13 Jan
2021

Commercialising a pandemic – how to balance patents and public health emergencies

Co-published

Intellectual property, especially patents, has to be seen as an enabling factor for pharmaceutical innovation. In return for complex R&D, multi-stage pre-clinical and clinical testing, and heavy investment, innovators are granted an exclusive right to:

  • commercially exploit their innovation in order to recuperate the costs (according to a recent study by the Tufts Centre for the Study of Drug Development, published in the Journal of Health Economics, the estimated cost of developing a marketed approved medicine is $2.6 billion); and
  • exclude others from using or selling that invention, for a limited period.

However, it is equally important for innovators to remember that at the core of the patent process are unmet medical needs, which require immediate solutions.

In the words of Thomas Cueni, director general of the International Federation of Pharmaceutical Manufacturers and Associations: “Patents, and IP more generally, are the main reason that there is such a strong innovation base to work from to find solutions… there is no guarantee of success as few treatments and even fewer vaccines may prove to be safe and effective. This level of risk-taking would be impossible without a flourishing innovation ecosystem built on strong IP incentives.”

Balancing patents and public health emergencies

One of the key questions is how to balance the interests of patent-owning pharmaceutical companies in developed countries in light of deteriorating public health in developing countries, especially during public health emergencies such as the HIV/AIDS crisis, the fight against cancer and the one that we are all currently facing – covid-19.

The issue of public health was addressed at the fourth World Trade Organisation (WTO) ministerial conference in Doha in 2001. The Doha Declaration confirmed the absolute right of governments to take measures to protect public health by creating provisions for WTO member countries to issue compulsory licences to export generic versions of patented medicines to countries with insufficient or no pharmaceutical manufacturing capacity, as well as to allow parallel imports.

Paragraph 4 of the Doha Declaration prioritises public health over IP rights and clarifies that this extends not just to medicines, but also to vaccines, diagnostics and other health tools as required. 

In the present context, a recent Oxfam report reveals that “a small group of rich countries representing 13% of the world’s population has bought up more than half of the future supply of leading COVID-19 vaccines”. This makes accessibility to the necessary medical requirements in developing countries with higher populations extremely difficult.

In view of this, some pharmaceutical companies, including AstraZeneca, have signed sub-licence agreements with several producers, including the Serum Institute of India, to increase the supply of future vaccines. AstraZeneca is also said to have agreed to provide vaccines at ‘non-profit’ prices for as long as the pandemic lasts. Further, Gilead has licensed its remdesivir patents to generic manufacturers in India, Pakistan and Egypt for supply in 127 countries.

In an attempt to prioritise public health, in June 2020 the World Health Organisation (WHO) established the Covid-19 Technology Access Pool (C-TAP), which aims to gather patents and all other forms of intellectual property (eg, trade secrets, software and know how) in order to expand the development and production of new technologies needed in its response to the pandemic. However, C-TAP is a voluntary mechanism and does not force those who own the rights and knowledge to collaborate.

Indian Patent Act and public health emergencies

For several decades, India has faced various health crises, which have been compounded by inadequate healthcare facilities and low accessibility to medicines. At the same time, it is an important supplier of pharmaceutical products at low prices in the form of generic drugs and is known as the ‘pharmacy of the developing world’.

In India, patent rights may be revoked in exceptional circumstances to maintain a fine balance between the monopoly rights enjoyed by a patentee and the responsibility of the government to provide accessible and affordable public healthcare. Hence, the Indian Patent Act 1970 is robust enough to deal with the issues involving public health emergencies and has many provisions to protect public health in accordance with patent rights. This includes the following provisions:

  • Section 3(d) – this is one of the most important provisions of the Indian Patent Act, introduced by the 2005 amendment. It focuses on the scope of enhanced efficacy and prevents the evergreening of patents. Section 3(d) was the basis of the Novartis case (6 SCC 1: (2013) SCC (Civ) 227: (2013) SCC Online SC271 SCC Online SC271), wherein it was observed that the mere change of form with properties inherent to that form does not result in enhanced efficiency, thereby allowing the generic production of medicines.
  • Section 47 – this lays down conditions for the grant of patents and establishes that any machine, apparatus, other article or process for which a patent has been granted may be imported or made by or on behalf of the government for “merely of its own use”. Further, in case of medicine or drug patents, it allows the government to import the relevant medicine or drug for merely of its own use or for distribution purposes. In this context, ‘merely of its own use’ is deemed to be use in the public interest.
  • Section 83 – this aims to balance public health with patents and sets out that patents are granted to encourage and secure inventions. Further, it focuses on:
    • the mutual advantage of producers and users of technological knowledge in a manner conducive to social and economic welfare;
    • the balancing of rights and obligations;
    • ensuring that the patents granted do not impede the protection of public health or in any way prohibit the central government from taking measures to protect public health; and
    • ensuring the availability of the patented invention at reasonably affordable prices to the public.
  • Section 84 – this provides for compulsory licensing after the expiration of three years from the date of the grant of a patent. A compulsory licence may be granted if:
    • the reasonable requirements of the public have not been met;
    • the patented invention is not available at a reasonable price to the public; or
    • the patented invention is not being used in India.
  • Further, Section 84(6) stipulates that the conditions necessary for granting a compulsory licence will be waived in case of:
    • a national emergency;
    • other circumstances of extreme urgency;
    • public non-commercial use; or
    • anti-competitive practices by the patentee.
  • Section 90 – in order to balance the rights of the patentee, Section 90 ensures reasonable royalty or other remuneration provisions for the patentee, bearing in mind factors such as the nature of the invention, investment, including developing or making it, obtaining a patent, keeping the patent in force and other relevant factors.
  • Section 92this is also well suited for the current scenario. The section establishes that the central government, on being satisfied of the existence of conditions of emergency, extreme urgency or public non-commercial use, can waive the three-year requirement mentioned in Section 84, as well as the procedural requirements pertaining to the grant of a compulsory licence under Section 87.
  • Section 102this empowers the central government to acquire an invention that is the subject of a patent or a patent application when it is satisfied that it is necessary to do so in the public interest. It can do this by publishing a notification to that effect in the Official Gazette. Section 102 also states that the central government must pay any compensation as may be agreed upon between it and the applicant, patentee or related person; in the absence of such an agreement, the amount of compensation is to be decided by the High Court.

In view of this, it is clear that the Indian Patent Act is flexible enough to deal with numerous potential challenges relating to public health emergencies. It succeeds in striking a balance between the rights of the patentee and the rights of the affected public at large.

Comment

In Bishwanath Prasad Radhey Shyam v Hindusthan Metal Industries (AIR1982 SC1444), the Supreme Court held that: “The object of patent law is to encourage scientific research, new technology and industrial progress. Grant of exclusive privilege to own, use or sell the method or the product patented for a limited period, stimulates new inventions of commercial utility. The price of the grant of the monopoly is the disclosure of the invention at the Patent Office, which after the expiry of the fixed period of the monopoly, passes into the public domain.”

With this in mind, it is clear that patents and public health are two sides of the same coin. The solution to improve the standard of public health by making pharmaceutical products easily accessible at minimal costs does not restrict patenting for pharmaceuticals, but rather attempts to find a balance between the two.

For further information contact:

Avanee Tewari
Chadha & Chadha
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This is a co-published article whose content has not been commissioned or written by the IAM editorial team, but which has been proofed and edited to run in accordance with the IAM style guide.