[Ip-health] Novartis : Keeping Its Head in the Sand re the Impact of Its Challenge to the India Patent Act

Baker, Brook b.baker at neu.edu
Fri Nov 11 11:32:27 PST 2011

Novartis : Keeping Its Head in the Sand re the Impact of Its Challenge to
the India Patent Act

Novartis has been suing India for years challenging sec. 3(d) of India¹s
2005 Amended Patents Act that erects high barriers to patenting minor
modifications to existing medicines that provide no significant
therapeutic benefit to patients. Although Novartis badly lost its first,
broadest challenge to the Indian Amended Patents Act in 2007 (where its
claimed that sec. 3(d) violated the WTO TRIPS Agreement and that it was
unconstitutionally vague and irrational), Novartis is now challenging the
meaning of sec. 3(d) in the India Supreme Court. Novartis is arguing that
sec. 3(d) should be interpreted as requiring low standards in the
examination of all patent applications, and in particular with respect ton
its blockbuster cancer drug Gleevec/Glivec with global sales in 2010 of
US$4.3 billion.

Given the importance that Novartis has assigned to its efforts to
undermine sec. 3(d), one would expect that Novartis would publicize its
heroic efforts to extend its monopoly rights, deepen its profits, and
whittle down India¹s protections against patent-evergreening ­ the
patenting of minor modifications of existing chemical entities, of new
uses of existing medicines, and of new formulations unless they show
significant positive therapeutic effects. But, no, Novartis¹s major
publications are strangely silent about how it is trying to derail India
as the "pharmacy of the poor," not only in India, but in other developing
countries as well. You can find no mention of Novartis vs. India in
Novartis¹s 274-page 2010 Annual Corporate Report nor in its 12-page report
called "Connecting with patients: Pioneering initiatives to enhance access
to healthcare."

The 2010 Annual Report is written to investors and clearly articulates
Novartis¹s global ambitions. Here Novartis is not self-conscious in
salivating over its prospects in key pharmerging developing countries,
including India. In his personal address to shareholders, Daniel Vasella,
Chairman of the Board of Directors, commented on Novartis¹s views about
future markets for medicines:

"Expanding populations and increasing prosperity are creating a new middle
class of about 2 billion people. The demand for better healthcare is
rising disproportionately in China, India, Russia and Brazil. The build up
of sustainable healthcare systems also is playing a significant role, as
in the case of China, where such expansion is being pursued with
substantial political energy. Š At Novartis, we are continuously expanding
in emerging markets, outpacing our growth in more developed markets, with
a particular focus on Russia, China, Brazil and India. Novartis Group
sales grew 13% in emerging markets over last year. Our top six emerging
markets grew 12% in 2010, accounting for about 10% of net sales (excluding
Alcon, Inc.). That figure will double over the next five years ­ we will
continue investing in emerging markets because of the growth rates we are

Further in the Report, Novartis gets even more specific about its
profit-maximizing intentions towards India and five other priority
emerging markets where it earned $4.6 billion in 2010, a full 10% of its
global sales:

"In India, for example, rising income is fueling the purchase of insurance
coverage, and it is estimated that approximately 220 million people will
have coverage by 2015. Further, economic studies have shown that once a
country¹s GDP reaches a certain level, its healthcare spending usually
accelerates. IMS Health, a leading provider of industry data, estimates
that key emerging healthcare markets ­ including markets such as Brazil,
China, India, Mexico, Russia, South Korea and Turkey ­ will grow 14% to
17% per year through 2014, while developed markets will likely grow only
3% to 6% over the same period."

In sum, Novartis sees India as a future cash cow. But to ensure that India
becomes a cash cow, Novartis wants to make sure that India¹s patent regime
remains weak ­ meaning that it will be able to get initial and
evergreening patents easily, getting a new 20-year period of exclusive
rights every time it does so. Norvartis¹s attitude towards patent rights
is revealed in its "Enhancing Access" puff-piece where it describes
"Incentives needed for innovative research": "Protecting intellectual
property rights is essential to encourage research and development,
leading to new and better medicines. Only with effective patent laws can
we continue to bring therapeutic improvements to patients, ultimately
resulting in better patient care."

To cover-up the brutal impact of its relentless pursuit of profits and
stronger "more effective" IP rights and to soften its corporate image,
Novartis champions its charitable work in developing (and developed)
countries. It writes about its Arogya Parivar ("healthy families") program
in rural India, its research on neglected diseases, and its Glivec and
Tasigna Global Access Programs. While not claiming that these programs do
not do some good, they are insufficient to ameliorate the damage that
Novartis is trying to do to the India patent regime. Patent rights,
because they give the right to exclude competition, almost always result
in super-competitive pricing that may be affordable to rich elites and
insured middle-classes but is out of reach for poor-patients paying out of
pocket and cash-strapped governments facing a crisis in infectious,
neglected, and chronic disease.

Perhaps the most disturbing feature of Novartis¹s hypocrisy is represented
in the pictures it chooses for its corporate reports. Here we see images
of people from distant lands who are sick and in need of medical ­ an
emaciated Black man being washed by a healthy white health worker, a sick
baby held in his father¹s arms, an older white woman in a well apportioned
room. In fact these patients will get very different treatment and have
very different access to Norvartis¹s health product depending on accident
of birthplace and economic opportunity. Patent rights and profit
maximization do not occur in a flat world ­ they occur in a world of harsh
The Novartis lawsuit against India is an affront to the people pictured in
its corporate communications. Novartis should drop its lawsuit now.

Professor Brook K. Baker

Health GAP (Global Access Project)
Northeastern U. School of Law
Program on Human Rights and the Global Economy
400 Huntington Ave.
Boston, MA 02115 USA
Honorary Research Fellow, University of KwaZulu Natal, Durban, S. Africa
(w) 617-373-3217
(cell) 617-259-0760
(fax) 617-373-5056
b.baker at neu.edu


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