India’s Supreme Court denied Novartis AG (NOVN)’s request for patent protection for its Gleevec cancer treatment, allowing the nation’s generic-drug makers to continue to sell copies of the drug at a lower price.
In a decision watched by non-profit groups seeking to expand access to medicines and drugmakers concerned about India’s position on intellectual property, the court today upheld regulatory rulings dating to 2006 that the drug wasn’t sufficiently innovative to merit a patent. Basel, Switzerland- based Novartis argued that the molecule imatinib, on which Gleevec is based, required years of research and modification to make it an effective, safe leukemia treatment.
“Repetitive patent is not permissible on the same drug,” Justices Aftab Alam and Ranjana Prakash Desai said in the court’s ruling in New Delhi. “The drug is neither new nor complies” with provisions of the patent law, they ruled.
Novartis India Ltd. (HCBA) shares fell while those of Indian generic copy manufacturer Natco Pharma Ltd. (NTCPH) jumped. The decision may add to concern among Western pharmaceutical companies that India is allowing domestic generic-drug makers to profit from products that deserve patent protection. Scientists credit Gleevec with turning a deadly blood cancer into a chronic disease, and the drug was Novartis’s best-selling product last year with sales of $4.7 billion.
“The worst thing about this is that pharmaceutical companies won’t want to partner with Indian pharma or generic players, because they’ll be significantly concerned about protection of their intellectual property,” said Navid Malik, an analyst with Cenkos Securities Plc (CNKS) in London. “The government is basically trying to create an industry with no investment as generics don’t require much R&D.”
The Indian Patent Office in 2006 denied a patent to Novartis, a decision upheld by the Indian Intellectual Property Appellate Board. The board cited a provision of Indian law that aims to prevent “evergreening,” in which companies make an incremental change to a drug’s chemical makeup, without any real medical benefit, to extend its patent life and prevent the introduction of low-cost generic copies.
Novartis appealed to the nation’s highest court. Generic versions of the drug are on the market in India.
“The Supreme Court’s decision prevents companies from abusing the patent system to get unwarranted patents on existing medicines,” Leena Menghaney, access campaign manager for Doctors Without Borders, said in an e-mailed statement.
Decisions such as today’s may unintentionally stifle India’s drug industry, Ranjit Shahani, vice chairman and managing director at Novartis India, said before the ruling.
“We’ll continue to build our business, but we will certainly be cautious in investments in R&D and innovation in India,” Shahani said in an interview. “And until the climate for intellectual property and the ecosystem is fully in place, I don’t think any investment in R&D will take place here.”
Brook Baker, a law professor at Northeastern University in Boston, said he doubts the pharmaceutical industry will pull back much on its investments in India based on the decision. The country will still grant 20 year patents on new, innovative drugs and a growing middle class with chronic diseases will provide many business opportunities, he said.
“I think there is plenty of incentives for them to come to India,” Baker said in a telephone interview. “They always cry doomsday and say no one will invest in India because it isn’t an investor-friendly country. But companies will invest in India because they can make money there.”
Novartis India declined 1.8 percent to 587.95 rupees in Mumbai, the most since March 4. Novartis’s American depositary receipts fell less than 1 percent to $71.06 at the close in New York. Natco Pharma climbed 5.4 percent to 452 rupees in India, its biggest gain since March 5.
“This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options,” Shahani said in a statement after the decision. “Novartis has never been granted an original patent for Gleevec in India. We strongly believe that original innovation should be recognized in patents to encourage investment in medical innovation especially for unmet medical needs.”
Novartis and aid groups agree that the drug itself is of secondary importance in the larger debate over intellectual property.
Sales of Gleevec in India are negligible, because more than 90 percent of volume in the country is donated through Novartis programs, available to the poor, Paul Herrling, who heads Novartis’s Institute for Tropical Diseases in Singapore, said in an interview before the decision.
Besides denying a patent to Gleevec, India has angered pharmaceutical companies by allowing generic-drug makers to produce copies of patent-protected medicines to ensure they’re available in the country at affordable prices. Drug companies say they have programs in place to make expensive medicines available to the poor.
The patent appeals board last month upheld a ruling that allows Natco Pharma to make a low-priced copy of Bayer AG (BAYN)’s Nexavar cancer treatment.
In decisions like the Gleevec ruling, India is weighing the cost of treating patients today against hampering home-grown innovation at a later point, Darius Lakdawalla, a health economist at the University of Southern California, said in an interview.
“Today, India is allowing a robust generics industry and not protecting patents and the cost for that is low,” Lakdawalla said. “But what is going to happen five to 10 years in the future?”
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