[Ip-health] Novartis Hearing Updates: Final hearing commences before the Supreme Court; Summary Update of week 1

Prathibha Sivasubramanian prathibha.siva at gmail.com
Mon Sep 17 20:59:14 PDT 2012

*Novartis Hearing Updates: Final hearing commences before the Supreme
Court; Summary Update of week 1 *

18 September 2012, New Delhi.

As you are aware, the final hearing of the petition filed by Novartis
AG (*Novartis
v. Union of India*), challenging the order of the Intellectual Property
Appellate Board (IPAB) rejecting its appeal relating to its
*patent*<http://www.lawyerscollective.org/tag/patent>application for
the beta-crystalline form of imatinib mesylate, and related
petitions commenced before a bench of the Supreme Court of India comprising
Justice Aftab Alam and Justice Ranjana Desai on 11 September 2012 and
continued until 13 September 2012. The final hearing will resume today.
Below is a summary update of the arguments advanced by Novartis’
counselduring the first week

Detailed daily updates and some of the relevant pleadings will be posted in
a few hours at
The daily reports are factual updates of the proceedings before the court
and do not contain any comments on the proceedings as the latter is
impermissible under the Indian law relating to contempt of courts.

Mr Gopal Subramaniam, senior counsel appearing for Novartis AG, commenced
his arguments by stating that the matter is of enormous significance, as
the Supreme Court would be interpreting section 3(d) of the Patents Act for
the first time. He traced the history of the patent regime in India to
India’s obligations under the TRIPS Agreement. He also set out the history
of the proceedings in the present case—the Patent Controller’s rejection of
its patent application, the rejection by the Madras High Court of Novartis’
constitutional challenge to section 3(d) and the rejection by the IPAB of
its appeal. Pointing out that the IPAB had reversed the Patent Controller’s
decision on three counts—novelty, inventive step and priority date—in
Novartis’s favour, he said that the IPAB rejected Novartis’ patent
application only on the ground of section 3(d). Referring to *Gleevec* as a
magical drug, Mr. Subramaniam said that *Gleevec* had been granted patents
in 35 countries.

Responding to Justice Alam’s query about the cost of the treatment for the
entire course, Mr Subramanian informed the Court that, when Novartis had
been granted exclusive marketing rights, the price of the drug was INR
120,000 per month. It was pointed out to the Bench that the drug has to be
taken lifelong. In an attempt to allay the concerns regarding the high
price of the drug, Mr. Subramaniam referred to the patients’ assistance
program run by Novartis, which provided *Gleevec* for free to 85% people
enrolled in the programme. He added that 5% patients who paid the full
price had to pay the price of the drug for only 80 days, after which the
drug was given to them free of cost for the remainder of the year. He
stated that the present case was not to make money out of poor people for
profit but to vindicate the honour that was lost to Novartis by the
rejection of a patent to its invention which had been granted a patent in
35 other jurisdictions. Justice Alam asked Mr Subramaniam if, instead of
having a complex patients’ assistance programme, it would be easier for
Novartis to reduce the prices of the drug to INR 2 or INR 5 per unit which
would bring it within the reach of those who needed it. Mr Subramaniam said
that he would need to take instructions from his client. He, however, added
that, in order to demonstrate its *bona fides* and to show that it does not
want to profiteer without conscience, Novartis would provide an undertaking
that it would continues its patients’ assistance programme even after it
was granted a patent.

Referring to section 3(d), Mr Subramaniam said that section 3(d) was a
gateway provision that was meant to prevent evergreening (i.e. subsequent
patents on drugs that had already been approved and were being marketed at
the time of the subsequent patent application). He said that Novartis’
patent application was not covered by section 3(d) because neither imatinib
nor imatinib mesylate were known substances. Noting that efficacy was the
controlling word of section 3(d) and its explanation, Mr Subramaniam argued
that, for section 3(d) to apply, the known substance and its efficacy must
be known and established. For efficacy of a compound to be known in the
sense of section 3(d), he urged that the compound should have been able to
be administered to human beings. He submitted that only the
beta-crystalline form of imatinib mesylate has been tested on human beings
and that, therefore, section 3(d) was not attracted as neither imatinib nor
imatinib mesylate had been administered to human beings.

To support his proposition, Mr Subramanian relied on an English judgment
involving a patent for a derivative of a known compound. He said that, in
the case, Beecham held patents for ampicillin, which was a known
antibiotic. Bristol, another company, sold hetacillin, a derivative of
ampicillin made by adding acetone. Mr Subramaniam said that, in that case
which covered what section 3(d) intended to cover, hetacillin was described
as “ampicillin with a hat on”. Justice Alam asked if the beta-crystalline
form of imatinib mesylate claimed by Novartis was imatinib with “a three
piece suit”.

