The big question facing HIV-positive people in India is access to affordable antiretroviral drugs. Already, second-line drugs cost over Rs 1 lakh per person per year in India, compared to approximately Rs 50,000 in 66 other developing countries. K M Gopakumar outlines some measures the government can take to rein in prices

In February 2001, the Indian pharmaceuticals company Cipla made the historic announcement that it would sell a generic version of the three antiretroviral (ARV) drugs used in combination for US$ 350 per person per year (PPY), a fraction of the $ 12,000 PPY charged by multinational companies. Prices fell further as other Indian generic companies got into the production and marketing of ARVs. This also enabled national governments and non-governmental organisations to initiate free antiretroviral therapy (ART) programmes. Currently, more than 2 million people in the Global South receive ARVs.

In India, more than 100,000 people receive first-line ARVs today, through the government’s free treatment programme started in April 2004. However, about 10% of people living with HIV/AIDS need treatment, and, according to the latest estimates, there are 2.5 million HIV-positive Indians. That means 250,000 Indians need the drugs but more than half of them do not get them.

There is also an urgent need for affordable second-line treatment. In the absence of official data, estimates of people who have developed resistance to first-line drugs and who need second-line drugs range from 1,800 to 35,000. These people have two options -- the debt trap or the death trap. Activists have campaigned for the availability of second-line drugs in the government programme. The announcement with regard to second-line treatment is expected to take place on December 1, 2007.

The efforts of activists and governments are threatened by the amended Patents Act, 2005. The product patent regime has emerged as a major potential threat to the sustainability of the free treatment programme as well as affordable drugs in general. What are the implications of the new patent regime on access to ARV drugs in India, and what can we do about them?

Process patents and access to drugs

The absence of product patent protection to pharmaceutical inventions in India till 2005 contributed in three ways towards improving people’s access to ARV drugs. Because the Patents Act, 1970, recognised patents on processes alone, Indian pharmaceutical companies could produce generic versions of drugs and drive down the prices of drugs from multinationals. Second, though fixed-dose combinations (FDC) are ideal for patients, multinational corporations did not wish to manufacture these by cross-licensing their patents. As Indian pharmaceutical companies had no such problems, they developed and manufactured FDCs and thereby reduced the number of pills to be taken from six to two per day. Finally, in many countries, patents covered even paediatric doses, which meant they could not be available at affordable prices. Again, Indian generic pharmaceutical companies introduced generic paediatric doses at affordable prices.

Under the new patent regime with the Patents (Amendment) Act 2005, it is not possible to introduce generic versions of drugs that are under patent protection. This will affect the availability of existing drugs -- both generic drugs currently available for which patent applications are pending and new drugs for which generic versions are not yet available. It can also affect the availability of new drugs currently in research and development.

Currently there are 23 ARV drugs that have obtained marketing approval for treating AIDS. They are classified into five groups: nucleoside reverse transcriptase inhibitors (NRTIs), non-nucleoside reverse transcriptase inhibitors (NNRTIs), protease inhibitors (PIs), fusion inhibitors and integrase inhibitors. These classifications are broadly based on the way in which these drugs contain the destruction of T4 cells. (For second-line treatment, the WHO has recommended one NNRTI and NRTI each, along with one PI for those exposed only to NRTI in the first-line treatment.)

Only two of these 23 ARV drugs are believed to be invented after 1995. The rest are not eligible for patent protection because the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) provision on product patents is applicable in India only from January 1995.

Availability of existing drugs under the process patent regime

Despite the constraints of the amended Patents Act, certain provisions set limits on what can be patented as well as the action that generic manufacturers can take to prevent the granting of frivolous patents.

Pharmaceutical companies often misuse patent protection by making small modifications of a known substance and applying for a new patent to extend their monopoly even after the patent on the original molecule has expired. The amended Act contains safeguards against this practice, known as ‘evergreening’ patents. Information in the United States Food and Drug Administration’s ‘Orange Book’ (containing a list of all drugs approved for marketing in the USA) on patent expiry dates reveals that there are multiple patent applications on a single ARV drug, with different expiry dates. In other words, there are evergreening patent applications on many drugs.

