeal if the opposition application is turned down,” he added.

“Filing a pre-grant opposition is going to become difficult, or the provision may even be eliminated altogether,” said economist Biswajit Dhar, who specialises in intellectual property rights.

Relaxation for patent holders

After the successful grant of a patent, it is up to the patentee to use the innovation as they will. However, to protect against the sequestering of knowledge for the protection of their intellectual property, they have to declare that they are using the patent to provide some benefit within the jurisdiction of the patent awarded, that is, India.

The new rules would make it relatively easier for patent holders to withhold information about their products from the public. This information is used by watchdog organisations and generic drug manufacturers to protect against patent evergreening (extending the right of the patentee to produce and sell the product), according to a lawyer familiar with the discussions in the ministry who spoke to IndiaSpend on the condition of anonymity.

One such piece of information is Form 27, the “statement regarding the working of patented innovation(s) on a commercial scale in India”. Every patentee is required to submit the details mentioned in this document every year, within three months of the end of the financial year as per Rule 131 of the current patent rules. The draft recommends that this be changed to once every three years within six months of the end of the financial year.

As the name suggests, the form seeks information from the holder of the patent if they are “working” (manufacturing, importing or licensing its production) the patented invention in India. It also requires the patentee to disclose how much revenue has accrued from the sale or manufacture of the product in India. The proposed amendments to the rules do away with all of these disclosures, allowing pharmaceutical companies to answer the question “please state whether each patent in respect of which this form is being filed is worked or not worked” with a simple yes or no.

A form 27 submission by Japanese pharmaceutical company Otsuka revealed that a new drug for TB called delamanid, for which a patent was granted in India in 2014, was not being manufactured, imported or licensed in India.

“Under pressure from international organisations, Otsuka registered delamanid in India and licensed its production to Mylan labs in 2017,” said the lawyer who was part of the discussions on the draft patent rules. At present, delamanid is available for the treatment of drug-resistant TB in India. The patent for the drug expires in October 2023, after which generic manufacturers are free to produce their versions of the drug.

Form 27 is also the basis on which compulsory licence for production is issued by the government, according to Barooah. A compulsory licence grants permission to a producer other than the patent holder to manufacture the patented product.

In 2012, the Indian Controller General awarded a compulsory licence to Indian pharmaceutical Natco to manufacture sorafenib, an anti-cancer drug patented by Bayer. Bayer contested the licence in the Supreme Court, but the court rejected its petition in 2014.

Generic drug manufacturers

Drugs and pharmaceutical exports constitute 5.71% of India’s total exports and were valued at Rs 2.04 lakh crore in 2022-23. India exports drugs to 200 countries, producing 20% of the world’s generic drugs by volume, making it one of the biggest suppliers of low-cost drugs in the world.

This was enabled by the Patents Act of 1970 which recognised only process patents and not product patents. It meant that a patented product could be produced in India provided the producer used a manufacturing method different from the patent holder. “The idea of a better-ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death,” said Indira Gandhi to the World Health Assembly in 1982.

After India joined the Trade Related Aspects of Intellectual Property Rights (TRIPS) in 1995, it allowed filing of product patents starting from 1995, although they were to be examined only after December 31, 2004.

The amended Patents Act of 2005 and the rules included provisions for pre-grant opposition, compulsory licensing and Section 3(d) in the Act, all of which would protect against awarding patents to non-beneficial updates to a patented product. This was done to protect both the generics drugs industry and public health, according to Dhar.

The favourable environment created by the patent regime combined with the wage advantage over China (from where the active pharmaceutical ingredients are imported) allowed India to develop its pharmaceutical industry, he added.

Generic manufacturers need to be ready to step in and produce life-saving medicines once innovator product patents expire so that those living in low and middle income countries can access treatment without further challenges, said Claudia Martinez, Manager of the Access to Medicine Foundation’s Generic & Biosimilar Medicines Programme. “However, when originator companies try to extend the life of their patents in those countries where they are filed and enforced, this not only causes significant delays in generic availability but can also jeopardise affordable access,” she added.

IndiaSpend has reached out to the Ministry of Commerce, Trade and Industries and the Controller General of Patents to comment on the stakeholders involved in the consultations over the amendment to the rules, and if the public health and generic drugs industry were part of the discussion. The story will be updated when they respond.

The Indian Drug Manufacturers’ Association told IndiaSpend that its experts are working on a statement on the draft patent rules. The story will be updated when they respond.

“Ultimately, the result will be that public health will be harmed,” said Dhar.

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.

Also read: How push from survivors and an HIV support group led to a cheaper tuberculosis drug