INDIA: Setback for Novartis in India Over Drug Patent

Indian companies will be free to continue making less expensive generic drugs, much of which flow to the developing world, after a court rejected a challenge to the patent law on Monday.

Aid organizations declared the ruling a victory for the "rights of patients over patents," but the Swiss drug company Novartis, which filed the case, warned that the ruling would discourage investments in innovation and would undermine drug companies' efforts to improve their products.

In the case, brought last year, Novartis asked the High Court in Madras to clarify a key element of India's 2005 patent legislation, arguing that it violated trade rules and breached the Indian Constitution. Indian law says a drug qualifies for a patent when it is a new invention or a significant improvement to an existing one. The law denies patent protection to new versions of drugs invented before 1995.

Novartis sought to determine whether an Indian court had been right to deny a patent on a modified form of the Novartis leukemia drug Gleevec, known in Europe and India as Glivec. The application was rejected on the grounds that the new drug was insufficiently different from the previous version.

Novartis argued that the section of the law prohibiting patents for any drug that is an "incremental innovation" violated the World Trade Organization's agreement on trade-related aspects of intellectual property rights.

If the Madras court had ruled the other way, the decision could have set an important precedent that might have allowed other international companies to receive patents on modified versions of existing medicines, thereby extending the period of their exclusive right to produce the drug. Such drugs account for most of the estimated 9,000 patent applications waiting for approval in India, according to Doctors Without Borders, which warned that such a ruling would have resulted in a "shutdown of the pharmacy for the developing world."

Indian companies provide 84 percent of the drugs to fight H.I.V. and AIDS that Doctors Without Borders supplies to patients worldwide. They also provide more than 25 percent of other essential drugs used by the organization.

Other relief programs are equally dependent on Indian-manufactured products.

Indian companies would have been prevented from manufacturing generic versions of Gleevec, which they sell domestically and internationally for about a tenth of what Novartis charges. The Swiss company charges $2,600 for a month's worth of the drug.

This could have left large numbers of patients without access to the cancer treatment, and the precedent created would have prevented the manufacture of many other drugs that Indian companies produce at a fraction of the cost of the brand-name originals.

The full text of the judgment was not immediately released, but according to Reuters, which attended the ruling, the judge said the court had no jurisdiction to decide whether Indian patent laws complied with the W.T.O. guidelines on intellectual property law.

The international pharmaceutical industry and global relief organizations have been scrutinizing this long-running case, aware that the ruling would have profound implications for their work.

"This is a huge relief for millions of patients and doctors in developing countries who depend on affordable medicines from India," Tido von Schoen-Angerer, director of the essential medicines campaign at Doctors Without Borders, said in a statement released by the organization.

Novartis said in a statement that the case would "have long-term negative consequences for research and development into better medicines" that could benefit people in India and other nations.

"It is clear there are inadequacies in Indian patent law that will have negative consequences for patients and public health in India," said Paul Herrling, head of research at Novartis. "Medical progress occurs through incremental innovation. If Indian patent law does not recognize these important advances, patients will be denied new and better medicines."

Officials from Novartis said they were awaiting the release of the full text of the ruling "to better understand the court's decision."

Dr. Ranjit Shahani, a vice chairman of Novartis, said in a statement: "We disagree with this ruling, however we likely will not appeal to the Supreme Court."

A spokeswoman for the company said Novartis thought it had "advanced the debate" with this court case and now wanted to combine forces with other interested parties to continue its campaign.

Novartis is awaiting a ruling in a separate case before the intellectual property rights appellate board in Delhi, appealing the earlier decision not to grant a patent for the modified form of Gleevec.

The position of the Indian government became clear in April when the health minister, Dr. Anbumani Ramadoss, said that the government was "very concerned" that the challenge by Novartis would restrict India's ability to produce cheap AIDS drugs.

The head of the Mumbai cancer patients' support group, Y. K. Sapru, welcomed the decision.

"This is a very major victory domestically and internationally," he said. "India has a $5 billion pharma industry, and 65 percent of those drugs are sold to the developing world and poorer people in the developed world. All that would have been suspended if the judgment had gone the other way, and there would have been a dearth of affordable drugs. That calamity has been prevented."

Yusuf Hamied, chairman of the Indian pharmaceutical company Cipla, also described it as a positive ruling.

"If Novartis had won, this would have been a tremendous setback for us," he said. "I am willing to pay a royalty on a new invention, but I am against monopolies. This would have increased monopolies, which would have meant higher prices."

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