Corrective measures to be taken against policies of Big Pharma

Narendra B ZaveriWednesday, September 28, 2022, 14:50 Hrs  [IST]

The previous two parts of this article, refer to the Big Pharma’s most damaging policy and actions, primarily intended to control the fast all around growth of the Indian drug industry, having direct impact on the availability of the vital life saving drugs to millions of citizens during last two decades. This has been made possible by the patent law amendments of Section 25 and the other Sections referred below. It is possible to contain and control the mischief by amending the Patent Act, Rules and the government policy to protect, firstly millions and millions of Indian citizens  -  their lives, heath, and also the Indian drug industry.

In view of the past conduct of Big Pharma in India referred in the previous part, the need and urgency of amending the Patents Act, cannot be overemphasized. Objections, if any, of Big Pharma to such amendments have to be ignored. The amendments suggested are in compliance with the TRIPS Agreement and also consistent with the constitutional provisions.   

Since Big Pharma have themselves blocked production, distribution and importation of their products in India, they have nothing to lose and cannot complain. Lives of millions of Indian citizens and development of Indian drug industry are of much greater importance than negative policies of Big Pharma.

Proposal No. 1

Definition of ‘working of patent’ for compulsory licence.
Section 82 – Add clause (c): Add the following as clause (c) of Section 82:

“(c) reference to working of the patent in India for the purposes of compulsory licence requirements, shall mean actual manufacture or production of the article or product of invention in India either directly or through licensee.”

Reason for proposal
To make India self sufficient or self reliant. India has a huge population and a huge demand for industrial and consumer goods. Compulsory License (CL) provision will enable production within the country of wide range of goods, while at the same time ensuring license fee income for the patentee.

Proposal No. 2
The grant of CL is provided in patent system as part of give and take bargain patentee. The CL provisions are intended to be consideration and a matter of right for the other citizens and interested parties for the restriction impose on them by grant of patent. The Patentee cannot object to the grant of CL. It is matter of right and remedy for the other citizens. The CL provisions of 28 USC 1498 in force in USA also do not provide for any right to patentee to object to the grant.

The word ‘compulsory’ in CL necessarily implies that the patentee has no right to object to the grant. The TRIPS Agreement also specifically provides in Article 31 (title) the words are ‘other use without authorization of the right holder’.

The following provision shall be added as 84 A after Section 84: Sec 84 A:

Other use without authorization of the right holder
i) Any person desiring to use the patented invention in India during the patent term, by way of production, marketing and distribution of the patented product, may apply to the controller of patents for grant of such license for the purpose, and the controller shall grant such license subject to the following terms and conditions.
a) Such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such effort have not been successful within three months.
b) Such use may only be permitted for production, distribution, marketing and or sale of the product within India and not for exports.
c) The licensee shall be liable to pay to the patentee, royalty, at the rate of 2% on the licensees sale price of patented product.
ii) In the event of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use, the central government may, without the prior consent of the patentee,  issue licenses to any person or persons and on such terms and conditions and for such period to meet such emergency or contingencies. The terms and other conditions including royalty as prescribed by Section 92 shall be applicable to all such licenses.

iii) The govt shall have a power to grant compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work, product hopping, evergreening and fixing, maintaining high prices more than 5 times the cost of production of the patented product. However, such license may not be given before expiry of two years after grant of patent. The licensee shall be liable to pay to the patentee a royalty of 2% on the sale price of the product during the patent term.

Reason for the proposal of 84 A (i)
This provides right for third parties to manufacture, distribute or market the patented item in India during the patent term without the consent of the right holder. Article 31(b) of TRIPS Agreement specifically provides for right of third parties for grant of such licenses without the consent of the right holder. Such provision is also in compliance with the basic framework of the patent system, namely, give and take bargain. It is also necessary for compliance with the provisions of Article 14 and 19 (1) (g) of the constitution of India.

Reason for the proposal of 84 A (ii)
This subsection is in compliance with Article 31(b) of the TRIPS Agreement and empowers the govt to use the patented invention in circumstance emergency etc. It also empowers the government to meet the situations covered by the Directive Principles of State Policy, particularly Article 47.

Reason for the proposal of  84 A (iii)
This in compliance with Article 5A (2) of Paris Convention read with Article 2 of TRIPS Agreement, makes special provision for grant of compulsory license to prevent abuses of the patent system. The need for such specific provision and power is emphasized by the recent reports of abuses of patent system, particularly by Big Pharma companies and brought out in the report of Committee of Oversight and Reform of US on 10th December 2021 and also WIPO report of 2022 (both referred above). The abuses of the patent system referred in the subsection show that there is actually no patentable invention contributed by the patentee and claims are only false, frivolous and fraudulent.

Proposal No. 3
Delete Section 87 and reason for proposal: Section 87 provides for patentees right to object to a grant of a compulsory license. This is in direct violation of the fundamental scheme of patent system. As a necessary part of the give and take bargain, i.e. patent system, in consideration of the right and protection given to the patentee, other citizens and the State are entitled to use the patent on reasonable and fair terms with no right of objection to the patentee. Section 87 as amended in 2005, is designed to provide to right of objection to the patentee. Accordingly, Section 87 has to be deleted. It is also in direct violation of the constitutional right guaranteed to all other citizens by article 19(1) (g).

Proposal No. 4
Remedy – royalty – no preventive injunctions.
Sections 108 (3) :
Substitute the following in place of sub-section (3) of Sec 108 and adding the Proviso as set out below:
(3) Notwithstanding anything containing in subsection (1) & (2) above, the remedy for infringement of a patent for drugs, Pharma and medical devices, shall only be by way of compensation for any past use and royalty for future use at a rate not exceeding 6% on the defendant sale price of the drug, and shall not be by way of temporary or permanent injunction.  

Reason for proposal
Grant of relief - whether by way of injunction or compensation - is always a matter of Court discretion and not a matter of right of plaintiff as per established law. In case of suit for patent infringement in respect of drugs, pharmaceuticals and medical devices, the patients requiring such drugs are also vitally affected by any relief granted in the suit, though they are not parties to the suit. Grant of a temporary or permanent injunction will directly and vitally impact on millions of patients requiring drugs, pharmaceuticals and medical devices. Their very lives and health are directly affected by denial of access to the patented drug etc. While the loss to the plaintiff or defendant can be compensated in terms of money, the sufferings and deaths of millions of patients requiring drug etc cannot be compensated. Under the circumstances the grant of injunction - temporary or permanent - can never be allowed and the relief has to be by way compensation or damages in terms of money.

In USA, the Supreme Court - e-Bay case - has directed that no relief by way of interim injunction should be allowed in respect of a patent suit, even for other products. Applying the reasoning to patents for drugs etc, even permanent injunction cannot be granted. The relief of interim/permanent injunction granted in several patent suits by different high courts in India have resulted in access to the drug.  The proposed amendment seeks to correct the situation.

The provisions of the patent rules and the guidance if any issued there under, should be reviewed and revised in keeping with the amendments of the act as suggested.  

(Author is an advocate based in Mumbai)