Tapan Ray

Indian School of Business, HyderabadIndian School of Business, HyderabadMarch 2, 2009March 2, 2009

INDIAN PATENT ACT 2005 - An Overview

Founded in 1965 Over 75 Members Research-based International & large Indian Pharma Companies

Affiliated to International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Geneva, Switzerland and World Self-Medication Industry (WSMI), France

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

Organisation of Pharmaceutical Producers of Organisation of Pharmaceutical Producers of India (OPPI)India (OPPI)

Healthcare Policy – An Overview

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

Patented Products Pricing

IP Index

ContentContent

Policy-sets that influence the Pharmaceutical Industry

Healthcare Policy Industrial Policy Health Safety Policy

• Access to medicines• Cost-effective medication• Regulating the physician and consumer behaviour • Generic promotion/ substitution

• 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

Source: EXIM Research

Policy Framework Supporting Policy Framework Supporting Pharmaceutical IndustryPharmaceutical Industry

National Pharmaceutical Pricing Authority (NPPA) Department of Pharmaceuticals Ministry of Health & Family Welfare

- Central Drug Standard Control Organization (DCGI)

Ministry of Science & Technology - Department of Biotechnology

Drugs & Cosmetic Act, 1940 - Key Schedules: Schedule D1, D2, H, K, M, Y (2005)

Regulatory Authorities in IndiaRegulatory Authorities in India

Central Drugs Controller Office– New drug approval– Clinical research– Safety

Port– Import and Export

Central Drug Laboratory– Analytical testing

State Drugs Controller Office– Manufacturing – Inspections

Regulatory RolesRegulatory Roles

Countries Govt. Payment

Out of pocket

payment

Insurance Others

United States 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% 11% 13.9%

Canada 72% 17% 11%

UK 81% 3% 16%

Spain 72% 20.5% 7.5%

Italy 73.7% 26.3%

India : 80% out of pocket payment and 20% from others

India’s Healthcare Context is India’s Healthcare Context is UniqueUnique

Doctor’s Fees 9%

Medicines 15%*

Diagnostic Investigations & Pathological Tests 24%

Hospitalization 17%

Transport 20%

Miscellaneous 8%

Others 7%

* 60% towards taxes and trade margins

15% of Total Household Cost for Individuals

Source: National Survey of Health, 2003

MedicinesMedicines

Households72%

Firms 5%

Local Government2%State Government

13%

External Aid2%

Central Government6%

Source: National Health Accounts – 2001-02, MoHFW, GoI

Proportion of Health Expenditure by Financing Source

Sources of Financing Healthcare Sources of Financing Healthcare Services in IndiaServices in India

Source: Network, November 2004

• This 350 mn. people are largely clustered around urban centres where health care facilities exist

Percentage of WHO regions lacking access to essential medicines

Access of Medicines to All Proves Access of Medicines to All Proves to be a Challenge to be a Challenge

650 Mn. (no access

to medicines)

350 Mn. access to medicines

150 Mn. – Formal sector

200 Mn. – Largely above Poverty line

300 Mn.

Above Poverty line

350 Mn.

Below Poverty line

Pharma Industry role is restricted to this sector

Formal Sector: Those employed with the Public or Private Sector

Need of these patients are primarily for essential medicines

Access to Innovative MedicinesAccess to Innovative Medicines

NATIONALINTEREST

SCIENCE &TECHNOLOGY

ANDR&D

AVAILABILITY &

MEDICINEPRICES

HEALTHCARENEEDS

INTELLECTUALPROPERTY

RIGHTS

Ideal IPR Policy for Ideal IPR Policy for IndiaIndia

First Indian Patent Law : 1856

Patent Designs and Protection Act : 1872

Protection of Inventions Act : 1883 to 1970

India signed WTO : 1st January 1995

Indian Patents (Amendment) Act, 2005

Patent Law in India – A BackgroundPatent Law in India – A Background

5Enter Clinical

Testing

5Enter Clinical

Testing

250Enter

Preclinical Testing

New Product Development is Risky, New Product Development is Risky, Time-consuming and ExpensiveTime-consuming and Expensive

Sources: 1) Increased Length and Complexity of the Research and Development Process. Chapter 1 in: PhRMA Pharmaceutical Industry Profile 2003.

2). Tufts Center for the Study of Drug Development. Impact Report, Vol 8, Num 6, November/December 2006

Phase I 20–80 Healthy Volunteers Used

to Determine Safety and Dosage

Phase III1,000–5,000 Patient Volunteers Used to Monitor

Adverse Reactions to Long-Term Use

Additional Post-Marketing Testing

Phase II100–300 Patient Volunteers Used to Look

for Efficacy and Side Effects

FDA Review Approval

Preclinical TestingLaboratory and Animal Testing

Discovery (2–10 Years)

Compound Success Rates by Stage

5,000–10,000Screened

1Approved by the

FDA

Years

88

66

44

22

00

1010

1212

1414

1616

Cost to Develop New Biotech Products Is Estimated to Average $1.2 – 1.7 BnCost to Develop New Biotech Products Is Estimated to Average $1.2 – 1.7 BnCost to Develop New Biotech Products Is Estimated to Average $1.2 – 1.7 BnCost to Develop New Biotech Products Is Estimated to Average $1.2 – 1.7 Bn

Target Identi-

fication

Target Vali-dation

Lead Identifi-

cation

Lead Optimis-

ation

CandidateMedicine

Pre-Clinical

Clinical Phase I

Clinical Phase II

Clinical Phase III

~ 6-12 months 0 years 10 years 20 years

Basic Research Development

Source: Pharmaceutical Sector Inquiry - Issue Nov. 2008 – Page No.51

MA

Pricing

ProductLaunch

Life Cycle of a Medicine – Pre-launch PeriodLife Cycle of a Medicine – Pre-launch Period

