Patents Act, 1970 and Access to Covid-19 Medicines

Patents Act, 1970 and Access to Covid-19 Medicines

Introduction:

The recent pandemic situation escalated to a level that swept the country in a storm and brought out the glaringly insufficient medical facilities, healthcare systems and resulted in an acute shortage of the necessary medicines and injections being prescribed to Covid patients like the Remdisivir, Favipiravir, Tocilizumab, etc. This, combined with the acute shortage of vaccines available in comparison to the massive population of the country, was liable for the various untimely deaths that happened particularly during the recent second wave.

While grappling under the weight of this devastating chaos, people from all industries over the country started raising demands for the government to consider invoking the provisions of Patent Act, 1970 to ease the access to medicines for Covid treatment. This was further marked by the argument that the Covid vaccines too, should be subject to these provisions so that they may be produced at a larger scale than they are at the time.

The important question is, what are the concerned provisions and how do they come into play in the current scenario? How far can they be implemented, and whether it would yield the desired results or not? This assignment attempts to shed light on the provisions relating to compulsory license and the power of Central Government to use inventions for purposes of Government, and the acquisition of inventions and patents by the Central Government, respectively – and focuses on how these provisions have been brought to the forefront of scrutiny because of the demands for increasing supply and access to Covid-19 medicines.

Access to COVID-19 Medicines:

In Mahendra Pratap Singh vs State of Orissa And Ors.[i], the Supreme Court had held that “the Government is required to assist people, and its endeavor should be to see that the people get treatment and lead a healthy life.” Recently, the Supreme Court in Navtej Singh Johar v Union of India thr. Secretary Ministry of Law and Justice[ii] further clarified this position by stating “Article 21 does not impose upon the State only negative obligations not to act in such a way as to interfere with the right to health. This Court also has the power to impose positive obligations upon the State to take measures to provide adequate resources or access to treatment facilities to secure effective enjoyment of the right to health.” 

his reiterates that access to treatment is essential for the right to health of those suffering from Covid-19. The Covid-19 crisis underpins the importance of accessibility issues that may arise from a restricted manufacturing due to patent issues. This is where the Patent Act comes in.  A grant of patent gives the patentee all the rights, title and interest in the invention, thereby creating a negative right in rem – a right to restrict a third party from making, using, offering for sale, selling or importing the invention (as claimed within the patent). Applying this to the current scenario, if any patented drug (post regulatory scrutiny, clinical trials, etc.) is found to be effective in the treatment of patients, no other entity apart from the patentee will be able to manufacture and sell the drug, unless specifically authorised by the said patentee.

Exceptions to Patent Rights:

Despite the iron-clad patent protection to inventions, the Patent Act does give certain exceptions that can pierce the shield. Section 47 of the Act gains significance as it states that grant of patents under it are subject to certain conditions. Chapters XVI and XVII are the most significant in terms of administration and alteration of patent protection in the context of a national health emergency such as the ongoing pandemic. The Act clearly states that patents granted do not in any way prohibit Central Government in taking measures to protect public health[iii].

So, it makes sense to go through the provisions that can suspend the exclusivity that comes with a grant of patent and see which of these sections would be conducive to help ease the supply of necessary Covid-19 medicines and vaccines.

Compulsory Licensing:

Section 84: This provides for granting of a compulsory license on application to the Controller by an interested third party, after expiry of a three-year period from the date of the grant of the patent. The compulsory license may be granted if: the reasonable requirements of the public w.r.t. the patented invention have not been met, the patented invention is not available at a reasonable price to the public, or the patented invention is not worked in the territory of India.

In the current situation, a procedure under sec.84 would not be favourable to the cause, considering that the section applies to inventions that have been granted patent for 3 years. Remdisivir – the most demanded drug during Covid – was granted patent only in February 2020[iv]. Further, none of the vaccines available in India have a standing patent and hence, cannot be covered under this section. Medicines like Favipiravir and Tocilizumab may be considered under this section, provided that any third party had been interested in making an application, which none did. Further, it has a tedious process and is granted only when path to voluntary license has been exhausted, and the waiting seems to have had significant public health costs.

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Recently, the patent barrier on Tocilizumab was removed by the manufacturer to facilitate compassionate use of the drug. Favipiravir, on the other hand, retains some of its barriers still, though it gave way to certain generic manufacturers in India. Hence, sec.84 has limited reliability and a tedious process. The threat of litigation also makes the generic companies to distance from using Section 84. Hence, it is not an appropriate response to tackle an emergency situation.

Section 92: This section of the Act has been enacted keeping in mind the exact situation being faced in the form of the ongoing pandemic. The Central Government on being satisfied that conditions namely national emergency, extreme urgency or public non-commercial use having been met, by notification may indicate that compulsory license with regard to a granted patent after sealing shall be issued. Consent of the patent holder is not a necessary requirement for granting compulsory license. This section waives the three-year requirement in terms of Section 84 as well as procedural requirements pertaining to grant of compulsory license in Section 87 of the Act.

