QUESTION:

The concept of product patent for pharmaceutical products is likely to

make life saving medicine beyond the reach of the poor and deprived
section of the society around the world.
A number of African countries have been the worst hit by the spective of
AIDS. CIPLA an Indian Pharmaceutical Company has offered to market ant
aids medicine at one length the cost at which it is sold by global
pharmaceutical firm. However due to the product patent, law, substantial
controversy has been generated around the globe on ethical grounds

As a business management, strategist discuss and advice on how to deal

with this Issue.

INTRODUCTION
A patent is a legal document that is granted to the first person to invent a
particular invention” states Nicholas Godici, former Commissioner of
Patents at the United States Patent and Trademark Office (USPTO). “It
allows them to exclude others from making, using or selling the invention
that’s described in the patent for a period of twenty years from the date that
they first filed the application.” 

The term patent originated from the Latin term literae patentes (letters
patent) which means ‘open letters’. The origin of patent law in India can be
traced back to the law and practice on patents in the United Kingdom. The
Indian Patents Act of 1970 was modeled on the British Patents Act of 1949 as
amended. However there exists a stark difference between the Indian
Patents Act of 1970 and the British Patents Act of 1949 in the sense that the
Indian Act granted product patents for food, medicines and chemicals only
from January 1st 2005 unlike the British Act which provided such patents
under the 1949 Act and continue to do so.
The term Patent has been defined under Section 2(m) of the Indian Patents
Act of 1970. A patent confers on the patent owner or the patentee a negative
right to exclude others from working or operating the invention for a limited
period of time and hence grants the patentee exclusive monopoly rights
over his patented invention. The term of a patent under the Indian Patents
(amendment) Act, 2005 is for a period of 20 years after which the invention
falls into the public domain and anybody can make use of the invention. It is
then said to have become a part of prior art in the existing field. A patent
right being a creation of a statute is territorial in extent. Hence the patent
which has been granted in one country cannot be enforced in another
country unless it has been enforced in that country also

MAIN BODY
Cipla is one of India's top five pharmaceutical manufacturers. Although
Cipla's primary market is India, the company sells its products worldwide.
Cipla's line of more than 400 drugs include anti-asthmatic, anti-cancer, anti-
inflammatory, anti-depressant and anti-AIDS medications. Over the years,
the company has developed strong research and marketing capabilities. In
recent times, Cipla has attracted considerable media attention because of
its efforts to offer AIDS drugs globally at very low prices. But in its quest to
capture this market, Cipla faces the might of global multinational
corporations, who are doing all they can to protect and enforce their patent
rights. The case deals with all these issues in detail.

The Indian Pharmaceutical industry is one of the largest in the developing

world and is ranked as the fourth largest in terms of production and 13th
largest in terms of domestic consumption value. Over the past 30 years
Indian drug industry has emerged from almost non-existent to a world
leader in the production of generic drugs. With the changes brought about
by the patents act of 1970, Indian drug manufactures became experts in the
field of reverse engineering and increased its supply of less expensive copies
of the worlds best-selling patent protected drugs. This could only be
possible because there was no product patents system for drugs and
medicines. While the patent act of 1970 in its original form does provide a
distinction between product patents and process patents, the exception
provided in section 5 of the act of 1970 (which has been omitted by the
amendment of 2005) offered only a process patent for food, medicine or
drug substances and specifically excluded product patents for the same.
Thus India was able to copy foreign patented drugs without paying a license
fee and was able to make it vailable to the masses at one-tenth of the
original price. Moreover the Drug Price control Order, 1970 put a cap on the
maximum price that could be charged and ensured that the life saving
drugs are available at reasonable prices. The Act of 1970 could be
considered to be one of the most progressive statutes which safeguard both
the interest of the inventor and the consumer in a balanced manner. The
Act has been promulgated keeping Directive Principles of State Policy
(DPSP) contained in Article 39 of the Constitution in mind. Hence with a
regulatory system focusing on process patents and being in the grip of a
rigid price control framework, the Indian pharmaceutical industry has
emerged from an import dependent industry to in the 1950’s to having
achieved world wide recognition as a low cost producer of high quality
pharmaceutical products with an annual export turnover of more than $ 1.5
billion dollars.
The distinction between a product patent and process patent that existed
prior to the 1995 TRIPS agreement helped India develop a huge generic
drug industry which had its basis on reverse engineering of brand name
drugs through slightly modified processes.