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

R&D in IndiaR&D in India

Ranbaxy

Dr. Reddy’s

Glenmark

Wockhardt

Zydus Cadila

Piramal Healthcare

Lupin

Biocon & others

Research done by Research done by Major Indian CompaniesMajor Indian Companies

R&D Status of Indian CompaniesR&D Status of Indian Companies- NCEs- 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

R & D Spend: How Top Sectors Fare

Source: Capitaline Plus

Pharma Spends More Than All Industries Put Together

51%

25%

11%

5% 4% 3%

51%

26%

11%

5% 4% 3%

0

10

20

30

40

50

60

Pharma Automotive Oil/Refining IT Software Elec. Equipment Engineering

2006

2005

Indian Industry – R&D SpendIndian Industry – R&D Spend

Developed countries : 2% of GDP

In India : 0.6% of GDP (stated to be 2% by 2011)

R&D Funding StructureR&D Funding Structure

R & D Spend - Pharmaceuticals

Almost 7 - 8% of 2006 Trade Sales

@ Constant $ (1 = INR 40)

Source: IDMA

Year $ Mn

1995 31

2000 71

2005 409

2006 522

Indian Pharmaceutical IndustryIndian Pharmaceutical Industry

India : 7 – 8% (U.S.$ 522 Mn.)

Growth : 26%

U.S. :19% (U.S.$ 52.2 Bn. of total revenue)

R&D Spend of Pharmaceutical R&D Spend of Pharmaceutical IndustryIndustry

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, GoI

Patent Application StatusPatent Application StatusPharmaceuticalsPharmaceuticals

Definition of Patentability

Data Protection

Scope of Compulsory Licensing

Pre-Grant Opposition

Enforcement of Patent Act

Indian Patent LawIndian Patent LawAreas of ConcernAreas of Concern

TRIPS Allows NCEs, Polymorphs, Chiral Isomers, New Indications etc.

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.”

PatentabilityPatentability

Date of filing of patent for invention 1

Date of expiry of patent for Invention 1

Date of filing of patent for improvement

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

Evergreening… A MisconceptionEvergreening… A Misconception

Objectives: 1. To ensure genuine pre-grant opposition2. 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 Pre-Grant Opposition by RepresentationRepresentation

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.

Pre-Grant Opposition by Pre-Grant Opposition by RepresentationRepresentation

The Economic TimesMay 29, 2008

TRIPS Article 39.3

"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."

Regulatory Data ProtectionRegulatory Data Protection

Financial Express November 19, 2007

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.

20 Years

5 Years

Scenario 1

Mandatory Data Protection is Mandatory Data Protection is ‘Evergreening’… A Misconception‘Evergreening’… A Misconception

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.

20 Years

5 Years

Scenario 2

Mandatory Data Protection is Mandatory Data Protection is ‘Evergreening’… A Misconception‘Evergreening’… A Misconception

Preserving a climate that supports Innovation is more important than ever.

Enforcement of PatentEnforcement of Patent

WTO TRIPS Agreement - Article 28.1(a)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

MintMarch 20, 2008

Financial ExpressMarch 20, 2008

Business StandardMarch 20, 2008

Current StatusCurrent 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 LinkageA 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?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 EssentialCommunication 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 ProcessEstablishes 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?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 StatesPatent 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 EuropePatent Linkage in Europe

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

Patent Linkage Around the WorldPatent Linkage Around the WorldCountry Description

Australia Health Authorities do not provide marketing approval for a generic copy which would infringe an existing patent.

Bahrain In progress

Canada 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 WorldPatent Linkage Around the WorldCountry Description

Dominican Republic – Central America FTA (DR-CAFTA)

In progress

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 WorldPatent 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. 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 LinkageNecessity 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 ExistsThe Procedure ExistsThe 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 dataC. 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 _____ Signature __________________ Designation ________________Note- Delete, whichever is not applicable.

Financial ExpressMarch 20, 2008

The MintJanuary 8, 2009

The Economic TimesJanuary 21, 2009

~85% of All Patented Medicines will have a Therapeutic Equivalent

Patented Drugs

(1) Includes new salt, new formulations, new combinations, new manufacturer or patents for new indications Source: Lu and Comanor (1998), OPPI, FDA, BCG Analysis

76%

15.7%8.3% (1)

Therapeutic Equivalents will exist.

Empirical evidence suggests ~15% of new patented drugs are NMEs with significant therapeutic advantage.

Post 2005 only 2.3% of the Indian pharma market l consists of drugs that have no therapeutic equivalent.

97.7% of the market will be generic or the products will have therapeutic areas.

Will Patent Laws Fuel Price Increases?Will Patent Laws Fuel Price Increases?

650 Mn. (no access

to medicines)

350 Mn. access to medicines

Free Market Price

Negotiated prices for Government procurement

Industry to support Government efforts to provide Access

2-pronged Approach

The Way Ahead…The Way Ahead…Ensuring Access in Control Free Pricing Ensuring Access in Control Free Pricing

RegimeRegime

Hasten reforms to attract players

Mandatory insurance in organised sector

Health insurance for farmers, labourers

Promote Health InsurancePromote Health Insurance

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 to Pharmaceutical I.P. Index to Benchmark IndiaBenchmark India

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

Pharmaceutical I.P. IndexPharmaceutical I.P. Index