Transfer Pricing Associates

India's Supreme Court vs Novartis

post Monday April 9, 2012

Tags: cancer, india, indian supreme court, international law, novartis, patent, patent law, pharmaceutical


In late March 2012, India’s Supreme Court heard arguments in a case that would seriously affect the millions of people with critical illnesses across the developing world. The Indian government is pitted against Novartis, the Swiss pharmaceutical company in a case that is based on a single clause in patent law. It isn’t only India that is focused on this case, the international community is awaiting the verdict and the impact and future of intellectual property law management.

The Swiss company Novartis is seeking a patent for a formula of a leukemia drug called imatinib mesylate, marketed as Gleevec in North America, and internationally as Glivec. However, in 2006, the Indian Patent Office denied the patent arguing it was a mere formula of a previously known drug. Since taking the decision to court, Novartis has lost the appeal twice, with judges ruling that its efficacy was no greater than the currently available drug. The efficacy clause is the argued point, with Novartis arguing it is discriminatory.

But why is the Indian government taking this drug clause so seriously when the international community has embraced it? India’s $26 billion generic drug industry is at stake. The industry has fuelled improvements in public health in developing countries and supplied most of the India’s own domestic medication needs. The cost difference for countries seeking to purchase patents for widespread use can vary between $120 per patient per year to $12,000 per patient per year.

If the Indian Supreme Court accepts Novartis’s appeal and overturns the judgment, it would impact the access to key medications that much of the developing world relies upon—at the cheaper rates. It will also likely affect other companies’ patent applications – either positively or negatively for the consumers.  However, the judgement as it currently stands impacts the company’s ability to recoup investment costs that go into research and development of these drugs. The international community of pharmaceutical companies are anxiously awaiting the decision as well as it will impact the ability for these companies to rely of Indian patent authorities, and can continue investing money and time in developing new medications for the Indian market. For these reasons, Novartis has the support of the international pharmaceutical business, but the impact is yet to be seen.

If the judgment stands, how will the international community of pharmaceutical companies compensate for this loss in potential revenue?

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