ADVICE ON CIPLA PHARMACEUTICAL’S

i. Life saving medication to the poor’s
Many basic, life-saving medications remain unaffordable in low- and
middle-income countries. Spurred on by that fact, Yusuf Hamied, chairman
and managing director of Cipla Pharmaceuticals, has steered his enterprise
to the forefront of global pharmaceutical development by manufacturing
low-cost drugs for diseases like AIDS, diabetes and arthritis, among others.

ii. To protect their patents on multinational pharmaceutical companies

Cipla has faced challenges in India and abroad from multinational
pharmaceutical companies looking to protect their patents on particular
medications, including antiretroviral drugs used to combat HIV infections in
countries like South Africa, where access is severely limited by the annual
per-person cost of US$10,000 to US$15,000. Most recently, the Delhi high
court awarded Cipla the right to continue selling a low-cost generic
equivalent of the lung cancer drug Tarceva following a patent-infringement
suit by the drug's manufacturer.
Cipla should look to protect their patents on particular medications and
explains why rules governing intellectual property rights in industrialized
nations should not apply to poorer countries.

iii. India must Examine Intellectual Property Rights (IPR)

India must seriously examine its Intellectual Property Rights (IPR) position
and see how best TRIPS (Trade Related Intellectual Property Rights) can be
interpreted, as IPR laws are national laws. India should cull the best points
from various laws to suit her future needs. For example, American patent
laws include the Bolar Provision, so that generic companies can have
products ready for sale as soon as a patent expires. Compulsory licensing is
valid under TRIPS and can be invoked when there is a national emergency.
But diseases like malaria, tuberculosis and leprosy are permanent,
perpetual and even perennial emergencies in countries like India, and I'd
say that we need a system of automatic license of right for a fixed royalty to
the patent holder (typically, about 2% to 4% of net sales).
India should insist on automatic licensing in certain circumstances, besides
recognizing the need that countries at different stages of development need
to be treated differently.
According to Hamied:- suggested a "TRIPS north" and a "TRIPS south,"
where the north comprises 600 million people in the developed world while
the south comprises the 3 billion people of the Third World. The rules of
industrial nations should not necessarily apply to poorer nations. Ninety
percent of the profits of multinationals are made in the north and not the
south, and that's what constitutes the R&D component [for these
companies]. In fact, I would go so far as to say that if TRIPS is not changed,
India and other like-minded countries should walk out of the WTO and form
the TWTO (Third World Trade Organization).

iv. WTO should supports legal protection of intellectual property

The World Trade Organization (WTO) should supports legal protection of
intellectual property rights of multinational pharmaceutical patents, as
does in the U.S. government, which is strongly lobbied by the multinational
pharmaceutical industry. The UN also is doing her job slowly when it comes
to fighting for the have-nots to ensure that they have access to reasonably
priced generic medication. The World Health Organization should endorse
generic drugs for quality and approving processes used in generic factories.
v. Cipla should use Automatic License of pharmaceutical right.
The fact is that health care in India has always been in a state of perpetual
crisis according to Hamied. The disease profile is frightening: 80 million
cardiac patients, 80 million affected with mental illness, 60 million
diabetics, 50 million asthmatics, 50 million hepatitis B cases, and one in
three Indians is a latent carrier of TB. The World Bank has said that India will
have 35 million HIV cases by 2015, approximately half of all the AIDS cases in
the world. Given these facts, the patent regime in this country should be so
devised that utmost priority is given to secure the people's right to access
affordable, quality health care without monopoly. This can be achieved by
an automatic license of right with a suitable royalty payment on net sales to
the innovator. Even a developed country like Canada followed this policy
from 1969 to 1992, under the Canadian bill S-91.

