Lead Author: Gargi Chakrabarti
Organization: National Law University, Jodhpur, India
Country: India


Pharmaceutical innovation thus includes a huge spectrum of research activities (including failed research projects) and it necessarily directs itself towards a common direction of increased therapeutic efficacy and safety. Few scientists in this industry used to develop “block-buster” drug from no prior research; but mostly pharmaceutical research leads to innovation of new molecule to an already existing class. This second category of innovation is termed as incremental innovation, which is proved to be very useful; when pharmaceutical innovation, treatment of disease and patient compliance is concerned. TRIPS Agreement is silent about patentability of incremental innovations, and the practice in different countries vary widely from liberalized grant of patent for incremental innovation to no patent for certain kinds of innovations where there is no therapeutic efficacy. The issue here is the patentability of inventions which are actually incremental innovation and its impact on global access to medicine. This paper will discuss the details of definition of incremental innovation and ever-greening; will describe international guideline regarding incremental innovation; and how those legal provisions are implemented in the practical reality. It will analyze the impact of incremental innovation provisions on access to medicine and establish that with the analysis of case studies. It will also evaluate Indian stand regarding incremental innovation, especially after joining WTO, and will also specifically discuss the impact of Section 3(d) of Indian Patent (Amendment) Act 2005 on patent protection and access to medicine.


1. Introduction
Pharmaceutical Industry is one of the most profitable industries in today’s globalized economy. Innovation is the pillar of the research-based pharmaceutical industry (IFPMA, 2012). ‘Innovation’ here means the application of knowledge of research and development to produce a therapeutically effective pharmaceutical product. Pharmaceutical innovation thus includes a huge spectrum of research activities (including failed research projects) and it necessarily directs itself towards a common direction of increased therapeutic efficacy and safety (Charles, 2012). Few scientists in this industry used to develop “block-buster” drug from no prior research; but mostly pharmaceutical research leads to innovation of new molecule to an already existing class (Wertheimer, 2004). Similarity of new molecule with other molecules of same class is not only in chemical structure but also in mechanism of action; but the new molecule usually differs in terms of therapeutic profile, mechanism of its metabolism, adverse effects, dosage schedule, delivery system etc (GSK, 2008). This kind of innovation is termed as ‘incremental innovation’. In 1999 one study showed that top ten prescribed drugs in USA were products of incremental innovation, eg. Prilosec, Lipitor, Prozac, Revecid, Zocor, Zoloft, Claritin, Paxil, Norvasc and Augmentin (Zarate, 1996).
2. Patenting of New Forms of Known Substances and New Uses: International Guideline
Article 27.1 of TRIPS Agreement specifies that “patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.” So, TRIPS Article 27.1 has not specifically mentioned anything about patentability of ‘new forms of known substances’ or ‘new uses of known substances’. It leaves on the discretion of individual Member Country to interpret the patentability requirements and to apply the best mode of execution as per the public health need of the country and their public policy. For promotion of social interest and prioritization of public health need, domestic legal regime may take strict interpretation of patentability requirements; which will allow the patenting of only genuine innovations and will prevent the market monopoly of the private companies by mere modification of the existing medicines. Ministries of Health of Chile, Argentina, Uruguay and Paraguay along with the Brazilian Ministry of Health showed concern regarding the patentability of trivial modification of known substances as they said, “the fulfillment and application of patentability criteria in our region raises concerns due to the proliferation of patent applications on matters that do not properly constitute an invention or are marginal developments. That those difficulties have been highlighted in several studies pointing to the negative effects to access to medicines and public health in the granting of patents of medicines based on these types of claims” (Lima, 2013). Countries of developing world is concerned in this issue as their patients are suffering from life threatening diseases and have problems of affordability and accessibility of medicine. World Health Organization (WHO) organized a Study for ‘Evaluation of the Guideline for the Examination of Pharmaceutical Patent’ (hereinafter ‘the study’) which was jointly sponsored by WHO and International Center for Trade and Sustainable Development in 2006; the study was done by Dr. Carlos Correa and he has given some valuable recommendations in his report (Correa, 2007).

