INDIAN PATENT ACT 2005 — An Overview Tapan

INDIAN PATENT ACT 2005 - An Overview Tapan Ray Indian School of Business, Hyderabad March 2, 2009

Organisation of Pharmaceutical Producers of India (OPPI) v Founded in 1965 v Over 75 Members v Research-based International & large Indian Pharma Companies v Affiliated to International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Geneva, Switzerland World Self-Medication Industry (WSMI), France v 3 Fundamental Beliefs - Adherence to TRIPs Compliant IPR - Ethical Sales Promotion based on IFPMA Guidelines and OPPI Code of Conduct - Adherence to International GMP & Quality Standards

Content v Healthcare Policy – An Overview v IPR Scenario in India & Indian Patent Act 2005 – Key Concerns • • • Definition of Patentability Data Protection Scope of Compulsory Licensing Pre-Grant Opposition Enforcement of Patent Act v Patented Products Pricing v IP Index

Policy Framework Supporting Pharmaceutical Industry Policy-sets that influence the Pharmaceutical Industry Healthcare Policy • Access to medicines • Cost-effective medication • Regulating the physician and consumer behaviour • Generic promotion/ substitution Source: EXIM Research Industrial Policy Health Safety Policy Promoting SMEs Strengthening R&D Protection of IPR Sustaining Industry. Institution Linkages • Supporting technology transfer and capacity development • Ensuring Quality in manufacturing • Efficacious treatments • Innovations in drug delivery • Safety in medicines • •

Regulatory Authorities in India v National Pharmaceutical Pricing Authority (NPPA) v Department of Pharmaceuticals v Ministry of Health & Family Welfare - Central Drug Standard Control Organization (DCGI) v Ministry of Science & Technology - Department of Biotechnology v Drugs & Cosmetic Act, 1940 - Key Schedules: Schedule D 1, D 2, H, K, M, Y (2005)

Regulatory Roles v Central Drugs Controller Office – New drug approval – Clinical research – Safety v Port – Import and Export v Central Drug Laboratory – Analytical testing v State Drugs Controller Office – Manufacturing – Inspections

India’s Healthcare Context is Unique Countries Govt. Payment Out of pocket payment 44. 3% 13. 7% 35. 8% 4. 9% Japan 80% 20% - - Australia 71% 16% 7% 5% France 77. 5% 20. 5% 2% Germany 75. 1% 13. 9% Canada 72% 17% 11% UK 81% 3% 16% Spain 72% 20. 5% 7. 5% Italy 73. 7% United States Insurance Others 26. 3% India : 80% out of pocket payment and 20% from others

Medicines Doctor’s Fees Medicines Diagnostic Investigations & Pathological Tests Hospitalization 9% 15%* 24% 17% Transport Miscellaneous 20% 8% Others 7% * 60% towards taxes and trade margins 15% of Total Household Cost for Individuals Source: National Survey of Health, 2003

Sources of Financing Healthcare Services in India Proportion of Health Expenditure by Financing Source Central Government 6% State Government 13% Local Government 2% Firms 5% Households 72% External Aid 2% Source: National Health Accounts – 2001 -02, Mo. HFW, Go. I

Access of Medicines to All Proves to be a Challenge Percentage of WHO regions lacking access to essential medicines • This 350 mn. people are largely clustered around urban centres where health care facilities exist Source: Network, November 2004

Access to Innovative Medicines 150 Mn. – Formal sector 350 Mn. access to medicines 200 Mn. – Largely above Poverty line Pharma Industry role is restricted to this sector 300 Mn. 650 Mn. (no access to medicines) Above Poverty line 350 Mn. Below Poverty line Formal Sector: Those employed with the Public or Private Sector Need of these patients are primarily for essential medicines

Ideal IPR Policy for India SCIENCE & TECHNOLOGY AND R&D NATIONAL INTEREST INTELLECTUAL PROPERTY RIGHTS AVAILABILITY & MEDICINE PRICES HEALTHCARE NEEDS

Patent Law in India – A Background v First Indian Patent Law : 1856 v Patent Designs and Protection Act : 1872 v Protection of Inventions Act : 1883 to 1970 v India signed WTO : 1 st January 1995 v Indian Patents (Amendment) Act, 2005

