1. Tapan Ray Indian School of Business, Hyderabad March 2, 2009 INDIAN PATENT ACT 2005 - An Overview

2.  Founded in 1965  Over 75 Members  Research-based International & large Indian Pharma Companies  Affiliated to International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Geneva, Switzerland and World Self-Medication Industry (WSMI), France  3 Fundamental Beliefs - Adherence to TRIPs Compliant IPR - Ethical Sales Promotion based on IFPMA Guidelines and OPPI Code of Conduct - Adherence to International GMP & Quality Standards Organisation of Pharmaceutical Producers of India (OPPI)

3.  Healthcare Policy – An Overview  IPR Scenario in India & Indian Patent Act 2005 – Key Concerns Definition of Patentability Data Protection Scope of Compulsory Licensing Pre-Grant Opposition Enforcement of Patent Act  Patented Products Pricing  IP Index Content

4. Policy-sets that influence the Pharmaceutical Industry Healthcare PolicyIndustrial PolicyHealth Safety Policy Access to medicines Cost-effective medication Regulating the physician and consumer behaviour Generic promotion/ substitution Promoting SMEs Strengthening R&D Protection of IPR Sustaining Industry- Institution Linkages Supporting technology transfer and capacity development Ensuring Quality in manufacturing Efficacious treatments Innovations in drug delivery Safety in medicines Source: EXIM Research Policy Framework Supporting Pharmaceutical Industry

5.  National Pharmaceutical Pricing Authority (NPPA)  Department of Pharmaceuticals  Ministry of Health & Family Welfare - Central Drug Standard Control Organization (DCGI)  Ministry of Science & Technology - Department of Biotechnology  Drugs & Cosmetic Act, 1940 - Key Schedules: Schedule D1, D2, H, K, M, Y (2005) Regulatory Authorities in India

6.  Central Drugs Controller Office – New drug approval – Clinical research – Safety  Port – Import and Export  Central Drug Laboratory – Analytical testing  State Drugs Controller Office – Manufacturing – Inspections Regulatory Roles

7. CountriesGovt. Payment Out of pocket payment InsuranceOthers United States44.3%13.7%35.8%4.9% Japan80%20%-- Australia71%16%7%5% France77.5%20.5%2% Germany75.1%11%13.9% Canada72%17%11% UK81%3%16% Spain72%20.5%7.5% Italy73.7%26.3% India : 80% out of pocket payment and 20% from others India’s Healthcare Context is Unique

8. Doctor’s Fees 9% Medicines15%* Diagnostic Investigations & Pathological Tests24% Hospitalization17% Transport20% Miscellaneous 8% Others 7% * 60% towards taxes and trade margins 15% of Total Household Cost for Individuals Source: National Survey of Health, 2003 Medicines

9. Households 72% Firms 5% Local Government 2% State Government 13% External Aid 2% Central Government 6% Source: National Health Accounts – 2001-02, MoHFW, GoI Proportion of Health Expenditure by Financing Source Sources of Financing Healthcare Services in India

10. Source: Network, November 2004 This 350 mn. people are largely clustered around urban centres where health care facilities exist Percentage of WHO regions lacking access to essential medicines Access of Medicines to All Proves to be a Challenge

11. 650 Mn. (no access to medicines) 350 Mn. access to medicines 150 Mn. – Formal sector 200 Mn. – Largely above Poverty line 300 Mn. Above Poverty line 350 Mn. Below Poverty line Pharma Industry role is restricted to this sector Formal Sector: Those employed with the Public or Private Sector Need of these patients are primarily for essential medicines Access to Innovative Medicines

12. NATIONAL INTEREST SCIENCE & TECHNOLOGY AND R&D AVAILABILITY & MEDICINE PRICES HEALTHCARE NEEDS INTELLECTUAL PROPERTY RIGHTS Ideal IPR Policy for India

13.  First Indian Patent Law : 1856  Patent Designs and Protection Act : 1872  Protection of Inventions Act : 1883 to 1970  India signed WTO : 1 st January 1995  Indian Patents (Amendment) Act, 2005 Patent Law in India – A Background