Only an invention with patent already granted or applied for can be used by the Government for its own use. This essentially means that the Government shall use the patent to either manufacture itself or cause to be manufactured on its behalf for example, through a public sector undertaking or even a private entity, whichever it deems fit in public interest. This course of action specified under Section 47 of the Act poses a situation where the patentee receives no remuneration for such usage subject to Section 100 of the Act discussed below.

Acquisition of Patent by Government:

Chapter XVII of the Indian Patents Act is related to the use of inventions for the purpose of Government and acquisition of inventions by Central Government. Under sec.99, “use of an invention for the purposes of government” means an invention is said to be used for the purposes of government if it is made, used, exercised or sold for the purposes of the Central Government, State Government, or a government undertaking

Section 100: Under this provision, the government directly uses or authorises an entity to make use of the invention patented or under application for its own purposes. S. 47(4) read with this empowers the Government to import a drug for distribution by itself or on its behalf having regard to public purpose. Essentially, this exempts the Government from payment of royalties or license fees subject to the provisions of Sec.100.

In simple terms under this section, if an invention has been recorded, tested or tried by Government or any authority on its behalf in isolation of a subsequent patent claim, then the Government is not required to pay any royalty. If the use of the invention is as a consequence of said patent claim or prior communication of the knowledge by the potential patentee, then the Government is required to pay adequate remuneration before or after the use of the invention. The determination of remuneration is mutually negotiable and subject to judicial review.

Section 102: Another, example of a possible course of action is acquisition of inventions and patents by the Government under Section 102 of the Act. This can only be done by the Central Government for public purpose and after giving notice to the applicant/patentee wherein the payment for the same is to be mutually determined and is subject to judicial review. Both revocation and acquisition eliminate patent protection while other methods merely suspend the same while keeping the patent alive qua the original patentee.

There are no limitations with respect to the use by Government. The public policy objectives for providing government use are to enable the Government to use any invention whenever it is so required. Though the law provides for the grant of government use on the ground of “national emergency” or “circumstances of extreme urgency”, however these phrases are not defined in the Act. This gives flexibility for interpretation of the term by the State.

Critical View Regarding Accessibility of Medicines:

‘Remdesivir’, took up the news when the USFDA issued an Emergency Use Authorization (EUA) for emergency use of the drug to treat serious Covid-19 patients. Despite the lack of conclusiveness about its success in treating Covid, there was a huge demand for the drug which resulted in an acute shortage since this was largely uncommonly used earlier.

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Sections 92, 100, and 102 could have been invoked to tackle the shortage of patented medicines like this one, or Favipiravir and Tocilizumab, for that matter. However, the key thing about all three of these provisions is that they require government action. The government features a cold foot when it involves using compulsory licenses, often thanks to bilateral political pressure from the US. A US-India Business Council submission to the US trade representative in 2016 revealed that Indian officials gave an oral assurance to not grant any compulsory licenses.

Demand for these medicines increased with the increasing infection. Soon, the limited supply started diminishing and it became apparent that the people were desperate despite capacity to buy. Hoarding and black marketing of these drugs played a part too, resulting in these injections being sold at sky-high price which brings us to another disadvantage of a patent protected drug: its price cannot be controlled under the Drugs (Prices Control) Order[v]. This is why the price of these drugs is not regulated by the government. A notification by the Ministry of Chemicals and Fertilizers earlier in May said that on the intervention of the government, major manufacturers/marketers of the remdesivir injection had reported voluntary reduction in the MRP.

The issue with vaccines, on the other hand, is that they haven’t been granted patent, nor have they applied for it yet. The provisions under the Act make it clear that only inventions that have been patented, or with pending applications can be taken over.

The SC took suo moto cognizance in April regarding the government’s Covid response. In its order dated April 30th, the SC has observed that the central government can consider using its powers under Sections 92, 100 or 102 of the Patents Act to increase production of essential drugs to make sure that it’s commensurate to the demand. This was accompanied by the disapproval of various other High Courts regarding the Centre’s unwillingness to act on the subject matter, among which was the Delhi HC in Rakesh Malhotra v Union of India

[vi], where it indicated that the Government has to reach out to the manufacturers to ramp up production of the medicines. It also specifically spoke of the provision of compulsory license under section 92.

The central government took a circumspect stand on exercising the statutory provisions available. In an affidavit filed in the SC on May 9th, it said that: “It is earnestly urged that any discussion or a mention of exercise of statutory powers either under the patents act 1970 read with TRIPS agreement 65 and Doha declaration or in any other way; for essential drugs or vaccines having patent issues would have serious, severe and unintended adverse consequences in the country’s efforts being made on global platform using all its resources, good-will and good-offices through diplomatic and other channels,”. The government added that the main constraint is in the availability of raw materials and essential input, and so any additional permissions and licences may not result in increased production immediately.

It was further argued that it is presumptuous to assume that the patent holder will not agree to more voluntary licences for such manufacturers who have a new drug manufacturing permission from the DCGI, and that if such a manufacturer applies for a compulsory licence, the same may be suitably considered.