3. Incremental Innovation v. evergreening
When access to medicine is the key issue from public health point of view, the affordability and accessibility of medicine for patients will be jeopardized because of these kinds of patents and serious negative health impact will result. Indian Patent Act included s. 3(d) which is aimed to prevent the patents for inventions based on incremental innovation and evergreening. It is important to understand here the difference between proper drug innovation and mere replication. Technically ‘incremental innovation’ and ‘evergreening’ are not synonymous. Incremental innovation is the way of production of newer generation of drugs from older generation, and it includes research and development to increase either therapeutic efficacy and/or safety profile. But ‘evergreening’ is the company strategy to maximize the patent term or to prevent generic entry. Incremental innovation can be one of the ways adopted by the companies. But there are many other ways which can be adopted by pharmaceutical companies for evergreening, like (i) switch from prescription to over-the-counter medicine, (ii) exclusive partnership with generic manufacturing companies before patent expiry, (iii) defensive pricing techniques, (iv) filing of fraudulent patent application to invoke unnecessary legal consequences to do undue delay in generic entry, (v) brand migration and so on.
In Australia legal safeguard is provided against evergreening under s 26C and 26D of Patent Act, 1990; effective mechanism is made under these sections by which government will be paid damages if the evergreening practice is proved (Bhat, 2012). Same approach can be found by USA in Korea-US FTA in which Article 18.9.4 is specially framed to give provision for anti-evergreening agency (Bhat, 2012). India has taken a very bold and firm step, leaving all other countries behind, to stop evergreening and to prevent grant of patent for incremental innovation by introduction of s. 3(d) in its legislation, which needs special mention and discussion hereafter.

4. Analysis of Indian Sec 3(d) – legal and technical perspective
Indian stand regarding patent protection of second indication of the known substance or new form of known substances is having its statutory basis in s. 3(d). Because of its unique nature s. 3(d) required to be analyzed in details with reference of the case of Novartis v Union of India [(2013) 6 SCC 1].
4.1 Structure of Section 3(d)
Section 3 in Indian Patent Amendment Act, 2005 provides an exhaustive list of topics which are non-patentable subject matter, as it says, “The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.” The explanation is as follows: “For the purpose of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substances shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.” Aim of s. 3 (d) is supposedly not to grant patent for incremental innovation without significant therapeutic efficacy. So, technically s. 3(d) denotes a difference between “evergreening” and “incremental innovation.” So s. 3(d) is encouraging the companies to produce newer generation of medicine to meet greater public health need, at the same time preventing successfully the patent protection of “evergreen” varieties. Novartis v Union of India is a landmark case which discussed the different important aspects of s. 3(d).