In order to check the practice of evergreening, Section 3 of the amended Indian Patents Act prevents the patenting of known substances. Sixteen categories of discovery -- three relevant to pharmaceutical patents -- are excluded from patent protection as they are judged to be outside the definition of an invention. In an elaboration of the section in the Act on what are not considered inventions, Section 3 (d) introduced the notion of ‘efficacy’. This excludes “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”. Further, “for the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differsignificantly in properties with regard to efficacy”.

Limitations to the safeguard provided by Section 3 (d)

However, a patent can be granted if the applicant proves that the claimed invention related to the known substance results in the enhancement of the known efficacy of that substance. A patent may also be granted to a derivative if the applicant proves that it differs significantly from the existing substance with regard to efficacy. Further, the Patents Act itself does not provide any definition to the term ‘efficacy’. Therefore, as Section 3 (d) adopts a case-by-case approach, it does not provide a comprehensive safeguard against evergreening.

The term ‘efficacy’ was recently defined by the Chennai High Court in its judgment on the Novartis petition challenging Section 3 (d). According to the court “…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 light of this judgment, a substantial number of patent applications related to ARV drugs currently under examination will attract the scrutiny of Section 3 (d). Public interest groups and generic companies in India have already identified approximately 120 patent applications on various ARV drugs. These applications cover both first-line and second-line drugs. Table 1 is a list of some pending patent applications currently being examined by the Indian Patents Office. These applications claim patents in the form either of salts or of combinations or isomers, and therefore attract Section 3 (d) of the Indian Patents Act.

Table 1

A select list of patent applications on ARV drugs in the mailbox currently being examined by the Indian Patents Office

Substance name	Title	Indian application number	Priority date	Applicant
Lamivudine+Zidovudine	Pharmaceutical compositions	2044/CAL/1997A	31/10/ 1996/ UK	Glaxo
Nevirapine/Hemihydrate	Pharmaceutical suspension comprising Neverapine Hemihydrate	2485/DEL/1998A	NA	Boeheinger Ingelheim
Trizivir	Antiviral combinations	1206/CAL/1997A	NA	Glaxo
Tenofovir	Nucleotide analog composition	986/DEL/2002A	25/7/97/US	Gilead
	Nucleotide analog composition	963/DEL/2002A	25/7/97/US	Gilead
	A method for preparing Form 2 or Form 4 Crystalline Adefovir Dipivoxil	989/DEL/2002A	25/7/97/US	Gilead
Lamivudine	Pharmaceutical compositions	479/CAL/1998A	24/03/ 1997 and 26/03/ 1997	Glaxo
Amprenvir +AZT+Ziagen	Antiviral combinations	1206/CAL/1997A		Glaxo
Amprenvir+AZT+3TC+FTC	Vaccine	2172/MAS/1998A	26/09/ 1997	SmithKline Beecham
Amprenvir	Pharmaceutical formulations	727/DEL/1997A	22/03/ 1996/ USA	Glaxo
Abacavir	A novel salt	872/CAL/1998	17/5/97/ UK	Glaxo
Lexiva Fosamprenavir Calcium	Calcium (3S)	IN/PCT/2001/00039	18/7/ 1998/ GB	Glaxo
Lopanavir	Process and intermediates for preparing retroviral protease inhibitors	259/MUMNP/ 2003	31/08/ 2000	Abott

Source: Compilation by Leena Menghany, Medicins Sans Frontieres

Further, a majority of the 327 new molecular entities (NME) approved between 1995 and 2005 by the US FDA would also attract Section 3 (d). Since it takes eight to 10 years from the date of patenting to marketing approval, the vast majority of these 327 NMEs were invented before 1995 and the patent applicant must prove enhanced efficacy.

It is to be noted that even the Chennai High Court judgment does not rule out the possibility of evergreening patents. For instance, a combination of two drugs may have a substantial improvement in therapeutic effect and be held patentable. Also, this judgment is a high court decision, not a law, so while it may set a precedent it is not binding.

In the final analysis, all the drugs that we are using for first-line and second-line treatment will not be eligible for patent protection in India in light of Section 3 (d). However, the effectiveness of this section depends on the skill and willingness of patent examiners to apply the law to real-life situations. The current infrastructure, including human resources, is insufficient to meet the challenges posed by the flood of evergreening applications. Public interest groups must be on guard.

Public scrutiny through pre-grant opposition

Section 25 of the Patents Act provides an opportunity for the public to scrutinise all patent applications and state their opposition before or after the grant of patent. This section provides various grounds to oppose the grant of patent. The Indian Network of Positive People (INP+) along with its associates, including the Delhi Network of Positive People (DNP+), has filed 13 patent oppositions against various evergreening applications. Table 2 provides details of these oppositions.