The position is very surprising indeed for the people who are striving for access to drugs. Contrarily, the decision got support from pharmaceutical industry lobby groups such as Indian Pharmaceutical Alliance (IPA), which represents large domestic pharmaceutical companies. The pharmaceutical companies have maintained that due to a lack of technology transfer and raw materials, the step for suspension or acquisition of patents would be futile, and that working with global companies through voluntary licensing is the better route.

It has been further contended by the pharmaceutical companies that the production of vaccines would require the transfer of invaluable information including data sharing, as well as trade-secrets. Clinical trial data is indispensable within the production of vaccines. While the TRIPS Agreement provides for disclosure of clinical test data in cases of emergencies, there are not any equivalent provisions within the Indian statutes. In addition to the present, the Indian statutes don’t have any laws concerning trade secrets. It has been contended that if the government does issue Compulsory License or mandate the sharing of data, manufacturers of vaccines might resort to alternate ways of protecting information, hence making it even more cumbersome to engage in its production.

It is curious to notice that on one hand, the Centre wants to avoid pushing its domestic laws to handle the crisis, and contrary to that, has been pushing for the same on all potential global platform. This raises a question of hypocrisy at international level that will most likely not be answered.

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It is obvious that the government is going for a diplomatic approach. Apart from the status they confer, pharmaceutical companies provide countless jobs that pay very well, pay taxes on their income, and supply new medicines that can save or improve lives. Drugmakers and their trade groups spend millions every year lobbying the government to maintain the status quo on patents.

This leaves India in a peculiar position, but as is said, desperate times call for desperate measures. Permitting the generic production of patented medicines seems like the way to go forward, considering the speculation of a third wave starting soon.

Some pharmaceutical companies, including AstraZeneca, have signed sub-licence agreements with many producers, like the Serum Institute of India, to extend the supply of future vaccines. It also agreed to facilitate vaccines at ‘non-profit’ prices till the pandemic lasts.

Gilead too, has reportedly entered into non-exclusive voluntary licencing agreements with multiple generic drug manufacturers to allow them to make Remdisivir for distribution in 127 countries[vii]

, including India. Gilead has been successful in diluting most (if not all) reasons that might provide the Central Government a chance to push it to licence the drugs since it has made a voluntary attempt to make it freely available. Moreover, this has also thwarted any potential criticism of profiteering or misuse of its patent monopoly during this critical time. However, this cannot be claimed for all drugs.

Conclusion:

Access to treatment is crucial for the right to health of those suffering from Covid-19. Thus, the Indian government ought to strive to relax patent rights when necessary to ensure that the potential antivirals and vaccines for Covid-19 is affordable for the people, in fulfilment of its positive obligations under Article 21 of the Indian Constitution. Patents and public health are just different sides of the same coin. Improving the standard of public health by making pharmaceutical products easily accessible at minimal costs, is not about merely restricting patenting for pharmaceuticals, but rather attempts to find a balance between the two. Besides, the inaction of the Government has brought to face many controversial questions, whether in the country, or globally.

The safeguards in the Patent Act have been provided to make sure that such protection can be utilised in exceptional circumstances. These provisions ensure that a state can for public purpose, exploit the knowledge within their own domestic domain. Furthermore, interests of the private sector haven’t been completely discarded since a comprehensive framework exists for remunerating them for such use, and the same is subjected to judicial review under the Act to prevent the private players from abusive state action.

The country, or rather, the entire globe, is dealing with an exceptional calamity. The government invoked the Epidemic Disease Act, 1897 which under section 2, gives the power to take “special measures” to counter epidemic diseases. Thus, if the spread of the disease deepens in India, it might be within its rights to take “special measures” like declaring the disease as a “national emergency” under the Patents Act, to grant compulsory licenses, or as required under section 100(5). This also serves as a sufficient “public purpose” under section 102 for the Government to publish a notification in the official Gazette. After completing the acquisition, the government can allow local companies to supply generic versions of the drug.

Though the Centre has made it clear that in case the government receives an application under the law by a manufacturer to invoke the Patents Act for a compulsory license, then it can be considered to “effectively handle any future crisis”, what cannot be ignored is its failure to handle the past crisis in terms of quick response to ensure drug supply. Negotiating voluntary licences and temporary patent waivers with pharma giants and first-world nations may prove to be a fairly time-consuming process. The worst of the second wave is passed, but the sense of loss and the memory of the panic is fresh. Should the infection rear its head again and the central government’s political efforts do not bear fruit soon enough, then it may have to consider using the powers available to it under the Patents Act, and deal with the diplomatic fallout later.

Authored by: Shubhra Singh, Student, Faculty of Law, Banaras Hindu University

[i] AIR 1997 Ori 37

[ii] AIR 2018 SC 4321

[iii] Section 83(e) of the Patent Act, 1970.

[iv] Indian Patent No. 332280 titled COMPOUNDS FOR TREATING FILOVIRIDAE INFECTIONS, granted on 18/02/2020.

[v] Section 3 of the Essential Commodities Act, 1955.

[vi] W.P.(C) 3031/2020

[vii] https://www.gilead.com/purpose/advancing-global-health/Covid-19/voluntary-licensing-agreements-for-remdesivir

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