14. 5 Enter Clinical Testing 250 Enter Preclinical Testing New Product Development is Risky, Time-consuming and Expensive Sources: 1) Increased Length and Complexity of the Research and Development Process. Chapter 1 in: PhRMA Pharmaceutical Industry Profile 2003. 2). Tufts Center for the Study of Drug Development. Impact Report, Vol 8, Num 6, November/December 2006 Phase I 20–80 Healthy Volunteers Used to Determine Safety and Dosage Phase III 1,000–5,000 Patient Volunteers Used to Monitor Adverse Reactions to Long-Term Use Additional Post-Marketing Testing Phase II 100–300 Patient Volunteers Used to Look for Efficacy and Side Effects FDA Review Approval Preclinical Testing Laboratory and Animal Testing Discovery (2–10 Years) Compound Success Rates by Stage 5,000–10,000 Screened 1 Approved by the FDA Years 8 8 6 6 4 4 2 2 0 0 10 12 14 16 Cost to Develop New Biotech Products Is Estimated to Average $1.2 – 1.7 Bn

15. Target Identi- fication Target Vali- dation Lead Identifi- cation Lead Optimis- ation Candidate Medicine Pre- Clinical Clinical Phase I Clinical Phase II Clinical Phase III Application(s) for Patent Protection ~ 6-12 months0 years10 years20 years Basic ResearchDevelopment Source: Pharmaceutical Sector Inquiry - Issue Nov. 2008 – Page No.51 MA Pricing Product Launch Life Cycle of a Medicine – Pre-launch Period

16.  Currently engaged in medium levels of research: -NDDS -Contract Research -Specialised Generics -Biogenerics -NCEs / NMEs (the ultimate aim) R&D in India

17.  Ranbaxy  Dr. Reddy’s  Glenmark  Wockhardt  Zydus Cadila  Piramal Healthcare  Lupin  Biocon & others Research done by Major Indian Companies

18. R&D Status of Indian Companies - NCEs 21Pre-clinical Stage 7Phase 1 16Phase II 2Phase III Expected to launch 3 NCEs worth sales around U.S. $ 500 Mn. by 2015

19. R & D Spend: How Top Sectors Fare Source: Capitaline Plus Pharma Spends More Than All Industries Put Together Indian Industry – R&D Spend

20.  Developed countries : 2% of GDP  In India : 0.6% of GDP (stated to be 2% by 2011) R&D Funding Structure

21. R & D Spend - Pharmaceuticals Almost 7 - 8% of 2006 Trade Sales @ Constant $ (1 = INR 40) Source: IDMA Year$ Mn 199531 200071 2005409 2006522 Indian Pharmaceutical Industry

22.  India : 7 – 8% (U.S. $ 522 Mn.)  Growth : 26%  U.S. :19% (U.S. $ 52.2 Bn. of total revenue) R&D Spend of Pharmaceutical Industry

23. 2002-032003-042004-052005-062006-07 Filed11,46612,61317,46624,41528,882 Examined9,53810,70914,81311,56914,119 Granted1,3792,4691,9114,3207,359 Source: Commerce Ministry, GoI Patent Application Status Pharmaceuticals

24.  Definition of Patentability  Data Protection  Scope of Compulsory Licensing  Pre-Grant Opposition  Enforcement of Patent Act Indian Patent Law Areas of Concern

25.  TRIPS Allows NCEs, Polymorphs, Chiral Isomers, New Indications etc.  Section 3(d) of the Patent Act – “Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regards to efficacy.” Patentability

26. Date of filing of patent for invention 1 Date of expiry of patent for Invention 1 Date of filing of patent for improvement Date of expiry of patent for improvement Anyone is free to use the patent of invention 1 when the term for that is over. The innovator or anyone else who has patent for the improvement will have rights to his patent only. There is no extension of patent term as per the Indian Patent Act Evergreening… A Misconception

27.  Objectives: 1. To ensure genuine pre-grant opposition 2. To eliminate opposition in seriatim The need: 1. Ensure that Innovation is not put to undue disadvantage for delay in Pre-grant proceedings. 2. Need to introduce statutory time limits for setting up hearings by the Controller and disposing off pre-grant matters for ‘Accountability’ Pre-Grant Opposition by Representation

28.  Recommendations: 1. Pre-grant opposition must be filed within 6 months of publication 2. Pre-grant opposition must be disposed within 12 months of commencement of pre-grant proceedings. 3. If not concluded within 12 months, provide equivalent Patent Term Restoration. Pre-Grant Opposition by Representation

29. The Economic Times May 29, 2008

30. TRIPS Article 39.3  "Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products, which utilize new chemical entities, the submission of undisclosed information or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use.. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data is protected against unfair commercial use." Regulatory Data Protection

31. Financial Express November 19, 2007

32. Date of filing of patent for invention 1 Date of expiry of patent for Invention 1 and introduction of generics Date of mandatory Data Protection Date of expiry of mandatory Data Protection *Anyone is free to use the patent of invention 1 when the patent term expires. There is no extension of patent term with mandatory data protection of the innovator for a specified period. 20 Years 5 Years Scenario 1 Mandatory Data Protection is ‘Evergreening’… A Misconception

