A deconstruction of Novartis’s defense of its challenge to the India patent regime.
Brook K. Baker
Northeastern U. School of Law
Program on Human Rights and the Global Economy
February 7, 2007
Given the barrage of negative publicity that Novartis has received as a
result of campaigns contesting its effort to overturn India’s strict new
patent regime, Novartis has issued a
three-page defense of its lawsuit.
This defense contains one truth, numerous half truths, and several flat out
Truth: Novartis seeks secure access to middle-income consumers via
patent-based monopoly rights.
“In India, Novartis is faced with a globalization dilemma that
characterizes many emerging economic powers today: two markets within one
country. India has a booming middle class on one hand, and a vast number of
extremely poor people on the other.
Half-truths: Novartis does seek monopoly rights in the India market and it
does compete with Indian companies, but it faces no realistic threat that
patent-free Indian generics would be shipped to its patent-protected
markets in North America, Europe and Japan.
[W]e take affluent India seriously as a formidable power with all the
rights and obligations that such status brings with it. As a consequence,
we seek to establish effective protection for pharmaceutical innovation in
“[I]t is clear that we seek business opportunities in India’s growing
economy. We also compete with Indian companies globally in attractive
markets, and the export of copies of our products into richer countries is
a major concern to us.”
Rich countries have stringent border controls, drug registration
procedures, and prescription practices that preclude import and sale of
generic versions of patented medicines. If Novartis’s complaint were true,
the U.S. would be flooded with cheaper generic versions of AIDS medicines
(or even of Glivec, which has been produced and sold at 1/10 the cost in
India), but, of course, it is not.
Half-truth: For Novartis, patents are truly non-negotiable, but it is not
true that the patent system is the best or only way of promoting research
“Protecting innovation is the foundation for massive R&D investments made
by the pharmaceuticals industry that are vital to medical progress.
Companies can continue to bring improvements and innovations to patients
and societies only with effective patent laws. For a research-based company
such as Novartis, patents are not negotiable.”
The public sector, especially in the United States, contributes significant
resources to the basic research that is the foundation of many
pharmaceutical innovations. Moreover, under the patent regime, incentives
for innovation are diverted from true social need towards block-buster
drugs (sales over $1 billion a year) and me-too drugs (minor variations
developed primarily to extent an existing patent monopoly or to gain market
share from a competing block-buster drug). Similarly, patent-based
monopoly rights divert pharmaceutical research away from preventative
innovations, like vaccines, and towards every-day medicines for chronic
diseases that primarily impact rich consumers in rich markets. As a
consequence of this perverse set of patent-based incentives, there is very
little research into the diseases that primarily affect poor people in the
In addition, there are many viable alternatives to the existing
patent-regime with respect to global public goods like medicines. Prize
funds, research and development treaties, and more robust and targeted
public investment in research are but a few of the proposals under
discussion that could reduce or eliminate the bloated sales forces and
supra-competitive profits that make drugs so expensive.
Half truth: Novartis now, belatedly supports one narrow set of
TRIPS-compliant flexibilities for accessing cheaper medicines, but it is
concurrently challenging another perfectly lawful flexibility, namely
defining scope of patentability so as to prioritize public health and to
increase access to medicines.
“Our case does not challenge provisions that provide for access under
international trade agreements, specifically the TRIPS and the Doha
Declaration. These flexibilities allow production for export under
compulsory licenses that have been issued for public health reasons. They
have been put in place to allow poor countries to safeguard access to
medicines that do not have sufficient local production capacity. In fact,
political agreement on the Doha flexibilities has been reached in order to
mitigate impact of TRIPS implementation in India.
Novartis confirms its new-found loyalty to one-narrowly defined TRIPS
flexibility – compulsory licenses issued under the August 30, 2003,
Paragraph 6 Implementation Decision. In this regard it is important to
note that Novartis previously joined 38 other drug companies and trade
associations in challenging South Africa’s completely lawful Medicines and
Controlled Substance Act that would have permitted parallel importation.