Limitations to Product Patent Protection

Opposition Proceedings
India's new patent regime provides for both pre- and post-grant opposition
procedures. Pre-grant opposition may be based on virtually all patentability
criteria that can be challenged, including the lack of novelty, inventive step,
utility, non-eligible subject matter, the failure to disclose the source of
biological material used for the invention, and inventions which are
considered traditional knowledge.21

Many MNCs, however, feel that this procedure unduly lengthens the patent
prosecution process and makes the outcome more unpredictable. On the
other hand, Indian generic pharmaceutical manufacturers favored retention
of pre-grant opposition in the new Patents Act to prevent "ever-greening"
and unnecessary litigation, and thus far generics have strategically used the
procedure frequently.22

Post-grant opposition, yet another mechanism for patent invalidation, is

new to the Indian Patent laws, and the grounds for post-grant opposition
are identical to those for pre-grant opposition.
Literature Review on Hiding behind patents to prevent legitimate
Patents are supposed to encourage innovation by providing incentives for
private companies to further investment and research. But for areas such as
health, patents can also restrict access to medicines for those who cannot
afford them. The large corporations from developed countries are patenting
so many resources from developing countries that it makes it difficult for
those nations to be able to produce medicines for themselves.
The World Trade Organization’s TRIPS agreement (Trade-Related Aspects of
Intellectual Property Rights) makes it difficult for other countries to produce
medicines if the product is already patented. However, there are some
provisions in the TRIPS agreement to allow generics, but that is only when
there is an emergency and the products are not used for commercial use
(and even this clause is under attack from the US and pharmaceutical
companies.) Furthermore, as detailed further in this site’s global health
overview section, poorer countries that do have industrial capacity to
produce generic alternatives are facing pressure not to sell them to other
poor countries who do not have such capacity.
Former World Bank Chief Economist and Nobel Prize winner for economics,
Joseph Stiglitz explained in an editorial in the prestigious British Medical
Journal that
Intellectual property differs from other property—restricting its use is
inefficient as it costs nothing for another person to use it.… Using
knowledge to help someone does not prevent that knowledge from helping
others. Intellectual property rights, however, enable one person or
company to have exclusive control of the use of a particular piece of
knowledge, thereby creating monopoly power. Monopolies distort the
economy. Restricting the use of medical knowledge not only affects
economic efficiency, but also life itself.
According to Joseph Stiglitz:-The establishment of the World Trade
Organization imposed US style intellectual property rights around the
world. These rights were intended to reduce access to generic medicines
and they succeeded. As generic medicines cost a fraction of their brand
name counterparts, billions could no longer afford the drugs they needed.
Developing countries paid a high price for this agreement. But what have
they received in return? Drug companies spend more on advertising and
marketing than on research, more on research on lifestyle drugs than on life
saving drugs, and almost nothing on diseases that affect developing
countries only. This is not surprising. Poor people cannot afford drugs, and
drug companies make investments that yield the highest returns.
As Noam Chomsky points out, “The World Trade Organization regime insists
instead on product patents, so you can’t figure out a smarter process.
Notice that impedes growth, and development and is intended to. It’s
intended to cut back innovation, growth, and development and to maintain
extremely high profits.”
According to Daryl Lindsey:-International intellectual property laws, which
protect the patents and the bottom lines of pharmaceutical companies
encourage them to continue investing the millions in research required to
develop new medicines. Western countries, led by the United States, have
fought strenuously on the international front to protect those patents—in
effect, placing a greater value on intellectual property, in the name of
spurring innovation and saving more lives in the future, than on saving lives
currently at risk. WTO patent rules allow 20 years of exclusive rights to make
the drugs. Hence, the price is set by the company, leaving governments and
patients little room to negotiate, unless a government threatens to overturn
the patent with a “compulsory license.” Such a mechanism authorizes a
producer other than the patent holder to produce a generic version of the
product though the patent-holder does get some royalty to recognize their
contribution. Parallel importing allows a nation to effectively shop around
for the best price of the same drug which may be sold in many countries at
different prices.
These are potentially very effective tools to get the price down. But there
has been constant threat by the large pharmaceutical industries in the U.S.
and Europe for example, that feel threatened by these mechanisms. They
have pressured developing nations and international agreements in various
ways to minimize the impact these would have on them.
It has been more than three years since the Indian Parliament passed the
latest amendments to the India Patents Act of 1970 aimed at conforming
India's patent laws to the requirements set forth by the World Trade
Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS).
TRIPS sets down minimum standards for many forms of intellectual
property protection that its member countries must provide. Notably, the
new amendments allow for product patent protection for pharmaceuticals.