New Product Development is Risky, Time-consuming and Expensive Years 0 Discovery (2– 10 Years) 2 Preclinical Testing Laboratory and Animal Testing 4 Phase I 20– 80 Healthy Volunteers Used to Determine Safety and Dosage 6 Phase II 100– 300 Patient Volunteers Used to Look for Efficacy and Side Effects 8 10 Compound Success Rates by Stage 5, 000– 10, 000 Screened 250 Enter Preclinical Testing Phase III 1, 000– 5, 000 Patient Volunteers Used to Monitor Adverse Reactions to Long-Term Use 12 FDA Review Approval 14 Enter Clinical Testing Additional Post-Marketing Testing 16 1 5 Approved by the FDA Cost to Develop New Biotech Products Is Estimated to Average $1. 2 – 1. 7 Bn Sources: 1) Increased Length and Complexity of the Research and Development Process. Chapter 1 in: Ph. RMA Pharmaceutical Industry Profile 2003. 2). Tufts Center for the Study of Drug Development. Impact Report, Vol 8, Num 6, November/December 2006

Life Cycle of a Medicine – Pre-launch Period Basic Research Development Clinical Phase I Target Identificatio n Target Validation Lead Identification Lead Optimisation Candidate Medicine Pre. Clinical Phase II Product Launch MA Pricing Clinical Phase III Application(s) for Patent Protection ~ 6 -12 months 0 years Source: Pharmaceutical Sector Inquiry - Issue Nov. 2008 – Page No. 51 10 years 20 years

R&D in India v Currently engaged in medium levels of research: - NDDS - Contract Research - Specialised Generics - Biogenerics - NCEs / NMEs (the ultimate aim)

Research done by Major Indian Companies v Ranbaxy v Dr. Reddy’s v Glenmark v Wockhardt v Zydus Cadila v Piramal Healthcare v Lupin v Biocon & others

R&D Status of Indian Companies - NCEs 21 Pre-clinical Stage 7 Phase 1 16 Phase II 2 Phase III Expected to launch 3 NCEs worth sales around U. S. $ 500 Mn. by 2015

Indian Industry – R&D Spend R & D Spend: How Top Sectors Fare Source: Capitaline Plus Pharma Spends More Than All Industries Put Together

R&D Funding Structure v Developed countries : 2% of GDP v In India : 0. 6% of GDP (stated to be 2% by 2011)

Indian Pharmaceutical Industry R & D Spend - Pharmaceuticals Year $ Mn 1995 31 2000 71 2005 409 2006 522 @ Constant $ (1 = INR 40) Source: IDMA Almost 7 - 8% of 2006 Trade Sales

R&D Spend of Pharmaceutical Industry v India : 7 – 8% (U. S. $ 522 Mn. ) v Growth : 26% v U. S. : 19% (U. S. $ 52. 2 Bn. of total revenue)

Patent Application Status Pharmaceuticals 2002 -03 2003 -04 2004 -05 2005 -06 2006 -07 Filed 11, 466 12, 613 17, 466 24, 415 28, 882 Examined 9, 538 10, 709 14, 813 11, 569 14, 119 Granted 1, 379 2, 469 1, 911 4, 320 7, 359 Source: Commerce Ministry, Go. I

Indian Patent Law Areas of Concern v Definition of Patentability v Data Protection v Scope of Compulsory Licensing v Pre-Grant Opposition v Enforcement of Patent Act

Patentability v TRIPS Allows NCEs, Polymorphs, Chiral Isomers, New Indications etc. v Section 3(d) of the Patent Act – “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 differ significantly in properties with regards to efficacy. ”

Evergreening… A Misconception Date of filing of patent for invention 1 Date of filing of patent for improvement Date of expiry of patent for Invention 1 Date of expiry of patent for improvement Anyone is free to use the patent of invention 1 when the term for that is over. The innovator or anyone else who has patent for the improvement will have rights to his patent only. There is no extension of patent term as per the Indian Patent Act

Pre-Grant Opposition by Representation v Objectives: 1. To ensure genuine pre-grant opposition 2. To eliminate opposition in seriatim The need: 1. Ensure that Innovation is not put to undue disadvantage for delay in Pre-grant proceedings. 2. Need to introduce statutory time limits for setting up hearings by the Controller and disposing off pre-grant matters for ‘Accountability’

Pre-Grant Opposition by Representation v Recommendations: 1. Pre-grant opposition must be filed within 6 months of publication 2. Pre-grant opposition must be disposed within 12 months of commencement of pre-grant proceedings. 3. If not concluded within 12 months, provide equivalent Patent Term Restoration.