33. Date of filing of patent for invention 1 Date of expiry of patent for Invention 1 and introduction of generics Date of mandatory Data Protection for Innovations Date of expiry of mandatory Data Protection for Innovations *Anyone is free to use the patent of invention 1 when the patent term expires with one’s own data. There is no extension of patent term with mandatory Data Protection of the Innovator for a specified period. 20 Years 5 Years Scenario 2 Mandatory Data Protection is ‘Evergreening’… A Misconception

34.  Preserving a climate that supports Innovation is more important than ever. Enforcement of Patent

35. WTO TRIPS Agreement - Article 28.1(a) Member countries agree to ensure exclusive rights to patent holders for a limited period of time “Prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, [or] selling” the product for the duration of the patent

36. Mint March 20, 2008

37. Financial Express March 20, 2008

38. Business Standard March 20, 2008

39. Current Status Last year at least 4 patents were infringed (mailbox applications?) No one knows when these cases will get resolved No known strong deterrent for patent infringement Serious adverse commercial impact on the innovators Is the sanctity of granting patents in India getting lost?

40. A Definition of Patent Linkage A regulatory system under which marketing approval of generic drugs is not granted until the expiration of original drug’s patent

41. Whose Responsibility? Governments, not Patent Offices, are bound by the WTO TRIPS Agreement It is the responsibility of all relevant Government Departments/Ministries to ensure that TRIPS obligations on patent protection are met

42. Communication Process Essential The process of gaining marketing approval for patented pharmaceutical generally rests with the Ministry of Health of a WTO Member State For WTO members to meet TRIPS obligations communication between the Patent Office and the Ministry of Health is critical to prevent premature approval of generic copies of patented drugs

43. Patent Linkage Process Establishes the communication process between the Health Ministry and the Patent Offices to prevent marketing approval of generic drugs before expiration of patents Ensures that one Government Department/Ministry does not impair the efforts of another Government Department/Ministry to provide effective intellectual property protection as required by Article 28 of the WTO TRIPS Agreement

44. What will it do? Ensures that Health Regulatory Authorities do not unintentionally undermine the ability of the Government to meet WTO TRIPS obligations Establishes Patent Linkage between Health Regulatory Authorities and Patent Office officials Helps Health Regulatory Authorities not to approve marketing rights of products under patent or are under patent review or approval process

45. Patent Linkage in the United States US FDA maintains a listing of pharmaceutical products known as the Orange Book The Electronic Orange Book is also available via the internet at: http://www.fda.gov/cder/ob/ US FDA does not authorize the marketing approval for a generic copy of a pharmaceutical product protected by a patent listed in the Orange Book

46. Patent Linkage in Europe Instead of Patent Linkage the period of data exclusivity is for 10/11 years

47. Patent Linkage Around the World CountryDescription AustraliaHealth Authorities do not provide marketing approval for a generic copy which would infringe an existing patent. BahrainIn progress CanadaCanada has a system similar to that of the U.S. FDA., where Health Regulatory Authorities will not provide marketing approval for pharmaceutical products protected by patents listed in the equivalent of the FDA Orange Book. ChileIn progress ChinaState Food and Drugs Administration (SFDA) must be satisfied that no patent is being infringed before it will issue marketing approval. If there has been litigation over a patent, SFDA will wait until the appeals process has been exhausted before acting.

48. Patent Linkage Around the World CountryDescription Dominican Republic – Central America FTA (DR-CAFTA) In progress JordanMarketing approval for a pharmaceutical product is not permitted during the period of patent protection. MexicoApplicants seeking marketing approval for generic pharmaceutical products in Mexico must certify that their patent rights are not infringed. Health Regulatory Authorities then check with the Patent Office, which must respond within ten days to confirm whether a patent is involved. While Health Authorities will accept an application of marketing approval during the patent period, grant of marketing approval will be delayed until the patent expires.

49. Patent Linkage Around the World CountryDescription MoroccoIn progress OmanIn progress SingaporeSimilar to the U.S. System, applicants seeking marketing approval for generic pharmaceutical products in Singapore must declare that the application does not infringe any patent. U.A.E.U.A.E. Health Regulatory Authorities will not provide marketing approval for pharmaceutical products that remain under patent protection in the country.

