Friday, 10 August 2007

Of Trivialities and Falling Skies: A Look at Decision in the Novartis Case in India

The skies are falling in India, literary! But that is because of the monsoons! However, if you have been listening to the spokespersons of Novartis and the IFPMA you might be forgiven to think that the skies are falling in India because a Madras High Court Bench rightly “laughed” Novartis out of court for three trivialities. First, the refusal by Novartis to accept that its drug Glivec could actually be a trivial invention per India’s law (a final affirmative finding is yet to be made on this). Second, the argument by Novartis that section 3(d) of the Indian Patent Act, 2005 violates the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). And third, the idea that the said section is unconstitutional because it is arbitrary, illogical and vague since Parliament made no guidelines on what “enhancement of efficacy et al” means. In the media throughout the world no words have been spared to describe what happened, why and its significance. The 89 page decision is actually interesting reading, so if you have time read the whole thing.

Ruling in this highly publicised case, the learned High Court Justices dismissed, with no order as to costs, a petition by Novartis AG, the Basel based Swiss Company, and Novartis India Ltd, its Indian subsidiary to declare section 3(d) of the Indian Patent Act, 2005 non-compliant with TRIPS and Article 14 of the Indian Constitution. The judges clearly knowing they were being watched globally, delivered, not necessarily a classic, but a foolproof judgment. Health activists, generic companies, medical organisations, churches, and many others were obviously jubilant. But, even before reading the decision, Novartis in a press release posted on their website warned of falling skies. Charged the release: “A decision issued today in an Indian court will have long-term negative consequences for research and development into better medicines for patients in India and abroad.” The friends at IFPMA, the industry association, were not far behind. In their press release, IFPMA charged that: “The High Court in Chennai, India, has today dismissed a legal challenge to Section 3d in India’s 2005 Patent Law that seriously handicaps Indian patients, emerging research-based Indian and international pharmaceutical companies alike by discouraging development of innovative medicines.”

Novartis had argued that section 3(d) of the Indian Patent Act, 2005 did not comply with Article 27 of TRIPS as it was apparently discriminatory and was unconstitutional because it was arbitrary, illogical and vague. On the first ground, the Court, using basic international law principles, determined that in India, a dualist country in terms of its approach to international law, treaty law only became national law and capable of violation in India when specifically domesticated by the Indian parliament. By the same token it would follow that if the dispute was at the WTO India would not be permitted to argue in its defense simply that India’s parliament had decided to implement a TRIPS provision in a particular way or that its parliament had discretion. Indeed, in a ruling in 1998 in the India mailbox case the Panel told India as much.

In simple terms, the Court was telling Novartis that the TRIPS Agreement is not a source of law in India. You can only litigate in Indian courts violation of Indian law. The judges, politely and respectfully, reminded Novartis that if they had trouble with the Indian law vis-à-vis TRIPS what they needed to do was simple. Take a train or a drive or use any other forms of transport available in Switzerland from Basel to Bern (the Swiss seat of government) and convince the folks in Bern that India was violating the contract that the Swiss government entered into in 1994 to protect Novartis’s and other Swiss companies’ inventions in India (there have been some reports from India indicating that a Swiss official has indicated they will not move to WTO). If the folks in Bern were convinced and the Indian government did not agree to change (India trade Minister, Kamal Nath says India law if fully TRIPS consistent), the folks in Bern or their lawyers were free to take a ride or send a cable to Geneva (the seat of WTO) and “sue the pants off” the Indian government.

I am at a loss how this simple, clear and reasonable message will have long-term negative consequences for R&D or how it will handicap Indian patients or discourage development of innovative medicines.

But the Novartis and IFPMA statements confirm once again a widely known fact. The message send by the Madras High Court speaks to many similar situations in developing countries. The case of Thailand and Brazil recently, and South Africa and others before that where TRIPS is brandished to threaten, scare and confuse are just few obvious examples. One would have thought we moved on from here, how wrong!

On the second ground, the Court held that it was reasonable and scientifically possible to make a determination that “a new form of a known substance had resulted in the enhancement of the known efficacy of the original substance and the derivative so derived will not be the same substance since the properties of the derivatives differ significantly with regard to efficacy.” [p.58]. In sum the judges told Novartis that if it was the innovative company that it claims, and in relevant cases has proven to be, then they should be ashamed to claim that they do not know what enhancement of known efficacy means. With emphasis, the judges therefore agreed with the Additional Solicitor General of India and other Counsel who argued that a company of Novartis stature cannot plead that “they do not know what is meant by enhancement of a known efficacy and they cannot show that the derivatives differ significantly in properties with regard to efficacy.” In essence, section 3(d) of the Indian Patent Law, 2005 is Constitutional and is not arbitrary, illogical or vague. It is a reasonable exercise of legislative power by the Indian parliament taking into account the country’s interests and, in particular, the need to prevent evergreening and improve access to medicines.

There is no doubt that thousands, if not more pages will be written on this landmark decision. What should not be lost is that other than settling the two basic questions in dispute, the Court also made some memorable observations and restatements of the law. Just a few including some quoted from earlier decisions:

[P.25] “When domestic law is challenged on the ground of it being in violation of an International Treaty, domestic courts would have no jurisdiction.”

[p.34] “No declaration would be given where it would serve no useful purpose to the petitioner…Assuming that we give a declaration as prayed for, namely, the amended provision is not in the discharge of India’s obligation under Article 27 of “TRIPS”, even then, we fail to see for what use the petitioner can put it.”

[P.41] “ Therefore it would be unwise to fix any specific formula to be applied, as a matter of static measure, to find out whether the new form of a known substance resulted in the enhancement of the known efficacy or the derivatives differ significantly in properties with regard to efficacy.”

[P.44] “The speeches made by the members of the House in the course of the debate are not admissible as extrinsic aids to the interpretation of statutory provisions.”

[P.52] “What the patent applicant is expected to show is, how effective the new discovery made would be in healing a disease/having a good effect on the body? In other words, the patent applicant is definitely aware as to what is the “therapeutic effect” of the drug for which he had already got a patent and what is the difference between the therapeutic effect of the patented drug and the drug in respect of which the patent is asked for.”

[P.63]: “Parliament and the State Legislatures function best when they concern themselves with general principles, broad objectives and fundamental issues…”.

[P.70] “We reiterate here at this stage that the amended section with it’s Explanation is capable of being understood and worked out in a normal manner not only by the patent applicant but also the Patent Controller”

[P.75] “The possibility of flagrant abuse or misuse of law has never been a ground for holding a provision ultra vires.”

[P.76] “The Legislature has a duty to safeguard the economic interests of the country.”

[P. 80] “It must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds.”

[P. 81] “ Therefore from the year 1948 or so the Parliament was aware about the change in economic conditions of the country, which made them change the 1911 enactment to suit the needs of the economic conditions of the country. Therefore there cannot be any doubt at all that the Patents Act as it stood then and as it stands today, is designed to safeguard the economic interests of this country and if that is so, the amended section must be viewed with greater latitude.”

[]P.88] “We have borne in mind the object which the amending Act wanted to achieve namely, to prevent evergreening; to provide easy access to the citizens of this country to life saving drugs and to discharge their Constitutional obligation of providing good health care to its citizens.”

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