The Economic Times May 29, 2008

Regulatory Data Protection TRIPS Article 39. 3 v "Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products, which utilize new chemical entities, the submission of undisclosed information or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. . In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data is protected against unfair commercial use. "

Financial Express November 19, 2007

Mandatory Data Protection is ‘Evergreening’… A Misconception 20 Years Scenario 1 5 Years Date of filing of patent for invention 1 Date of expiry of patent for Invention 1 and introduction of generics Date of mandatory Data Protection Date of expiry of mandatory Data Protection *Anyone is free to use the patent of invention 1 when the patent term expires. There is no extension of patent term with mandatory data protection of the innovator for a specified period.

Mandatory Data Protection is ‘Evergreening’… A Misconception 20 Years Scenario 2 5 Years Date of filing of patent for invention 1 Date of expiry of patent for Invention 1 and introduction of generics Date of mandatory Data Protection for Innovations Date of expiry of mandatory Data Protection for Innovations *Anyone is free to use the patent of invention 1 when the patent term expires with one’s own data. There is no extension of patent term with mandatory Data Protection of the Innovator for a specified period.

Enforcement of Patent v Preserving a climate that supports Innovation is more important than ever.

WTO TRIPS Agreement - Article 28. 1(a) Member countries agree to ensure exclusive rights to patent holders for a limited period of time “Prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, [or] selling” the product for the duration of the patent

Mint March 20, 2008

Financial Express March 20, 2008

Business Standard March 20, 2008

Current Status Last year at least 4 patents were infringed (mailbox applications? ) No one knows when these cases will get resolved No known strong deterrent for patent infringement Serious adverse commercial impact on the innovators Is the sanctity of granting patents in India getting lost?

A Definition of Patent Linkage A regulatory system under which marketing approval of generic drugs is not granted until the expiration of original drug’s patent

Whose Responsibility? Governments, not Patent Offices, are bound by the WTO TRIPS Agreement It is the responsibility of all relevant Government Departments/Ministries to ensure that TRIPS obligations on patent protection are met

Communication Process Essential The process of gaining marketing approval for patented pharmaceutical generally rests with the Ministry of Health of a WTO Member State For WTO members to meet TRIPS obligations communication between the Patent Office and the Ministry of Health is critical to prevent premature approval of generic copies of patented drugs

Patent Linkage Process Establishes the communication process between the Health Ministry and the Patent Offices to prevent marketing approval of generic drugs before expiration of patents Ensures that one Government Department/Ministry does not impair the efforts of another Government Department/Ministry to provide effective intellectual property protection as required by Article 28 of the WTO TRIPS Agreement

What will it do? Ensures that Health Regulatory Authorities do not unintentionally undermine the ability of the Government to meet WTO TRIPS obligations Establishes Patent Linkage between Health Regulatory Authorities and Patent Office officials Helps Health Regulatory Authorities not to approve marketing rights of products under patent or are under patent review or approval process

Patent Linkage in the United States US FDA maintains a listing of pharmaceutical products known as the Orange Book The Electronic Orange Book is also available via the internet at: http: //www. fda. gov/cder/ob/ US FDA does not authorize the marketing approval for a generic copy of a pharmaceutical product protected by a patent listed in the Orange Book

Patent Linkage in Europe Instead of Patent Linkage the period of data exclusivity is for 10/11 years

Patent Linkage Around the World Country Description Australia Health Authorities do not provide marketing approval for a generic copy which would infringe an existing patent. Bahrain In progress Canada has a system similar to that of the U. S. FDA. , where Health Regulatory Authorities will not provide marketing approval for pharmaceutical products protected by patents listed in the equivalent of the FDA Orange Book. Chile In progress China State Food and Drugs Administration (SFDA) must be satisfied that no patent is being infringed before it will issue marketing approval. If there has been litigation over a patent, SFDA will wait until the appeals process has been exhausted before acting.

Patent Linkage Around the World Country Description Dominican Republic – In progress Central America FTA (DR-CAFTA) Jordan Marketing approval for a pharmaceutical product is not permitted during the period of patent protection. Mexico Applicants seeking marketing approval for generic pharmaceutical products in Mexico must certify that their patent rights are not infringed. Health Regulatory Authorities then check with the Patent Office, which must respond within ten days to confirm whether a patent is involved. While Health Authorities will accept an application of marketing approval during the patent period, grant of marketing approval will be delayed until the patent expires.

Patent Linkage Around the World Country Description Morocco In progress Oman In progress Singapore Similar to the U. S. System, applicants seeking marketing approval for generic pharmaceutical products in Singapore must declare that the application does not infringe any patent. U. A. E. Health Regulatory Authorities will not provide marketing approval for pharmaceutical products that remain under patent protection in the country.

