Novartis angers critics in India

Challenge of patent laws creates uproar among public-health advocates.

This article first appeared in the Wall Street Journal

When charitable groups accused Novartis AG of jeopardizing the supply of inexpensive medicine to poor countries late last year, the Swiss drug giant thought it could swiftly win over its critics. Instead, the fight is only gathering momentum, with world leaders and politicians jumping in to rebuke the company.

Novartis set off alarm bells after India rejected its patent filing for the cancer drug Gleevec. Novartis has requested several patents in India, and Gleevec, which is patented in 36 countries including China, was the first to be rejected. Novartis sued to challenge India's decision in court in Chennai and filed a separate suit in the court saying that India needed to loosen its laws to make it easier to patent drugs.

India, a big maker of generic medicines supplied to many poor countries, established its current patent law in 2005 to fulfill its obligations as a member of the World Trade Organization.

Critics say the changes in Indian law sought by Novartis would make it harder for poor people to get inexpensive medicines for HIV and other diseases. Led by Doctors Without Borders, Novartis's critics have staged protests outside the company's offices in Washington, Brussels and Boston and collected signatures from nearly a quarter of a million people in 150 countries in an attempt to get Novartis to abandon its court case.

Unexpected uproar

Novartis officials say they are concerned about the damage the campaign is causing the company's reputation. "We didn't quite expect the uproar we've had," says Paul Herrling, head of corporate research at Novartis, who says he has met with the group to defend Novartis.

The dispute underscores the growing tension between public-health interests and intellectual-property rights. That friction has been particularly difficult for India as it attempts to develop into a more sophisticated economy with all the benefits and obligations of WTO membership.

Until 2005, Indian law allowed domestic companies to sell copies of drugs that were patented in the West as long as they changed the process by which the drugs are made. Charitable groups and developing nations rely on India's cheaper generic versions of the latest treatments for HIV and other diseases.

In early 2005, India adopted a new patent law that lets drug companies seek patents on medicines invented after 1995 -- the year India joined the WTO -- or for new and more efficacious versions of older drugs. So far, India has granted about 100 patents under its new law. One of the first went to Roche Holding AG for a hepatitis C treatment.

India says it rejected Novartis's application for a Gleevec patent because the form of the drug Novartis wanted to patent wasn't "more efficacious" than older versions of the drug. Novartis's lawsuit says the criteria India used violate WTO rules and should be removed from Indian law.

Generic companies in India sell copies of Gleevec, a treatment for rare cancers including chronic myeloid leukemia, or CML. Winning a patent for Gleevec wouldn't enable Novartis to stop them because India law allows existing generics to remain on the market. And Novartis, based in Basel, Switzerland, says it gives the drug away to about 6,700 patients in India because few can afford the official Gleevec price of $2,500 a month.

Growing middle class

But Novartis wanted patents for Gleevec and other drugs because it believed that India's growing middle class would increasingly be able to pay for brand-name medicines. Novartis made a case of Gleevec because it was the first to be rejected, says Thomas Wellauer, head of corporate services and a member of the executive committee at Novartis.

"If the patent law in India stays the way it is, it is very difficult to patent new drugs," Mr. Wellauer says.

Though India's pharmaceutical market is growing fast, patented drugs account for about 2% of the Indian market's $5 billion in sales. Sales are expected to climb to $12 billion by 2015, with the share of patented drugs growing to about 7%, according to a 2006 report from consultants Ernst & Young.

Several months after Novartis filed suit in August 2006, relief organization Oxfam International asked its supporters to email Novartis Chief Executive Daniel Vasella to complain. Novartis says it received more than 50,000 emails.

Novartis's public-affairs office emailed a response to the Oxfam campaigners, telling them "that our case in India is about gaining clarity and strengthening the Indian patent system, which will ultimately help patients and societies."

The Max Foundation, a leukemia support group based in Edmonds, Wash., and partly funded by Novartis, defended the drug company. In February it began collecting more than 5,000 signatures from uninsured, low-income patients around the world who receive free Gleevec from the company. The foundation posted the signatures on its Web site. Pat Garcia-Gonzalez, executive director of the Max Foundation, says Novartis didn't ask for its help and that the foundation collected the signatures of its own accord.

But the pressure kept building. Doctors Without Borders and other groups organized protests outside Novartis offices around the world and posted films of the events on their Web sites. Desmond Tutu, the South African Nobel Peace Prize winner known for his work against apartheid and AIDS, signed the Doctors Without Borders petition. Legislators in the European Union and U.S. also wrote open letters to Dr. Vasella urging him to drop the case.

Return to the 1990s?

HIV activists have been particularly critical of Novartis, saying its efforts could bring a return to the 1990s, when new HIV drugs were patented and expensive, and few generics were available for patients in poor countries. Any changes to India's patent law could make it easier for drug companies to patent minor improvements in HIV drugs, making it harder for poor patients to receive these medicines, Doctors Without Borders says.

Novartis says this isn't a concern because WTO rules allow countries to produce cheap copies of drugs they urgently need for a public-health crisis, whether the drugs are patented or not.

Novartis's case puts Indian drug companies in a delicate spot. Many oppose Novartis's efforts to strengthen patent laws, but some, including Ranbaxy Laboratories Ltd. and Dr. Reddy's Laboratories Ltd., are trying to patent brand-name drugs themselves. Ramesh Adige, executive director of Ranbaxy in Gurgoan, outside New Delhi, says incremental innovation should be patentable in India, so long as "frivolous inventions" aren't given patent protection.