50. Necessity of Patent Linkage Government grants patent and must ensure their protection through regulatory system Will encourage innovators Will help Indian Companies to avoid similar problems when they will launch their NCEs as systems will be already put in place Will help avoid unnecessary enormous litigation cost and time

51. The Procedure Exists The procedure (Patent Linkage) of checking Patent Status of a product before granting Marketing Approval already exists in Form 44 of the DCGI Unfortunately it is not implemented

52. Form 44 (See rules 122 A, 122 B, 122 D, and 122 DA) Application for grant of permission to import or manufacture a New Drug or to undertake clinical trial. I/we _____________________________________________of M/s. __________________________________________________(address) hereby apply for grant of permission for import of and/or clinical trial or for approval to manufacture a new drug or fixed dose combination or subsequent permission for already approved new drug. The necessary information / data is given below: Particulars of New Drug: (1) Name of the drug: (2) Dosage Form: (3) Composition of the formulation: (4) Test specification: (i) active ingredients: (ii) inactive ingredients: (5) Pharmacological classification of the drug: (6) Indications for which proposed to be used: (7) Manufacturer of the raw material (bulk drug substances): (8) Patent status of the drug: Data submitted along with the application (as per Schedule Y with indexing and page nos.) A. Permission to market a new drug :- (1) Chemical and Pharmaceutical information (2) Animal Pharmacology (3) Animal Toxicology (4) Human/Clinical Pharmacology (Phase I) (5) Exploratory Clinical Trials (Phase II) (6) Confirmatory Clinical Trials (Phase III) (including published review articles) (7) Bio-availability, dissolution and stability study Data (8) Regulatory status in other countries (9) Marketing information: (a) Proposed product monograph (b) Drafts of labels and cartons (10) Application for test license B. Subsequent approval / permission for manufacture of already approved new drug: (a) Formulation: (1) Bio-availability/ bio-equivalence protocol (2) Name of the investigator/center (3) Source of raw material (bulk drug substances) and stability study data. (b) Raw material (bulk drug substances) (1) Manufacturing method (2) Quality control parameters and/or analytical specification, stability report. (3) Animal toxicity data C. Approval / Permission for fixed dose combination: (1) Therapeutic Justification (authentic literature in pre-reviewed journals/text books) (2) Data on pharmacokinetics/pharmacodynamics combination (3) Any other data generated by the applicant on the safety and efficacy of the combination. D. Subsequent Approval or approval for new indication – new dosage form: (1) Number and date of Approval/permission already granted. (2) Therapeutic Justification for new claim / modified dosage form. (3) Data generated on safety, efficacy and quality parameters. A total fee of rupees __________________________________________(in words). _________________________________________) has been credited to the Government under the Head of Account _________________________________________________________________ (Photocopy of receipt is enclosed). Dated _____Signature __________________Designation ________________ Note- Delete, whichever is not applicable.

53. Financial Express March 20, 2008

54. The Mint January 8, 2009

55. The Economic Times January 21, 2009

56. ~ 85% of All Patented Medicines will have a Therapeutic Equivalent Patented Drugs (1) Includes new salt, new formulations, new combinations, new manufacturer or patents for new indications Source: Lu and Comanor (1998), OPPI, FDA, BCG Analysis 76% 15.7% 8.3% (1) Therapeutic Equivalents will exist. Empirical evidence suggests ~15% of new patented drugs are NMEs with significant therapeutic advantage.  Post 2005 only 2.3% of the Indian pharma market l consists of drugs that have no therapeutic equivalent.  97.7% of the market will be generic or the products will have therapeutic areas. Will Patent Laws Fuel Price Increases?

57. 650 Mn. (no access to medicines) 350 Mn. access to medicines Free Market Price Negotiated prices for Government procurement Industry to support Government efforts to provide Access 2-pronged Approach The Way Ahead… Ensuring Access in Control Free Pricing Regime

58.  Hasten reforms to attract players  Mandatory insurance in organised sector  Health insurance for farmers, labourers Promote Health Insurance

59. Based on 5 Criteria 1. Term of Exclusivity 2. Scope of Exclusivity 3. Strength of Exclusivity 4. Barriers to full I.P. Exploitation 5. Enforcement Ref. Meir Pugatch, University of Haifa – The Journal of World Investment & Trade Pharmaceutical I.P. Index to Benchmark India

60. CountryI.P. Index (2007) U.S.A. 4.67 Singapore 4.40 U.K. 4.37 Chile 3.00 Israel 2.89 Brazil 2.00 China 2.62 India 1.80 Ref. Meir Pugatch, University of Haifa – The Journal of World Investment & Trade Pharmaceutical I.P. Index