4.2 Novartis case
Novartis invented the drug ‘Imatinib’ useful for Chronic Myeloid Leukemia (CML), originally patent for ‘Imatinib’ free base form was granted in US in 1993 (Zimmerman patent, US patent number 5,521,184). In India Novartis applied patent for ‘Imatinib Mesylate’ (beta crystalline form, trade name ‘Glivec’), which is a salt of the free base ‘Imatinib’, in 1998. Because of the waiting period of their “mailbox” application until 2005, Novartis had applied for ‘exclusive marketing right’ (EMR) in India and granted in November 2003. On the basis of their EMR, Novartis sued Ranbaxy and Cipla (Indian generic drug makers) in Bombay and Madras High Court. There was immense difference in the opinion of Madras and Bombay High Court in this case. Madras High Court was of opinion that EMR should be continued as Novartis was running the “Glivec International Patients Assistance Program” (GIPAP) and tried to give the drug to the non-affordable patients (Novartis v Adarsh Pharma, 2004 (29) PTC 108 Mad.). However, for Bombay High Court the EMR and the ruling of Madras High Court was not correct as the Bench agreed with the defendants’ contention of higher price and importation (no local manufacture) of Novartis’ drug. Thus Bombay High Court denied injunction.
In 2005 Novartis’ application was rejected by Assistant Controller General of Patents, though patent for the same polymorph was granted in about 35 countries (Novartis v Union of India, WP No. 24759 of 2006). It was accepted that beta crystalline form is having better flow to organs, more thermodynamic stability and lower hygroscopic in nature, but the rejection was based on anticipation and loss of novelty of the crystalline form of the salt ‘Imatinib Mesylate’ with the disclosure of the free base ‘Imatinib’. The other grounds of rejection of the application, like i) lack of significant efficacy under s. 3(d), ii) obviousness and iii) wrongful priority was also suggested by several generic drug companies and the NGO called Cancer Patients Aid Association (CPAA). Novartis AG was not agreed with the rejection and they filed two writ petition in the Madras High Court. The petition for reversal of Assistant Controller’s order was transferred to Intellectual Property Appellate Board (IPAB) for decision; IPAB had upheld the decision of Assistant Controller by rejecting the appeal.
4.3 Analysis of s. 3(d): Reference of Glivec
As discussed earlier, s. 3(d) seeks for the ‘significant enhancement of efficacy’ of the new form of known substances to be patentable in India. The Court analyzed this requirement and elaborated its opinion in this case. Detailed discussions with relevant illustrations are given below:
• Meaning of “efficacy” – According to Madras High Court, the term ‘significant enhancement of efficacy’ is for medicine is the ‘therapeutic efficacy’, whose dictionary meaning is ‘the ability of a drug to produce the desired therapeutic effect’. So, according to their interpretation, the new form of a known substance will only be patentable when patent applicant can prove that discovery of the new form of a known substance has much better therapeutic effect for the given disease. It is also suggested that, to qualify for having ‘increased therapeutic efficacy’ the new form of the drug must have increased ‘bioavailability’. ‘Efficacy’ synonymous to ‘therapeutic efficacy’ and ‘bioavailability’ will be correct for pharmaceutical patent applications, for inventions related to other chemicals (like pesticides or agro-chemicals) the term ‘efficacy’ had to be interpreted as per its plain meaning.
• Determining “significant enhancement of efficacy” – Madras High Court mentioned specifically in their judgment that it is not possible to provide any guideline or a rule to determine whether any claimed increase in efficacy can be amounted to “significant enhancement of efficacy” for requirement of s. 3(d) (Novartis v Union of India, WP No. 24759 of 2006). Similar view is reflected by the drafters of the Patent Manual when it is said that, the quantification of ‘efficacy’ should not be done in terms of any numerical value, because “it is not possible to have a standard numerical value for efficacy for all products including pharmaceutical products.” So, ‘significance’ in enhancement of efficacy has to be judged as case by case basis.
• Proof of efficacy – It seems easy to get the ‘proof’ regarding efficacy of a drug as because it has to go through clinical trials, Madras High Court assumed the same. But clinical trials are conducted as per the requirement of Drug Regulatory Authority, which is much later in time frame and may not be proper to serve the purpose of patentability as per s. 3(d) (Richard, 2005). Interestingly the USPTO guideline on patentability of pharmaceutical substances seeks only the proof of correlation between activity and the claimed use, which needs to be proved by statistical relevance of the activity of the compound, or documentary evidence or a combination thereof (Nelson v Bowler, 626 F.2d 853). It is the discretion of the legal authorities to determine the amount of proof which would be sufficient for showing ‘significantly enhanced efficacy’ but it will be advisable to follow a reasonable middle way.
• ‘Known substance’ – S. 3(d) is not clarified that what constitute the proposed ‘known substance’. In the Novartis case, it was a controversy whether the reference ‘known substance’ is ‘Imatinib’ free base or the later salt ‘Imatinib Mesylate’ or the ‘alpha crystalline form of the salt Imatinib Mesylate’. It is also not reasonable to read s. 3(d) in such a way that it suggests the meaning of known substance will be same as that of ‘new’ or ‘novel’ as per the patentability criteria.
• ‘New Use’ – ‘New use’ of a known substance is excluded from patentable subject matter under s. 3(d); but this creates some ambiguity in case of pharmaceutical products.
• ‘Derivative’ – S. 3(d) prevents new forms of known substances to be patentable subject matter, such as polymorphs, salts, ethers, esters and all “other derivatives” amount to the same ‘substance’. This word ‘derivative’ creates another ambiguous area regarding s. 3(d). The term ‘derivative’ is not defined anywhere in the Act, nor the explanation clarifies it properly. In another recent pharmaceutical patent litigation of Roche v Cipla (CS(OS) 89/2008) the court had to consider this issue. Roche, the patent holder of ‘Tarceva’ (Elotinib), sued Cipla for their generic version ‘Erlocip’. Cipla contended that Roche’s patent is not valid as per s. 3(d) as ‘Erlotinib’ is not sufficiently more efficacious than the structurally similar previously known substance ‘Geftinib’. From the understanding of organic chemistry, both ‘Geftinib’ and ‘Erlotinib’ are 4-quinazolinamine derivative, but the type of substitution has significant difference. So, technically it is difficult to tag them as derivative of one another in strict sense. But it has to be taken seriously and the proper explanation for the same would be required in near future.