Mr Subramaniam relied on the Report of the Mashelkar Committee to support
his interpretation that section 3(d) does not apply to Novartis’ patent
application. He also argued that section 3(d) has to be interpreted
harmoniously with India’s obligations under the TRIPS Agreement to provide
a patent regime (both products and processes) for pharmaceuticals.

Referring the judges to the Doha Declaration on the TRIPS Agreement and
Public Health, Mr Subramanian said that the concern of promoting access to
medicines for all was redressed in the clauses relating to compulsory
licences. He referred the judges to the corresponding provisions in the
Indian patent relating to compulsory licences and submitted that India’s
obligations under Doha Declaration to secure access to medicines for all
had been addressed by these provisions. He said that the notion that
section 3(d) of the Patents Act is meant to secure access to medicines to
all is a fundamental misunderstanding and added that section 3(d) was an
impartible part of the general patent law. The purpose of section 3(d) is
to prevent patents to new forms of existing approved drugs by tweaking them.

Explaining the rationale for a global patent regime, Mr Subramaniam said
all countries contribute together for further research to develop research
and development for newer diseases on a long-term basis. He added that the
TRIPS Agreement facilitates transfer of technology and free flow of drugs
and also enables Indian inventors to file patent applications in other
countries and that an assured patent regime would increase joint ventures
in India by foreign pharmaceutical companies. Justice Alam intervened to
question the price at which the free flow occurred and whom it benefitted.
Mr Subramaniam said that, while price was a factor, it was intended to be a
kind of investment for research in long-term research for medicines.

In response to Justice Alam’s queries about the practice of using the
provisions relating to compulsory licence and the consideration that was
payable, Mr Subramaniam cited the instance of a compulsory licence being
granted in India on Bayer’s anti-kidney cancer drug to Natco and said that,
while no guidelines had been framed, the royalty fixed for Natco (6% of
Natco’s sales price) could be considered as a benchmark.

While referring the judges to the provisions that set out the general
principles of working of a patented invention in India, Mr Subramaniam said
that a patentee would have to set up a manufacturing facility. Replying to
an observation from Justice Alam that Novartis may choose only import the
drug, Mr Subramaniam said that it may be a necessity in certain cases but
that a condition to work the patent in India could be imposed at the time
of grant of a patent.

Mr Subramaniam then argued that section 3(d) does not apply to Novartis’
case as it applied only to discoveries and not inventions. Adverting to the
distinction between discoveries and inventions, Mr Subramaniam said that
India has decided to take a mean path of allowing patents to discoveries
too (as opposed to only inventions) if the discoveries exhibit enhanced
efficacy. He pointed out that the IPAB has held that the beta-crystalline
form of imatinib mesylate is an invention as it satisfies the tests of
novelty, inventive step and industrial application under section 2(1)(j)
and section 2(1)(ja). He submitted that the fallacy in the IPAB orders lies
in applying section 3(d) to Novartis’ patent application after holding that
it was an invention.

Mr Subramaniam pointed out that Novartis had been granted a process patent
for making the beta-crystalline form of imatinib mesylate and that, prior
to Novartis’ present patent application, no one could have known have to
make even imatinib mesylate, let alone the beta-crystalline form of
imatinib mesylate.

Mr Subramaniam then started reading the order of the IPAB. Clarifying the
distinction between novelty (anticipation) and obviousness (inventive
step), Mr Subramaniam said that, in the analysis of obviousness, the
existing knowledge is complete and enabling and therefore it is obvious to
reach the claimed product. He said that, in the analysis of anticipation,
full details are not given in the existing knowledge.  He added that
obviousness and anticipation were the twin tests of inventive step. He
pointed out the findings of the IPAB in Novartis’ favour on the issue of
novelty (anticipation) in which the IPAB held that none of the prior art
disclosures disclosed all the elements of the beta-crystalline form of
imatinib mesylate or how it was to be arrived at.

On the issue of maintainability, Mr Grover, senior counsel appearing for
CPAA, and Mr Salve, senior counsel appearing for Cipla, informed the Court
that though they had raised objections as to the maintainability of
Novartis’ petition before the Supreme Court on the ground that Novartis had
not approached the Madras High Court first, they would prefer for the
Supreme Court to decide on this matter. Rajeshwari Hariharan, counsel
appearing for Natco, informed the Court that Natco still maintained its
objections on this issue.

During the week, Novartis also submitted an undertaking to the Court that
states: “in the event of a patent being granted to Novartis in India” it
“undertakes to continue the (patient assistance) programme … till July 2018
and subject to there being no further regulatory price control / direction
in relation to the said product”. Mr Grover, senior counsel appearing for
CPAA, objected to the introduction of new facts through this affidavit
about Novartis’ patients’ assistance programme as CPAA had placed material
on record below the lower courts about Novartis’ conduct with respect to
its patients’ assistance programme.

Mr Subramaniam will resume his arguments later today. We will keep you
posted of the developments.

In solidarity,

Lawyers Collective HIV/AIDS Unit
Prathibha Sivasubramanian

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