In an interview with the Times of India, Ranjit Shahani of Novartis said that while the company will continue to release drugs in the country, it will be “cautious” about investing in India.
The central legal issue here is section 3(d) of the Patents Act, which states that new forms of known substances are not patentable unless they “differ significantly in properties with regard to efficacy”. However, in the background of all discussions about pharmaceutical patents in India, and really the patent system in general, is the balance between providing incentives for innovation and access to those new inventions. This takes on particular significance with life-saving drugs such as Glivec, and even more so in developing nations like India.
The rallying cry for international pharmaceuticals is that the cost of drug development requires the high prices to justify the research in the first place. Some point out that the average cost to develop a successful drug has increased fifteen-fold in the last 25 years, and the price tag has been tagged at $1 billion per drug.
Certainly, concerns for these costs are understandable. Accessibility activists predictably accuse pharmaceutical companies of putting profits before patients’ lives. Shahani responds by noting that 95% of all Glivec users in India receive the drug free of charge through its access programme, and that the company has given out more than $1.7 billion worth of the drug in the country.
This programme is of course laudable, but raises some questions. If 95% of Indian Glivec users received it free of charge, then 5% of patients paid for it, generating some $89.5 million in revenues, a situation that the company was satisfied with. If that was the case, is it really true that the prices that Novartis was charging were absolutely necessary to spur it to continue its innovation? The fact that the company was willing to take a 95% discount to its Indian Glivec revenue seems to confirm Andrew Witty of GlaxoSmithKline’s recent claim that the $1 billion R&D price tag was "one of the great myths of the industry".
Furthermore, generic versions are available in India at approximately 5% of the price of Novartis’s version; if Novartis had lowered the price to a point more in line with the generics’ price, it likely could have charged many of the 95% of users who received Glivec for free. Even at a higher price, it could have picked up users who used the generic version, as generics have a reputation in India for inferior quality.
These questions may be difficult to answer but are drawing increasing attention, and not just in India. A draft report from the Australian government released today questions whether lengthy patent terms and extensions for pharmaceutical patents really incentivise innovation, and critics grow increasingly concerned that US patents for different forms of the same molecule (the type of patent that the India Supreme Court rejected yesterday) may be one reason why the country pays the highest drug prices in the world.