Public scrutiny and opposition may have an impact on MNC efforts to patent their drugs in India. Glaxo has withdrawn its patent applications on the first-line combination Combivir. Patent applications for Atazanavir and the Lopinavir/Ritonavir combination in gel form -- critical for second-line treatment -- are now considered to be effectively abandoned. However, the patent application for a heat-stable version of Lopinavir/Ritonavir is still under examination. The public interest group I-MAK has filed a pre-grant opposition in India arguing that the technique used for making the heat-stable version is not new and lacks inventive steps. Opposition has also been filed to the patent application for Tenofovir, another drug used for both new-generation first-line and second-line treatment.

Immunity against patent infringement

The other relevant safeguard in this context is Section 11 A of the Indian Patents Act, which provides immunity to (generic) drug manufacturers against suits alleging patent infringement under particular circumstances. Section 11 A states that [as] “a patent is granted in respect of applications made under sub-section (2) of Section 5, 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 the first day of January 2005 and which continue to manufacture the product covered by the patent on the date of grant of the patent and no infringement proceedings shall be instituted against such enterprises”.

This means that all drugs which were in the market before the introduction of product patents -- this would include all first-line drugs except the new-generation first-line drugs -- will continue to be available in the market, but the (generic) manufacturers may have to pay a “reasonable royalty” to the patent holder. Still, even if the patent office grants a patent on a first-line drug this does not stop the production and marketing of those drugs in India if production started prior to December 31, 2004; it would be eligible for immunity from infringement proceedings provided under Section 11 A of the Patents Act.

However, the Act does not put a ceiling on this royalty, which means that if the patent holder sets a very high royalty, patients will have to pay higher prices for the drugs.

With the exception of Tenofovir, that too made by a single generic manufacturer, no second-line drug is eligible for this immunity. Hence there is a need to oppose these patents using pre-grant opposition as available under Section 25 of the Patents Act.

Supply of new drugs

The most important challenge in the product patent era will be to ensure access to new drugs currently in the research and development pipeline, and those that are yet to be launched in the market. Two provisions in the amended Act can be used to deal with such situations -- compulsory licence and government use. However, it may be difficult to actually implement these safeguards.

Compulsory licence

Compulsory licence is a licence given by the government to a third party to use a patent without the authorisation of the patent holder. It permits a government to issue a licence to manufacture and export a patented drug “in certain exceptional circumstances”. According to the Commission on Intellectual Property Rights (CIPR), an independent commission appointed by the UK government to examine the implications of intellectual property on development, “developing countries should establish workable laws and procedures to give effect to compulsory licensing and provide appropriate provisions for government use”. The CIPR recommended that developing countries adopt effective compulsory licensing mechanisms which include straightforward, transparent and fast procedures that do not suspend the execution of the licence. The effective and efficient issuance of compulsory licences is imperative to curb the abuse of patent rights by the patentee.

However, the compulsory licence provisions in the Indian Patents Act do not ensure the efficient issue of compulsory licences. Even though the language of Section 83 of the Patents Act reflects the spirit of Articles 7 and 8 of the TRIPS Agreement and of the Doha Declaration on Public Health and the TRIPS Agreement, the subsequent sections do not do so. With the exception of a “national emergency”, “extreme emergency” or “public non-commercial use”, a compulsory licence is available only three years from the date of grant of patent. Further, the legislation does not state clear grounds for the issuance of a compulsory licence. For instance, can a compulsory licence be issued when a patentee refuses to issue a voluntary licence on reasonable commercial terms? The details of anti-competitive practices are not spelt out clearly in the Patents Act or Competition Act. This leaves a gaping hole in the process that is likely to be exploited by the patent holder.

The procedural requirements to issue a compulsory licence are cumbersome and do not provide timeframes for the conclusion of the process. This will result in extreme delays in the issuing of compulsory licences. In addition, there is no ceiling on the remuneration payable to the patent holder, which will inevitably lead to demands for excessive royalty and unnecessary litigations. Finally, the injunction remedy, optional under TRIPS with regard to compulsory licence litigations, gives extra power to the patentee to block the compulsory licence for a long period of time. All these requirements cumulatively make the compulsory licence system an unworkable option in India.