4.4 Analysis of s. 3(d): Patent Eligibility Standard v Patentability Standard
It may be said that s. 3(d) is designed in a way to refine the patentability criteria to address the problem of patenting of pharmaceutical ‘evergreening’. From refinement point of view, the ‘enhanced efficacy’ can be taken as refinement of ‘non-obviousness’; as new forms of known substances are inherently obvious if there is no enhancement of efficacy. But as per the wording, s. 3(d) said, “the following are not inventions within the meaning of this Act……” which means any invention not in compliance with s. 3(d) will be denoted as excluded from patentability, i.e. s. 3(d) essentially structured to provide a patent eligibility test. From conceptual point of view, ‘patent eligibility’ test and ‘patentability’ criteria are distinct from each other. ‘Patent eligibility’ can be explained as a character of a subject matter (i.e. invention) by which it can be suitably represented as an application for patent protection. If the invention will not qualify the test of ‘patent eligibility,’ it would not be considered for judgment of ‘patentability.’ ‘Patentability’ can be explained as a set of criteria by which patent applications of ‘patent eligible’ inventions are examined for grant of a valid patent. Novelty, inventive step, industrial application and sufficient disclosure are the criteria of patentability according to TRIPS Agreement. As s. 3(d) has explicitly saying that a new form without significant increase in efficacy would not be a patentable invention, it seems that it sets out the ‘patent eligibility’ standard; but in effect the examination of an invention for compatibility with s. 3(d) will amount to raise the issues same as that of inventive step examination. Hence, in practical sense, most of the time s. 3(d) has to be used as a ‘patentability’ criteria rather than a ‘patent eligibility’ test.

5. Conclusion: Implication of s. 3(d)
Aim behind incorporation of s. 3(d) in Patent Act was to prevent the patent protection of ‘mere discovery of new forms’ and at the same time to encourage true innovators by patent incentive. It is indeed a very bold step in itself by Indian legislative authority, and as of now it is one of its kinds in the world. India is standing alone after making such a giant leap and going through all legal and technical assessment (as was done in Glivec case). Section 3(d) works as a kind of “filter” to differentiate between non-patentable discovery and true invention. Though some arguments have emerged against the rationale behind taking ‘therapeutic efficacy’ (which is a factor usually considered by drug regulatory authorities) as a standard for ‘patentability’ examination, still keeping the unethical practice of “ever-greening” by multi-national pharmaceutical companies by all means. The rigorous examination of every application with the help of s. 3(d) is justified from public interest and public need point of view. It needs to be understood that s. 3(d) aims to stop the use patenting of incremental pharmaceutical innovation as a tool for evergreening, but there is no intention to prevent patent protection of the true innovations, which are real asset for the industry and pathfinder for diagnosis or treatment of many diseases. The statutory language of s. 3(d) seems to be very strict, but the interpretation is done on case by case basis and each case needs to be judged from different perspective, as the case may be to get the balance of interest between pharmaceutical companies (providers) and public in general (users) to reach the global goal of access to medicine for all.

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