Patent Regulation, technical efficiency and growth of pharmaceutical industry in India Bills passed in Indian Parliament for pharmaceutical

industry - latest and controversies As a result, Patents (Amendment) Act 2005 was passed in Indian Parliament which replaced the Patents (Amendment) Ordinance 2004 issued in December 2004 by Government of India. The new bill covered the product patent regime for food, chemical and pharmaceuticals. It became mandatory to introduce the patent protection for these three sectors under the obligation of Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement of WTO which mandated patent protection on both products as well as processes for a period of 20 years. As per TRIPS Agreement, countries are required to recognize not only new patents but also any patent that was filed after January 1, 1995. Important features of Patents (Amendment) Act 2005: Provisions in Patents (Amendment) Ordinance 2004 that were carried over to Patents (Amendment) Act 2005: Product patent protection was extended to all fields of technology (i.e., drugs, foods and chemicals) Provisions concerning Exclusive Marketing Rights(EMR) were dropped in the new Act Compulsory license for export of medicines to countries with insufficient or no manufacturing capacity, to meet emergency health concerns Mandatory to have Pre-grant and Post-grant opposition in the Patent Office Patent rights with respect to mailbox shall be available only from the date of grant of patent and not from the date of publication Provisions related to national security to guard against patenting abroad of dual use technologies Simplification and rationalization of system to introduce flexibility and reduce processing time for patent applications

Significant Changes introduced in Patents (Amendment) Act 2005 as compared to Patent (Amendment) Ordinance 2004: Parallel Import: According to new Bill, the foreign exporter need only be duly authorized by the patentee to sell and distribute the product. Definition of Invention: Earlier invention was defined as a feature that involves technical advance as compared to existing knowledge or having economic significance or both that makes the invention not obvious to a person skilled in the art. According to new definition, invention is defined as any technology which has not been anticipated by

publication in any document or used in the country or elsewhere in the world before the date of filing the patent application with complete specification i.e. the subject matter has not fallen in public domain or that it does not form part of the state of the art Pharmaceutical Substances are newly defined as any entity involving one or more inventive steps. What not to be considered as inventions: the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. The word mere before new use in above stated definition was dropped.

Time Line Extension for filing pre-grant opposition: A minimum period of 6 months, from the date of publication as against the present period of 3 months. Expanding the grounds for pre-grant opposition: The grounds of pre-grant opposition have been extended to novelty, inventive step and industrial applicability, non-disclosure or wrongful mentioning of source and geographical origin of biological material and anticipation of invention by knowledge, oral or otherwise.

Deletion of provision that denies the person making an opposition representation the right of becoming a party to any proceedings. Facilitation of pharmaceutical exports: The condition for obtaining compulsory license for export of patented pharmaceutical products to countries that have inadequate production capacities has been extended to include authorization or notification from importing country.

Transitional arrangement applications: After the patent is granted, the patent holder shall only be entitled to receive reasonable royalty from such enterprises which have made significant investment and were producing and marketing the concerned product prior to January 1, 2005 and which continue to manufacture the product covered by the patent on the date of grant of the patent, and no infringement charges shall be applied against such enterprises.

Compulsory License: When compulsory license is granted for the main purpose of Production and supply in Indian market, the licensee may export the patented product to the other countries as well, if the need arises.

Benefits of Patent Protection for Pharmaceuticals? The main reason why Indian Pharmaceutical industry is heavily dependent on Intellectual Property Right Protection is the exponential cost of new chemical entity (NCE) development and high attrition rate in development cycle. According to recent studies, 1 out of 5000 molecules synthesized during research actually reached the market. Other estimates indicate that out of 100 drugs that enter testing phase I, 70 complete phase I, 33 complete phase II and 25 cleared phase III. Only two-thirds of drugs that entered phase III were eventually marketed. Thus, without patent protection, pharmaceutical industry cannot find the investment required to conduct this expensive and high risk research. The overall cost is further increased if the opportunity cost of such high investment for such a long time with no guaranteed return is taken into account. Thus, without patent protection, number of new drugs will dwindle and flow of medicines will be slowed down that will be detrimental for public health and overall economic development of the country.

Comparison of development time and cost of new chemical entity Year Development Time Development (Years) Cost ($ million) 1970 1990 2000 If started today 15 12 10 8-10 54 231 608 > 800

Patent applications by Indian pharmaceutical or biotechnology companies with Indian patent office (as on Dec 31, 2004) Patent office Kolkata Delhi Mumbai Chennai Total Application filed 1757 1952 1545 3672 8926 Request filed for examination 703 484 267 1034 2488

Controversies about Patents for Pharmaceuticals: Patents provide legal protection to inventors by preventing other people from copying or using their ideas. However, when this protection is applied to medicinal drugs, it become very controversial. The proponents of patent protection for drugs argue that such protection is mandatory to attract investments for high risk research and development activities, making sure they will benefit from the sales later. However, as per the opponents, such provisions limit the availability of drugs in the market on which the lives of many people may depend. On one hand, patent protection encourages the development of new medicines for diseases by providing protection for investments made by pharmaceutical companies. On the other hand, it makes it difficult for the common man to afford such medicines. Development of a new medicine requires a lot of time as well as money effort. It takes years of research and testing, which can be very expensive. Thus, when companies take such a high risk, they ensure that they will be able to profit from the new drug. It could make pharmaceutical companies less likely to invest in medicines that are mainly needed in the developing world by encouraging them to focus on the most profitable investments and ignoring less profitable diseases. Patented drugs are found to be much more expensive than their generic counterparts. Thus, World Trade Organization has created regulation to ensure that essential drugs can be imported into developing countries in cheaper forms or through compulsory licensing. Another controversial topic related to patent protection is the use of medicines that are derived from plants. The point of concern is who should benefit from the use of drugs that are derived from plants that may already have been used as herbal medicines in certain parts of the world.