It will take years to truly evaluate the full impact of India's new patent
regime on the pharmaceutical industry. It is clear that it will change, and
has already changed, the businesses of the indigenous generic
pharmaceutical industry.

With regards to foreign investment in pharmaceutical research and

development, however, it is less clear whether the recent growth can be
primarily attributed to the new patent regime, or whether it is more the
result of India's low cost, highly skilled scientific human resources.

Indeed, many multinational pharmaceutical companies (MNCs) have not

been entirely satisfied with some of the new laws and feel several of the
provisions still require further development.

But the new patent incentives in India are potentially at least a factor in
spurring foreign investment. If India did not respect pharmaceutical
product patents at all, and if they were not even attempting to protect IP, it
would be less likely that MNCs would be investing in India to the degree
they have been.

This article analyzes specific provisions of India's new patent laws, potential
ambiguities, their continuing development, and their current and potential
impact on the global pharmaceutical industry.
Although the amendments have impacted the industry, both Indian
companies and the multinational corporations, it will be years before the
full effects are realized.
Conclusion
India’s successful pharmaceutical industry, built on its patent laws that
allow the development of very cheap generic drugs has been under threat
from WTO . In exactly the same manner [the monopolies can sometimes be
justified], the protection of patents and other intellectual property rights,
despite their potential to create inefficiency and waste but accepting the
potential benefits of the patent system is different from saying that there is
no cost involved. If it has designed wrong and give too much systems are
essential, but they don’t discuss the pros and cons of the actual rules
themselves. This is how inequality can become structured into law. The
landscape of India's pharmaceutical industry has changed, and will
continue to change, due at least in part to the new patent law amendments.
Of course, the effectiveness of these new laws will depend to a large degree
on their interpretation, and how efficiently they are applied by the Patent
Office and enforced by the courts.

REFERENCES
i. Joseph Stiglitz, Scrooge and intellectual property rights, British Medical
Journal, December 23, 2006, Volume 333, pp. 1279-1280

ii. Daryl Lindsey, The AIDS-drug warrior: Jamie Love, Salon.com magazine,
June 1, 2001

iii.  www.prnewswire.com aids-healthcare-foundation-campaign-
challenges-cipla-over-drug-pricing-in-india
iv. "Cipla’s Receives Approval for Generic HIV Drug Tenofovir – Medication
News". Internationaldrugmart.com. 2010-02-11. Retrieved 2010-07-16.
v. BioSpectrum Team. "BioSpectrum - Pharma - BioSpectrumAsia Top 20,
Cipla, 4". Biospectrumasia.com. Retrieved 2010-07-16.
vi. Journal of the International AIDS Society: 13. 27 March
2011.http://www.jiasociety.org/content/14/1/15.
--

The concept of product patents for pharmaceutical

products is likely to make the life-saving medicines beyond
the reach of the poor and deprived section of the society
around the world. A number of African countries have
been the worst hit by the spectre of AIDS. Cipla, an Indian
pharmaceutical company has offered to market anti-AIDS
medicine at one-tenth the cost at which itis sold by global
pharmaceutical firms. However, due to the product patent
laws, substantial controversy has been generated around
the globe on ethical grounds. As a business management
strategist, discuss or advice on how to deal with this issue.

Wazo la hataza za bidhaa kwa bidhaa za dawa kuna uwezekano wa kufanya dawa zinazookoa maisha

zisiweze kufikiwa na sehemu maskini na iliyonyimwa katika jamii kote ulimwenguni. Nchi kadhaa za

Kiafrika zimeathirika zaidi na ugonjwa wa UKIMWI. Cipla, kampuni ya dawa ya India imetoa soko la

dawa za kupambana na UKIMWI kwa moja ya kumi ya gharama ambayo inauzwa na makampuni ya

kimataifa ya dawa. Hata hivyo, kutokana na sheria za hataza za bidhaa, utata mkubwa umetolewa kote

ulimwenguni kwa misingi ya maadili. Kama mtaalamu wa usimamizi wa biashara, jadili au ushauri jinsi

ya kushughulikia suala hili.