Maybe it now concedes the error of that 1998-2001 challenge to a lawful
TRIPS flexibility, but even now it erroneously implies that compulsory
licenses can only granted pursuant to the August 30 Decision.
Novartis supports the TRIPS conditions that promote access for developing
But more importantly, Novartis’ lawsuit directly challenges another key
TRIPS-compliant flexibility, namely the right to strictly define novelty,
inventive step, and industrial applicability – the baseline standards of
patentability – so as to exclude patents for minor variations of existing
chemical entities, for new uses of know chemical entities, and for mere
combinations of existing entities. Novartis and other drug companies want
to impose the same loose standards of patentability for India and other
developing countries that they have gained in the IP-crazed courts and
legislature of the U.S. and Europe. There is in fact a great deal of
variability of patent standards between countries, and India’s stricter
definition is completely permissible under existing TRIPS standards.
Lie: The Mashelkar Committee report did not directly address, let alone
hold, that certain provisions of the India Patent Act were non-compliant
“Many of the points we have raised around India’s patent laws have been
corroborated by the recent Mashelkar Committee report on patent issues in
India. The Government-established Mashelkar Committee voiced its views in
favor of incremental innovation and held that certain provisions of the
Indian Patent Act are not compliant with international agreements,
specifically WTO’s TRIPS agreement (Trade-related Aspects of Intellectual
The Mashelkar Committee in India was tasked with determining “whether it
would be TRIPS compatible to limit the grant of patent for pharmaceutical
substances to new chemical entity or to new medical entity involving one or
more inventive steps.” This definition would be even more restriction than
the version of section 3(d) of the Act that Novartis is challenging. The
only thing that the Mashelkar Committee actually said about the current
India’s Patent Act is that “There is a perception that even the current
provisions in the Patents Act could be held to be TRIPS non-compliant.”
(¶5.11.) A “perception” is not a “holding.”
Lie: Research-based pharmaceutical companies like Novartis do not make
their investment decisions based on monopoly marketing rights in developing
country markets – which has been produced and sold at 1/10 the cost in
India in rich country markets where their medicines enjoy even higher
standards of intellectual property protection.
“Knowing we can rely on patents in India benefits government, industry and
patients because research-based organizations will know if investing in the
development of better medicines there is a viable long-term option.”
Many research-based drug companies are exploring and cementing strategic
sub-licensing partnerships with Indian drug companies given their
comparative cost advantages in manufacturing for global sales and given
prospects for lower-cost clinical trials in India. However, drug companies
make 90% of their global sales in the U.S., Canada, Europe, and Japan.
India comprises only 1.3% of the global market. Does Novartis really want
people to believe that its going to make fundamental investment decisions
based on 1.3% of the global market instead of the 90%? It will set up shop
in India in order to make even more profits in rich country markets not
because of higher patent standards in India.
Donations are not an adequate defense: The best defense that Novartis
mounts is that because poor people can’t afford its drug it gives much of
it away in poor countries like India.
“In 2006, our access-to-medicines program reached 33.6 million patients.
Novartis spent USD 755 million last year alone. ... The Glivec
International Patient Assistance Program (GIPAP) is one of the most
far-reaching patient assistance programs every implemented on a global
scale. In India, 99% of patients who receive Glivec receive it free from
Novartis [6,600 people].”
However, corporate donations are not a sustainable solution: (1) they are
frequently hard to access, (2) they are revocable, (3) they are not offered
across the broad spectrum of patented medicines that poor people need, and
(4) they are designed primarily to forestall generic competition by
removing market incentives.
Novartis’s efforts to sanitize its efforts to eviscerate the heart of
India’s stringent patent regime are, in the end, indefensible. Its defense
of its cancer-drug patent today will undermine access to medicines for
HIV/AIDS, for heart disease, for diabetes, in fact for every new medicine
needed by desperately poor people in developing countries. Charity does
not hide avarice. By protecting its “fundamentals” – its non-negotiable,
patent-right aspirations – Novartis is revealing the cold and cruel logic
of Big Pharma: profits over people; letting poor people die is less
important than selling to middle-class Indians.