Novartis vs Indian Patent Laws - Pointers to Deeper Issues

Consider the case of Novartis' patent lawsuit against the Indian government.

Here is a simple background: From 1992 onwards, Novartis filed for patent for the alpha version of its cancer drug, Glivec (Gleevec in the US) across the world. At that stage, Indian patent laws did not support product patents. In 1995 India became a signatory to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and subsequently enacted the Patents Act in 2005. At this stage, Novartis filed for India patent for the beta version Glivec. In December 2005, Novartis' patent application was turned down by the Indian Patents Office on the grounds that it didn't meet the requirements under Section 3(d) of the Act, which requires that "derivatives of known substances cannot be patented unless they can be shown to differ in terms of efficacy". In 2006, Novartis took the Indian government to court arguing that the latter's patent laws were in violation of internation trade laws. Presently, the court hearings are going on.

Prima facie, the issue is simply whether the Indian patent laws militate against Intellectual Property Rights (IPR); specifically, whether the Patent Act (and especially Section 3 (d)) violate the TRIPs agreement to which India is a signatory. Here, the Report of the Mashelkar Committee appointed by the Indian government suggests that limitation of patentability in the Indian law is "beyond the scope of TRIPS flexibilities approved by the WTO." So the score card should read, 'Novartis 1 - Indian patent law 0.' [See Roger Bate's article, for a detailed, if somewhat narrow and pro industry, discussion.]

But live issues are rarely that simple. The battle has been joined by industry associations on the one hand and NGOs, activists and even the European parliament on the side of consumers (see Gerhardsen's blog for a good round-up). The key argument employed by the pro-consumer groups is that of 'market access,' that is the affordability of the drugs for poor consumers, especially in the context of developing countries. The pro- consumer groups are pressuring Novartis to drop the case.

For me, the Novartis story raises a set of inter-related questions.

First, what is our fundamental view of 'property'; is it exclusively meant to serve the interests of 'owners,' or may there be other stake-holders (or society) whose requirements may restrict or limit the owners' rights? In a deeper sense, this also points to a fundamental question, that of the dividing line between the individual and the larger group, community, society or the world.

Second, whether and why we need 'property' at all? Seemingly obvious answer is justice or fairness, i.e. you earned it, so you should enjoyed the benefits from it. (if yes, what about inheritance? And also, how much our personal achievements are based on attributes and abilities which may either be inherited from or developed by others). This essentially points to what the economists call 'incentive compatibility': that if I have fully, or almost, exclusive rights to the fruits of my labour, I will work hard; else I may not and if all of us behave like in a similar fashion, all of us collectively are worse off. This would sound familiar given the flood of praise for capitalism, especially after its victory over communism. But now some of us think that unbridled capitalism has a darker side, an uncaring face and it is its own enemy (see here and here). If that criticism be valid, what is a more robust mechanism?

Third, in view of 'unintended consequences' can regulation ever fully succeed? Given a set of incentives (e.g. maximising profits or shareholders wealth, or more realistically, managers' share options and bonuses), corporates may ignore their responsibilities to the society. Regulation; hard in form of laws or soft in the form of agreements or voluntary arrangements; is intended to provide the 'checks and balances.' This too has limited success. To take two drug-companies related examples from recent news, the UK National Health Service (NHS) finds itself overpaying for brand drugs when much cheaper alternatives are available; and it is considering a probe into cap on drug profits.

Finally, what value do we place on compassion, how do we prioritise and action it? Should issues of compassions be routed through regulations and law? Public pressure and activism? Individual acts like charity and philanthropy?

The answers vary widely across individuals, societies and nations. Even so, it helps to know what each of us stands for.

Happy thinking. Happy commenting.