The Indian Patents Act, 1970, inspired by the Ayyangar Committee, aimed to boost the domestic pharmaceutical industry and make essential drugs affordable. It eliminated patents for pharmaceutical products, granting only process patents for a limited time. This move reduced reliance on multinational corporations and empowered domestic manufacturers to produce cheaper generic drugs via reverse engineering. In 1995, India joined the WTO and later complied with TRIPS by introducing product patents in 2005. Section 3(d) of the Act restricts patents on new forms of known substances unless they show significant efficacy, preventing incremental innovations from being patented.
The emphasis on India is important for two distinct reasons. Firstly, modifications to India’s patent framework could yield extensive ramifications on global health access, as the nation is a prominent manufacturer and exporter of pharmaceuticals. Secondly, the leeway within the newly stringent regime, designed to strike a balance between health access and innovation, positions India as a critical case study within the discourse on intellectual property rights (IPRs). This is especially pertinent concerning Section 3(d) of India’s patent statute, which is deemed contentious due to its ambiguous nature, consequently raising apprehensions regarding potential exploitation. This issue was further intensified by the 2013 Supreme Court adjudication in the Novartis v. Union of India[1] case, which rebuffed the corporation’s appeal against a patent denial predicated on Section 3(d).
‘EFFICACY’ UNDER SECTION 3(D):
The pre-independence period was marked by the British patents law. In the post-independence era, the Indian Patents Act (IPA), 1970, brought a significant change by disallowing product patents in pharmaceuticals via Section 5. This change facilitated the growth of the Indian generics industry, as the ‘efficacy’ factor became irrelevant. In 2005, to comply with TRIPS, India reintroduced pharmaceutical product patenting, deleting Section 5 and introducing Section 3(d) to curb ‘evergreening’ and ‘product hopping.’ The criticality/centrality of the ‘efficacy’ factor can be gauged from Mueller’s observation that the presence of this section renders the new Indian patent regime neither a ‘Westernized panacea’, nor an ‘unmitigated disaster for the Indian public’.[2]
However, strict enforcement and narrow court interpretation of ‘efficacy’ as ‘therapeutic efficacy’ led to concerns that it disallows all incremental innovations.[3] Since then, ‘enhanced efficacy’ has been crucial for incremental innovation. Article 27.1 of TRIPS requires patents for products/processes that meet novelty, inventive step, and utility criteria, while Articles 27.2 and 27.3 allow exceptions. The controversy over ‘efficacy’ in India is more about patentability than patent-eligibility, with the IPA, 1970, merging these concepts. Section 3(d) restricts patents on new forms of known substances without ‘enhanced efficacy.’ The explanation to Section 3(d) necessitates significant differences in properties concerning efficacy, complicating the standard of proof and interpretation required for incremental innovations.
DEFINITION OF ‘EFFICACY’:
The term ‘efficacy’ in pharmaceutical patenting lacks a concrete definition, leading to confusion due to its interchangeable use with terms like ‘effectiveness’ and ‘relative efficacy.’ According to Ohly, the interpretation of ‘efficacy’ as merely ‘therapeutic efficacy’ contradicts the legislative intent[4] focusing on the drug’s ability to produce a desired therapeutic effect, as highlighted in the Novartis case of 2007. This narrow interpretation can overlook factors such as bioavailability and toxicity, which are crucial for patent eligibility under Section 3(d) of the Indian Patent Act. The FDA in the US and the European Medicines Agency in the EU use ‘effectiveness’ and ‘efficacy’ differently, adding to the complexity. The explanation clause in Section 3(d) requiring ‘significant differences in properties with regard to efficacy’ further complicates the interpretation, often making it challenging to patent incremental innovations in India.
In the United States, the Food and Drug Administration (FDA) primarily uses the term ‘effectiveness’ rather than ‘efficacy’. The FDA defines ‘efficacy’ as the results obtained from a comprehensive and well-controlled clinical trial, or the intention to conduct such a trial. On the other hand, ‘effectiveness’ is a regulatory decision made based on clinical efficacy and other data.
In the European Union, the European Commission does not provide a concrete definition of ‘efficacy’. The European Medicines Agency (EMA) of the EC does not clearly define ‘efficacy’ either, as it is often discussed in conjunction with ‘safety’ and primarily in terms of ‘significant clinical benefits’, which can vary depending on the disease. Interestingly, a large part of Section 3(d) in India appears to be derived from Article 10(2)(b) of Directive 2004/27/EC, a regulatory directive that defines a ‘general medicinal product’.