Necessity of Patent Linkage Government grants patent and must ensure their protection through regulatory system Will encourage innovators Will help Indian Companies to avoid similar problems when they will launch their NCEs as systems will be already put in place Will help avoid unnecessary enormous litigation cost and time

The Procedure Exists The procedure (Patent Linkage) of checking Patent Status of a product before granting Marketing Approval already exists in Form 44 of the DCGI Unfortunately it is not implemented

Form 44 (See rules 122 A, 122 B, 122 D, and 122 DA) Application for grant of permission to import or manufacture a New Drug or to undertake clinical trial. I/we _______________________of M/s. _________________________(address) hereby apply for grant of permission for import of and/or clinical trial or for approval to manufacture a new drug or fixed dose combination or subsequent permission for already approved new drug. The necessary information / data is given below: Particulars of New Drug: (1) Name of the drug: (2) Dosage Form: (3) Composition of the formulation: (4) Test specification: (i) active ingredients: (ii) inactive ingredients: (5) Pharmacological classification of the drug: (6) Indications for which proposed to be used: (7) Manufacturer of the raw material (bulk drug substances): (8) Patent status of the drug: Data submitted along with the application (as per Schedule Y with indexing and page nos. ) A. Permission to market a new drug : - (1) Chemical and Pharmaceutical information (2) Animal Pharmacology (3) Animal Toxicology (4) Human/Clinical Pharmacology (Phase I) (5) Exploratory Clinical Trials (Phase II) (6) Confirmatory Clinical Trials (Phase III) (including published review articles) (7) Bio-availability, dissolution and stability study Data (8) Regulatory status in other countries (9) Marketing information: (a) Proposed product monograph (b) Drafts of labels and cartons (10) Application for test license B. Subsequent approval / permission for manufacture of already approved new drug: (a) Formulation: (1) Bio-availability/ bio-equivalence protocol (2) Name of the investigator/center (3) Source of raw material (bulk drug substances) and stability study data. (b) Raw material (bulk drug substances) (1) Manufacturing method (2) Quality control parameters and/or analytical specification, stability report. (3) Animal toxicity data C. Approval / Permission for fixed dose combination: (1) Therapeutic Justification (authentic literature in pre-reviewed journals/text books) (2) Data on pharmacokinetics/pharmacodynamics combination (3) Any other data generated by the applicant on the safety and efficacy of the combination. D. Subsequent Approval or approval for new indication – new dosage form: (1) Number and date of Approval/permission already granted. (2) Therapeutic Justification for new claim / modified dosage form. (3) Data generated on safety, efficacy and quality parameters. A total fee of rupees _____________________(in words). _____________________) has been credited to the Government under the Head of Account _________________________________ (Photocopy of receipt is enclosed). Dated _____ Note- Delete, whichever is not applicable. Signature _________ Designation ________

Financial Express March 20, 2008

The Mint January 8, 2009

The Economic Times January 21, 2009

Will Patent Laws Fuel Price Increases? Ø Post 2005 only 2. 3% of the Indian pharma market l consists of drugs that have no therapeutic equivalent. Ø 97. 7% of the market will be generic or the products will have therapeutic areas. 15. 7% 8. 3% (1) Empirical evidence suggests ~15% of new patented drugs are NMEs with significant therapeutic advantage. Therapeutic Equivalents will exist. 76% Patented Drugs ~85% of All Patented Medicines will have a Therapeutic Equivalent (1) Includes new salt, new formulations, new combinations, new manufacturer or patents for new indications Source: Lu and Comanor (1998), OPPI, FDA, BCG Analysis

The Way Ahead… Ensuring Access in Control Free Pricing Regime Free Market Price 350 Mn. access to medicines 2 -pronged Approach 650 Mn. (no access to medicines) Negotiated prices for Government procurement Industry to support Government efforts to provide Access

Promote Health Insurance v Hasten reforms to attract players v Mandatory insurance in organised sector v Health insurance for farmers, labourers

Pharmaceutical I. P. Index to Benchmark India Based on 5 Criteria 1. Term of Exclusivity 2. Scope of Exclusivity 3. Strength of Exclusivity 4. Barriers to full I. P. Exploitation 5. Enforcement Ref. Meir Pugatch, University of Haifa – The Journal of World Investment & Trade

Pharmaceutical I. P. Index Country I. P. Index (2007) U. S. A. 4. 67 Singapore 4. 40 U. K. 4. 37 Chile 3. 00 Israel 2. 89 Brazil 2. 00 China 2. 62 India 1. 80 Ref. Meir Pugatch, University of Haifa – The Journal of World Investment & Trade