Wednesday, April 03, 2013

Victory for Innovation - Novatris loses it's patent case in India

This week, Supreme court of India struck down an appeal to extend the patent protection for its cancer drug Glivec.

Supreme Court of India has refused protection for Glivec on the grounds that it is not a new medicine, but an amended version of a known compound. Indian Supreme court rightly dismissed the appeal - as Novartis failed to show that it had done any new innovation - on its existing drug, and minor modification of the drug was just a trick used to extend the patent and market monopoly over the drugs.

The cost of Glivec is $70,000 per year, while the generic version costs about $2500! There is this huge premium being charged by patent holders over the patented drugs - that has made such drugs unaffordable to 99% of the world population - so extending the patent for 20 more years will mean a death sentence to millions around the world. No wonder doctors all over the world welcomed this ruling.

Even, Dr. Brian Druker, inventor of Glivec welcomed this judgment.

On a separate and unrelated event, Daniel Vasella, the outgoing CEO of Novatris just had to turn down a $78-million severance package – reacting to public outrage in Switzerland. After all, a company that can afford such golden handshakes for their CEO in the first place can't be suffering too much loss from this court ruling.

Patents and Innovation

Patents & patent protections are awarded to inventors as a financial incentive for their hard work. In case of pharmaceuticals, this patent protection regime has been converted into a profit machine by charging enormous price for patented drugs.

Today, Drug companies are not really inventing new medicines, instead they are using their R&D capability to tweak currently patented & protected products and extend the patent for 20 more years. This kind of perpetual patent protection results in higher profitability for the company - but stifles innovation.

Drug companies are Companies are using host of defensive patenting strategies - such as patenting second generation products - which is an insignificant tweak over the original drug and then filing of numerous patent applications for the same medicine. This prevents other companies from developing potential new drugs that was based on an existing drug. Such predatory practices has led to steep increase in drug prices all over the world and has blocked the development of new drugs to treat more common diseases.

Global Impact

In the United States, companies can get a new patent for a drug by altering its formula or changing its dosage. The companies contend that even minor improvements in medicines — changing a pill dosage to once a day instead of twice a day — can have a significant impact on patient wellness. But critics say a majority of drug patents given in the United States are for tiny changes that often provide patients few meaningful benefits but allow drug companies to continue charging high prices for years beyond the original patent life.

Such practices has led to run away drug prices in the USA, which makes such life saving drugs unaffordable to billions of people around the world. It is in this context, the supreme court ruling has global impact. Companies can now make generic versions of drugs for which the original patent has expired. This low cost generic medicines will be affordable to more than 80% of world population. Now that India has taken a strong stand on drug patents, other countries such as South Africa, Brazil, Philippines, etc., will be encouraged to make similar rules - which will lead to more affordable health care.

Closing Thoughts

Supreme court ruling is a landmark ruling in global Patent protection regime. Drug companies can no longer play around the original drug, and maintain a perpetual patent for the drug. Companies are encouraged to develop new drugs that address hitherto unaddressed and untreatable diseases.

One of the reasons the Bill and Melinda Gates foundation is so active in developing new drugs for the diseases of the poor (such as malaria) has to do with the fact that pharmaceutical innovation is too much driven by potential economic benefits of future drugs.

Drug companies will now have to embrace the bottom of the pyramid markets for growth and profitability.