Wednesday, 3 April 2013

Innovator Pharma Needs to Revisit Pricing Models

To ensure access to healthcare for all, India must harness innovation in discovering drugs, in developing therapeutics and in delivering affordable healthcare. It is in the light of these facts that one should evaluate the impact of the Indian Supreme Court's ruling in the case involving patent protection for Novartis AG's cancer drug, Glivec.

alt="Glivec was the first-of-its-kind cancer drug for leukaemia patients with patent protection in nearly 40 countries." Glivec was the first-of-its-kind cancer drug for leukaemia patients with patent protection in nearly 40 countries. However, Novartis failed to win patent protection for Glivec in India as the beta crystalline form of imatinib mesylate failed both the tests of invention and patentability as provided under section 2(1) and section 3(d) of the Indian Patent Act.

Preventing Evergreening

Section 2(1) of the Indian Patents Act of 2005 requires companies to prove that new forms of known compounds offer "enhanced therapeutic efficacy" in order to be granted a patent, and section 3(d) strikes a balance between innovation and access that recognizes true innovation and, at the same time, checks attempts at repetitive patenting or extension of the patent terms on frivolous grounds.
India, in keeping with the flexibility allowed in the TRIPS agreement formulated by the WTO, had introduced this safeguard in its patent Act in 2005 to protect public-health interests and prevent the "evergreening" of patents.

Thus, while Monday's Supreme Court ruling on Glivec is probably very disappointing for Novartis, it does not come as a surprise as the court upheld that Indian patent law does not favour extension of patents for minor modifications to existing medicines. This decision should not be confused with the subject of patentability of original innovation. India's patent regime recognizes and respects intellectual property associated with original innovation.

Elusive Healthcare

The cost of innovation runs between $1.5 billion and $2 billion over 15-20 years. Patents ensure that drugmakers are adequately compensated for the billions of dollars they spend during the years of painstaking research they conduct to bring the drug from lab to market to address unmet medical needs.

This necessitates higher price of innovator drugs, making it unaffordable for patients in the developing world. This is especially true for a country like India, where the World Health Organization estimates 67% of the population has no medical insurance, compared with 15% in China and about 50% in Africa. In India,almost 80% of healthcare expenses are borne out of people's own pockets, thus making healthcare inaccessible for many.

In the light of healthcare challenges faced by developing countries with a large patient pool, innovator companies need to rethink their business models and explore partnering options with either the government or existing Indian pharmaceutical companies to address affordability and accessibility. They need to evolve a pricing mechanism that is linked to purchasing parity. The delicate debate between patents and patients needs to be addressed as affordable healthcare cannot come at the cost of discouraging innovation.

Affordable Innovation

The Indian government has abdicated its responsibility to provide patented life-saving drugs to its patients, which has led to frivolous compulsory licensing issues, thus jeopardizing its image as a country that safeguards intellectual property.

India needs to be seen as actively encouraging innovation and creating an enabling ecosystem that delivers affordable innovation in order to find solutions to meet the burgeoning healthcare needs of patients. Inadequate safeguards for intellectual property will discourage drug innovators from bringing their latest discoveries to India, thus depriving patients access to the most recent medical advances. It is critical for India to respect intellectual property and create an ecosystem that encourages innovation and enables Indian drugmakers to develop affordable solutions. India has emerged as an attractive innovation hub due to its cost and talent arbitrage that has enabled it to garner a significant part of research outsourcing. A failure to create an ecosystem that encourages innovation would result in these global companies moving to China, South Korea and other Asian countries.

To maintain its lead as an innovation partner, India needs to be seen as encouraging knowledge-based industries such as pharmaceuticals and biotechnology, creating a regulatory environment that fosters quick approvals to expedite the development cycle. Our policymakers need to promote indigenous innovation.

The decision on the Glivec patent case, therefore, should not be seen as a case of deterring innovation and disrespecting IP but rather as a strong signal to establish the robustness of Indian Patent Act's section 3(d) that does allow incremental inventions to be patented provided they entail demonstrable novelty and improved efficacy.

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