Section 92 (a) of the Patents Act permits the waiving of procedural requirements -- such as efforts to obtain a voluntary licence and prior hearing -- for issuing a compulsory licence for drugs for HIV/AIDS, malaria and tuberculosis. However, to invoke this provision the government must notify HIV/AIDS as a national emergency. Such a notification is yet to be made.

Government use

The amended Patents Act provides for three types of government use. First, a patent is granted in India on condition that the government may import the medicines for the distribution of drugs in public sector hospitals or at any other hospital. Second, the government or authorised persons may use the patent against a royalty payment. Third, the central government may acquire a patent after paying compensation. The government can exercise these powers at any time.

However, the Act permits the patent holder to file legal challenges to the government’s decision to use or acquire the invention. This means the patentee can delay such use and the government will have to prove its need before the court. Using the TRIPS flexibility the government should have opted for administrative review. It also fails to use the flexibility of barring courts from issuing injunction in the case of government use. These provisions must be amended if they are to be implemented effectively.

Second-line drugs: The real barriers to access

As stated earlier, there is an urgent need to provide second-line treatment through the free ARV treatment programme. It is clear from the above discussion that it is not the patent but the cost of drugs that prevents the introduction of free second-line treatment. Press reports have indicated that while the government spends Rs 7,500 PPY for first-line ART drugs, it will have to spend Rs 1 lakh PPY for second-line drugs. Patent protection is not responsible for this high price, at least for the moment.

At present, Indian companies manufacture all the drugs that are on the international market for first-line and second-line treatment. Does that mean that people are able to get these drugs in the market at affordable prices? No. The prices charged by generic pharmaceutical companies in India itself are putting these drugs out of the reach of many people. The prices charged in India are higher than that charged by the companies, in certain cases, on the international market.

Indian companies produce generic versions of all types of protease inhibitors (PIs) used for second-line treatment including the heat stable RTV-boosted Lopinavir (LPV/r). Unlike first-line drugs, the prices of second-line generic drugs are high. Currently, the second-line regimen (TDF+ABC+LPV/r) would cost approximately Rs 10,00,00 or more PPY in India. The same regimen is available in 66 developing countries for Rs 47,951 as a result of measures taken by the Clinton Foundation.

One of the standard explanations for the high drug prices is that there is no competition among generic manufacturers. But there are between six and 10 Indian manufacturers of AIDS drugs and the drugs are not under patent in India, though patent applications are pending on many of them.

In any case, patents have not acted as a barrier in the production of ARV drugs in India. Indian generic companies either opposed patent applications or obtained royalty-free voluntary licences such as for the production of Atazanavir and Tenofovir. As a result, they are made by more than one manufacturer; for instance, there are at least four manufacturers of TDF and six manufacturers of LPV/r in India.

This shows that competition in the market has failed to bring down prices and warrants government intervention to do so. One should keep in mind the fact that approximately 80% of people in India seek healthcare from the private sector. In the absence of such government intervention, one has to depend only on the public sector to access ARV treatment. This results in great delays in reaching out to people who need immediate treatment in light of various constraints currently faced by the public sector including infrastructure and human resources.

Many companies blame the tax regime in India for higher prices. It is a fact that taxes in the form of excise duty, VAT/sales tax and octroi contribute approximately 20-25% of the price of a drug. But there is no credible explanation for the other 75% of the difference in drug prices. While the government has a duty to re-examine the tax regime for these life-saving drugs, companies cannot blame high prices entirely on the tax regime. Further, companies argue that prices quoted in the Clinton Foundation price list are the price of bulk purchase (tender price) and therefore should not be compared with the retail prices quoted above. This argument fails to explain the huge difference in the retail price and tender price.

Conclusion

The new patent regime continues to threaten access to new-generation first-line treatment as well as second-line treatment. While there are various legal safeguards to ensure the availability of essential life-saving drugs, their implementation depends on a proactive government and active public interest groups. Equally serious, Indian pharmaceutical companies must explain why their generic drugs are many times more expensive in India than in other developing countries.

Indians with AIDS have the right to affordable treatment with both first-line and second-line drugs. This requires the cooperation of government, industry and the health movement.