The interpretation of ‘therapeutic efficacy’ presents a challenge because it presupposes the existence of prior art for efficacy or enhanced efficacy comparison. However, in some instances, such prior art may not be available. This makes it impossible to carry out an efficacy comparison under Section 3(d), even if we were to adopt the Novartis interpretation. This is particularly true for new inventions that lack prior art, as the existence of prior art is a prerequisite for the application of Section 3(d).
The concept of ‘efficacy’ remains undefined across all patent systems. While the author of this piece advocates for a broader interpretation, there is an ongoing debate in India about whether a narrow or wide interpretation should be applied. Recently, Basheer has argued for a narrow interpretation in his intervention application in the Novartis case, as well as in an interview with Frontline.[5] He interprets the phrase ‘properties with regard to efficacy’ in the ‘explanation’ narrowly, acknowledging that it refers only to those properties that affect ‘efficacy’. However, he does not believe that certain properties, such as improved processability, flow characteristics, or storage potential, fall under this category.
Section 3(d) of the Indian Patent Act aims to prevent ‘evergreening’ by requiring that new forms of known substances demonstrate ‘enhanced efficacy’ to qualify for patent protection. This provision has faced limited opposition due to its role in curbing practices like product-hopping, which extend patent monopolies without significant innovation. Notable court cases challenging Section 3(d) include those involving Novartis, Boehringer case[6], and Roche v Cipla[7]. While India uniquely uses the ‘efficacy’ test for patent eligibility, other countries apply it for patentability, causing confusion. Section 3(d) blends eligibility and patentability concepts, creating complexity by involving both non-obviousness and utility tests. This ambiguity can result in lower patent validity and higher litigation costs. The term ‘efficacy’ in India is linked to the inventive step, which is defined by technical advancement and economic significance. Unlike the U.S., which evolved through various non-obviousness tests (Graham’s, TSM, KSR), India’s approach under Section 3(d) does not require the TSM test’s motivation element.
Given the need for ‘political correctness’, it’s not surprising that there’s limited opposition to Section 3(d) and the concept of ‘enhanced efficacy’ in preventing evergreening and product-hopping. This is likely why there are only a handful of court cases that challenge the nature of Section 3(d) itself, such as the Novartis case, the Boehringer case,[8] and Roche v Cipla.[9] However, there are numerous cases that deal with the application of Section 3(d), like the Asian Electronic case.
‘EFFICACY’ AND PROBLEMS OF UNCERTAIN CONCEPTS:
Section 3(d) of the Indian Patent Act is riddled with ambiguous terms like ‘derivatives,’ ‘known substance,’ ‘new use,’ ‘discovery vs invention,’ ‘significant,’ ‘enhancement,’ ‘standard of proof,’ and ‘burden of proof.’ Key questions include whether derivatives should be judged structurally or functionally and what defines a ‘known substance’ for efficacy comparisons. While a more inventive ‘new use of new form’ isn’t patentable, ‘significant enhancement in efficacy’ is, despite less inventiveness, creating inconsistency. The Novartis case showed even a 30% bioavailability increase wasn’t ‘significant enhancement.’ Proposals like PHOSITA or UPOSITA suggest solutions, and the USPTO recommends requiring data showing ‘reasonable correlation’ at the patent-filing stage.
The Indian Patents Act of 1970, based on the Ayyangar Committee’s recommendations was pivotal in promoting India’s domestic pharmaceutical industry and making essential drugs affordable. By granting only process patents for a limited time, it curbed multinational monopolies and encouraged local generic drug production. However, the 2005 Patent (Amendment) Act, aligning with WTO’s TRIPS, introduced product patents, sparking challenges, especially regarding Section 3(d). This section, preventing patents for minor modifications without significant efficacy, aimed to curb evergreening but faced criticism. The 2013 Novartis v. Union of India case exemplifies the ongoing global debate on balancing health access and innovation.
[1] Novartis AG v. Union of India, (2013) 6 SCC 1
[2] Mueller J M, The tiger awakens: The tumultuous transformation of India’s patent system and the rise of Indian pharmaceutical innovation, University of Pittsburgh School of Law Working Paper Series, Working Paper 43 (August 2006).
[3] Raju K D, Interpretation of Section 3(d) in the Indian Patents Act, 2005: A case study of Novartis, Indian Journal of Intellectual Property Law,1 (2008) 7.
[4] Ohly C D, What’s ‘new’? – Isn’t it obvious?, Journal of Intellectual Property Rights, 13 (5) (2008) 498-508.
[5] Eger T, Incremental innovation and patent protection for pharmaceutical products in India, in Economic Analysis of India, edited by P G Babu et al. (Oxford University Press, New York, New Delhi), 2010.
[6] Boehringer Ingelheim Pharma v. Premchand Godha, 2013 SCC OnLine Del 5069
[7] Hoffmann-La Roche Ltd. v. Cipla Limited, MANU/DE/0517/2008