The introduction of product patents aided in giving Indian pharmaceutical companies more power. In fact, the availability of exclusive ownership encouraged more pharmaceutical companies to conduct research and development for new drugs.
Without a doubt, the pharmaceutical industry (drug patent) has benefited greatly from the rapid advancement of technology that has taken place over the recent decades. As it takes years of research and experimentation to develop even one drug, it is a field that is often regarded as highly knowledge-driven.
Furthermore, much of the research in the pharma field is unpredictable, with many studies yielding no results. As a result, it is critical for pharmaceutical companies to make the most of whatever research yields viable results.
So, how do pharmaceutical companies stay financially secure when the research they conduct is both costly and unpredictable? This is where the drug patent comes into the picture. The pharmaceutical industry extensively utilises intellectual property rights such as patents as a way for them to protect their best interests.
Hence here’s a look at why drug patents are necessary for the Indian pharmaceutical sector.
Intellectual Property Right and Indian Pharmaceuticals
Since the pharmaceutical industry relies on research and development, it needs to take intellectual property rights very seriously. Most pharma companies protect themselves by relying extensively on drug patents in India. Therefore, over the years, India has developed a rigorous system of patent laws, which helps ensure that both the public and pharmaceutical companies benefit equally.
Furthermore, India is a part of the GATT, which has helped make drug patents in India more efficient. The first significant change that was induced after India’s induction into GATT allowed pharmaceutical companies to patent their drug manufacturing process. The drug patent duration at this time was seven years. Additionally, after India became a part of the GATT in 1994, several significant changes occurred in the Indian market, as the country had to comply with GATT and TRIPS laws. Following that, Indian pharmaceutical companies were required to meet the TRIPs’ minimum standard requirements. As part of this process, India implemented a product patent system that was valid for 20 years.
Moreover, MNCs and American corporations had a significant impact on the Indian healthcare and pharmaceutical sectors prior to 2005. However, since 2005, we have seen Indian companies dominate the market, as MNCs’ market share has decreased significantly. Furthermore, because R&D was less expensive in India, many foreign companies decided to establish subsidiaries there and sell medicines through them.
Drug Patent Definition
A patent is a legal document that protects an owner’s invention or idea from intellectual property theft. It is a type of Intellectual Property Right that forbids others from producing, using, marketing, or selling an innovation without the owner’s permission. It is granted by the government to ensure that the owner has complete control over their creation or idea. However, before granting a patent, a governing authority conducts several rigorous checks to ensure that the innovation’s plan, product, or process is unique and inventive.
Drug patents on the other hand are patents created specifically for drugs or medicines that prevent other companies from marketing, manufacturing, or selling a specific drug.
Drug Patents in India
After signing the TRIPs Agreement, India made transitional arrangements possible through an amendment to the Patent Act. A second amendment was introduced in 2000, and soon after, numerous bills were introduced, assisting in extending the duration of drug patents, adding new matters, and even introducing compulsory licencing. Product patents were introduced in a third amendment, along with changes to the fee structure and filing procedure for Indian pharmaceutical companies.
Types of Drug Patent
- Process Patent – Under this system, only the process of manufacture of a drug could be patented, and not the drug itself. Therefore, other competitors could use different methods to manufacture the same drug, leading to a lot of copies and generic medications.
- Product patent – As per this system, the actual Drug had a patent in India on it, preventing others from manufacturing it. This ensured that competitors could not make the same drug, and therefore a pharmaceutical could garner a monopoly over the market share for a drug they specialized in.
Additionally, this is the system followed in India.
- Patent-expired/Non-patented Drugs – Any pharmaceutical company can continue to manufacture/supply a drug to both the domestic and export market.
- Patented Drugs – Manufacture/supply of such drugs is possible only through compulsory licensing.
Ever-Greening by Pharma Companies
Ever-Greening is a strategy used by pharma companies to protect their commercial interest. It includes making small changes to an existing drug product and filing for a separate drug patent.
For instance, a pharma company would use the same molecular formulae with an altered structure and register a new drug patent. Sometimes pharmaceuticals could also add an ingredient that makes no difference to the final effect of the product and file another drug patent.
Many pharmaceutical companies may even choose to buy out their rivals. They could also try to impede a competitor’s research by filing false infringement claims against these new drug patents. While these strategies are legal, they raise the cost of medications for the general public and hence should be scrutinised.
How Drug Patents Have Helped
Prior to the widespread adoption of product drug patents in India, Indian pharmaceutical companies faced significant challenges. This was because generic drug companies do not invest heavily in research. They merely sell their drugs at significantly lower prices and then consolidate market share. Such companies were making life difficult for large-scale pharmaceutical companies that were assisting in the development of new drugs.
However, timely patent law interventions aided pharma companies in dealing with the situation effectively. However, while drug patents help pharmaceutical companies maintain a healthy profit margin, they should not be used as an attempt to monopolise the market. This was one of the motives behind the addition of the Competition Act of 2002, which helped prevent monopoly in the field. Therefore, drug patent laws not only help in balancing the protection of IP and competition but also ensure welfare for both companies and the general public.