Human history is rich in impassioned but strange advocacies in the name of the poor. Here’s one example. An anti-cancer drug patented and marketed by an MNC costs around $ 2600 per patient per month. The generic version manufactured in India costs around $ 200 per patient per month. The generic version is cheaper. But is it cheap enough for a poor Indian; India’s per capita annual income is $ 725? The answer should be obvious. It makes no difference to India's poor whether the patented or the generic version is in the market. Therefore, and if they had the time like you and me to be amused at life’s ironies, poor Indians would have had a laugh if they knew that well-meaning religious leaders in Europe have issued calls for protecting their access to the generic version of the drug — a drug they can’t afford — and criticised the MNC, Novartis. The Swiss company is fighting a case in the Chennai High Court to get its patented version, Glivec, accepted under Indian law. With these church fathers are Indian and Western NGOs, organised and unorganised health activists — and the Indian government, which denied the patent to Novartis.The MNC has argued that the denial violates India’s commitment to the WTO intellectual property rights regime. We are not going to spend time arguing whether India’s patent law is or isn’t WTO-compatible; the issue is before the court now. We will argue that even if the law in the present form is deemed WTO-compatible, it is flawed, that this flaw is against India’s interests and that correcting the flaw will not have any real adverse impact on the poor’s health care.India changed its patent law in 2005 to comply with WTO requirements and allowed products to be patented. That means A’s patented product can’t be produced legally in a different way by B. Between 1970 and 2005, the reverse situation applied and thousands of Indian pharma companies made money by reverse engineering Western companies’ patented drugs. This violation of property rights however had the effect of establishing a strong indigenous pharma industry, of which quiet a few, like Nicholas Piramal and Ranbaxy, are now potential world-class players.Tucked in India’s new patent law however are clauses, under Section 3 (d), that stretches the conditions of granting patents a little too far. This says patents won’t be given to derivatives of known substances unless there’s proof they differ in terms of ‘efficacy’. In even simpler English this means that patents can be denied to a demonstrably new and better version of an existing drug.No one is arguing for new patents on frivolous modifications of existing patented formulations. This practice is not uncommon globally, is called evergreening and must be disallowed by patent offices in India. But Section 3 (d) goes beyond, because many genuinely better drugs are actually improvements on existing formulations. Indeed medical research history can in part be understood in terms of ‘incremental innovation’. Clause 3 (d) undoubtedly helps generic drug manufacturers — two of them are parties in the Chennai case — but it doesn’t meet the test of logic or that of respecting property rights.Equally important, it doesn’t meet the current needs of Indian pharma industry. Nicholas Piramal is working on a new version of Novartis’s Glivec. If successful, it would be an incremental innovation. But the same clause that has been used by the government to deny a patent to Novartis — the Swiss MNC had sought a patent in India for what is called the ‘beta crystal’ version of the original formulation — will apply to Nicholas Piramal, too.India’s pharma majors are way behind Western MNCs in terms of research budgets. Developing new chemical entities (NCEs), that is, absolutely new formulations, is a horrendously expensive process. But developing new medical entities (NMEs) — demonstrable improvements on existing formulations, which are typically patented by MNCs — are affordable and doable. India has the research talent. But India needs the right law.The interests of generic drug manufacturers can’t be the sole guide to policy. Where would Infosys be today without intellectual property rights protection? Minus a change in the patent law, there would be no Infosyses in Indian pharma.Therefore, whether or not Novartis wins the case, India should allow incremental innovation. Otherwise, we condemn the domestic pharma industry to copycatting and lowbrow, low-value work. But changing patent laws is not what will condemn India’s poor to terrible health care. They are already condemned. India’s public expenditure on health is an appalling 1 per cent of GDP (public plus private expenditure is 3 per cent of GDP, which is nothing to be proud of either). Out of this criminally measly expenditure on public health, only 15 per cent goes to buying medicines that are given out free in public hospitals and health care centres — 85 per cent is spent on salaries, wages and establishment costs. This is the real story about health care for the poor in India: the government spends little and most of what it spends goes to maintaining a bloated bureaucratic establishment. This has nothing to with patents; in any case drugs for most common ailments are off-patent (that means patents on them have expired and copycatting of the original formula is perfectly legal). Public health in India also suffers from poor social infrastructure — dreadful sanitation facilities for example, as the recent UNDP report makes clear. This has nothing to do with patents either.There’s a private sector problem — too little of global, including Indian, pharmaceutical research budget is devoted to diseases that typically affect the poor, whether in India or elsewhere. Ninety per cent of global ailments affect the developing world; only three per cent of pharma research budget is devoted to this. This is of course a reflection of purchasing power realities. But health can’t only be left to the free market (I agree with all NGOs on this). The market can however be innovatively used. Many research projects on diseases for the poor are abandoned because returns are not deemed to be attractive. If an efficient, not-for-profit private sector organisation identifies these abandoned projects, gets the patents transferred gratis, raises funding to complete research and clinical trials and then licenses the formulation free to a developing country pharma company, the latter can market the drug at very low prices and still make a profit, particularly if volumes are high. Who would benefit? The poor of course. This sounds like a free-market fantasy. Free market fantasies must be good because this has happened.OneWorld Health, an American not-for-profit pharma company, has been lent patents from university research departments and biotech firms. It has worked on speeding up research in diseases like diarrhoea, which kills 2 million mostly poor people around the world. It held field trials in India for developing a cheap cure for another disease of the poor, visceral leishmaniasis (fever, weight loss, anaemia), and have been in negotiations with an Indian pharma company, Gland Pharma, for manufacturing the drug. More, many more such initiatives are required.Health activists are raising the issue about AIDS drugs — changes in the patent law will stop manufacture of cheaper versions. They ignore the potential of Indian pharma companies incrementally innovating on existing formulations. They also don’t talk about compulsory licensing, a provision that allows the government to essentially suspend a patent holder’s rights and allow mass manufacture in public interest.Take this example. Novartis is the global leader in research on dengue, a disease India knows and fears. Suppose Novartis gets a patent on a dengue drug — since it will most likely be an NCE, even India will give a patent under its current law. Dengue strikes India. The poor are badly affected. Novartis’s patented drug is too costly. The government can use compulsory licensing. But it cannot encourage, because of Section 3 (d), Indian companies to incrementally innovate on Novartis’s formulation. We can’t have an Indian solution to an Indian problem.In whose name can you justify that?