List of pre-grant opposition

Name of drug	Name of company	Date and place of filing opposition	By (name of network)	Legal and communication support	Remarks
Combivir	GSK	March 30, 2006, Kolkata	MNP+ and INP+	Lawyers Collective, MSF Access Campaign	GSK claim to withdraw their patent, but no confirmation from patent office
Nevarapine Hemihydrate	BI	May 9, 2006, Delhi	PWN+ and INP+	I-MAK and MSF	Written response from BI, opposition hearing soon
TDF	Gilead Science	May 9, 2006, Delhi	DNP+ and INP+	Alternative Law Forum and MSF	Gilead is trying to dilute the opposition by offering voluntary licensing to Indian generic companies
TD	Gilead Science	September, Delhi	DNP+ and INP+	I-MAK and MSF
Atazanavir	Novartis	July 27, Chennai	KNP+ and INP+	Lawyers Collective and MSF	Abandoned
Ritonavir	Abott	August 2006, Mumbai	DNP+ and INP+	I-MAK and MSF
Lopinavir	Abott	August 2006, Mumbai	DNP+ and INP+	I-MAK and MSF
Kaletra (soft gel)	Abott	August 2006, Mumbai	DNP+ and INP+	I-MAK and MSF	Abandoned
Amprenavir	GSK	July 13, Delhi		LC and MSF
Abacavir	GSK	June	INP+	I-MAK and MSF
Effavirenaz	Merck	April	INP+	Lawyers Collective

AIDS drugs cost more in India than in other developing countries Standard first-line drugs are available at $ 132 (Rs 5,500) per person per year (PPY) in many countries through the public health system or non-governmental organisations. The same drugs cost at least 50% more in the Indian retail market. The new-generation first-line treatment, consisting of TDF and EFV in combination with either 3TC or FTC, requires taking just one pill every day. The generic versions of these drugs are available internationally at half the price at which they are sold in India while the international price is beyond the reach of the vast majority of Indians. At least two generic companies from India -- Cipla and Matrix -- are producing either or both of these combinations. Cipla charges Rs 54,000 PPY for a combination of TDF, FTC and EFV in the domestic market. Yet Matrix was able to negotiate with the Clinton Foundation to sell TDF, FTC and EFV at $ 389 (Rs 15,847) PPY and to reduce the price of TDF, 3TC and EFV to $ 339 (Rs 13,899) PPY. If these companies can sell at these prices internationally there is no justification for charging 100% higher prices in India. Matrix agreed to cut the price of the widely used second-line drugs TDF, ABC, 3TC, TDF+3TC combination and LPV/r. Ranbaxy has agreed to cut the price of the antiretroviral drug didanosine. Cipla has agreed to cut the price of 3TC, TDF and TDF+3TC combinations. Thus the price cut announced by the Clinton Foundation internationally cover all the widely used drugs for second-line treatment. However, the Clinton Foundation’s announcement does not cover India, and people who need these drugs in India, where their production takes place, will not be able to access the drugs at an affordable price.

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and the Doha Declaration on Public Health and the TRIPS Agreement The agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is part of the Final Act of the Uruguay Round which established the World Trade Organisation (WTO). Hence, all members of the WTO must comply with TRIPS. TRIPS prescribes minimum standards of intellectual protection to various types of intellectual property protection, including patents. Regarding patents, TRIPS prescribes compulsory product patent protection for pharmaceutical and chemical patents. As a result of product patent protection, a legal monopoly is established with regard to patented medicines. Often this legal monopoly results in high prices and compromises access to medicines. The deadline for developing countries to comply with product patent requirements was January 1, 2005. However, for ‘least developing countries’ the deadline is 2016. Since the majority of developing and developed countries do not have the manufacturing capacity in the pharmaceuticals sector, the introduction of the TRIPS patent regime in developed and in certain developing countries compromised access to medicines for treatment of HIV/AIDS. The growing public anger on this issue forced WTO member countries to adopt a declaration in the Doha ministerial meeting, which is known as the Doha Declaration on Public Health and the TRIPS Agreement. The Doha Declaration unequivocally states that “the Agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all”. Further, it “reaffirms the right of WTO members to use, to the full, the provisions in the TRIPS Agreement which provide flexibility for this purpose”. Thus, using TRIPS flexibility becomes the dominant strategy to address access to medicines within the TRIPS patent regime. However, it is too early to make an assessment on the utility of this strategy in the Indian context.

(K M Gopakumar is with the Centre for Trade and Development (Centad), New Delhi)

InfoChange News & Features, January 2008