Column: Spurring R&D investment in medicine

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Published: November 26, 2015 12:51:45 AM

The regulatory regime must provide transparent and effective protection to both generic & innovative industries.

There is no doubt that continued innovation in the field of medicine is necessary to find cures for unmet medical needs. Breakthrough innovations in medical research over the last 100 years have been primarily responsible for increasing the life expectancy of the humankind from 30 years to 70 years. Today, biologics represent cutting-edge research in which the latest scientific discoveries are translated into novel therapies that provide new treatment options for patients.

Although one may quibble about the exact figure, enormous investments are necessary to support this time-intensive, extremely expensive and risky effort. The average cost of R&D associated with a new drug is above $1 billion today. The failure rate is high and capital investment is tied up for eight to 15 years as successful drugs progress through the increasingly challenging approval process.

Without an effective and meaningful legal and regulatory regime to protect these inventions necessary to develop a drug, some companies simply copy the drugs, offering their products at reduced prices. Since the 1970s, medicine prices in India have remained low. This, however, did not improve universal access and affordability, and certainly stymied domestic innovation and our ability to find cures for endemic diseases.

India is now primarily a generic market. The legal and regulatory system is geared towards addressing the needs of a generic industry. While India changed its law in 2005 to provide for product patents for pharmaceuticals, the regulatory regime for both small molecules and biologics has seen little effective transformation. Marketing approvals (MA) for a new drug continue to be given if it has been given the same by the US Food and Drug Administration (USFDA) or the European Medicines Agency (EMA). Approval is given presuming the robustness of the underlying dossier submitted to the foreign FDA. The first new drug applicant is required to do a small phase III trial on about 100 subjects. Subsequent new drug applicants are mandated to only undertake a limited bioequivalence and toxicity study. For small molecules, after the expiry of four years from the first approval of the product, no Drug Controller General of India (DCGI) approval is required. A manufacturing licence from the any of the state FDAs suffices.

There is nothing in the 1945 Drugs and Cosmetics Rules (DCR) that treats a new drug as exclusive, in the regulatory sense, for a certain period of time. Whereas countries like Japan do not issue MA to subsequent applicants for a new drug till the period of post marketing surveillance (four years) is over and its safety established, the stipulation in DCR’s Rule 122 E that a new drug is considered new for a four-year period simply requires all new applicants to obtain a DCGI MA.

A number of countries provide a period of exclusivity (varying from five years in the US to 13 in the EU) for the regulatory data generated at great cost and time. WTO/TRIPS Article 39.3 enshrines this obligation. In addition, some countries provide patent linkage which, in the minimum, operates as a notification system for the existence of a patent cover for the product being accorded MA. However, India does not provide either of these protections.

As a result, DCGI gives MA to the innovator (with a patent cover) and generics at the same time, rendering the patent given by the patent office meaningless (a patent holder has the right to prevent others from duplicating its product for a period of 20 years). An MA (based on safety and efficacy established by the underlying dossier) to the innovator by USFDA or EMA becomes the basis for DCGI’s MA to the innovator and generics almost simultaneously. As information on subsequent applicants is difficult to obtain from DCGI, the originator often gets information on infringement when the infringing product is already in the market. The only recourse left to the innovator is to file a patent infringement suit and seek temporary and permanent injunction.

That the infringing product is already in the market unfortunately skews the originator’s ability to obtain a temporary injunction as the criteria of ‘balance of convenience’ gets equally divided. In the interest of equity, transparency and justice, DCGI should provide a notification mechanism for all applications. This will enable the innovator patent-holder to file an infringement suit before the infringing product enters the market. Currently, the system is opaque and responses under RTI are thwarted on the ground of commercial sensitivity under Section 8 of the Act.

There have been some disingenuous references to Section 107A of the Indian Patents Act (the so-called Bolar Provision) and the WTO Dispute Settlement Body (DSB) in the Canada-Pharmaceuticals Patents Case (DS 114) as allowing unfettered use of the patented product for obtaining regulatory approval. The truth is Section 107A and DS 114 state that the use of the patented invention is limited to obtaining regulatory permission only and the product can be sold in competition with the patent owner only after the patent expires. In fact, the DSB panel concluded that the Canadian stockpiling provision (for future sales) was inconsistent with TRIPS Article 28.1 as it constituted a “substantial curtailment of the exclusionary rights” granted to patent holders.

The legal and regulatory regime must provide transparent, predictable, meaningful and effective protection, besides an enabling environment to both generic and innovative industry to prosper and strike a balance between encouraging competition while providing adequate incentives to support innovation of new treatments and cures. This is critical to spur investment in R&D in India.

The author is managing partner at Corporate Law Group, a New Delhi-based legal firm

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