AGENDA GUIDE FOR THE

INDIAN PARLIAMENTS EXPERT PANEL

Table of Contents
LETTER OF INVITATION
MANDATE
UNDERSTANDING THE BASIC CONCEPTS
INTELLECTUAL PROPERTY
PATENT
Rights of Patent Owners
What role do patents play in everyday life?
What kinds of inventions can be protected?
IPR in INDIA
IPR and Pharmaceutical Laws in INDIA
IPR vs Access to Healthcare
Novartis vs. Union of India
IPR as a HUMAN RIGHT
ISSUE OF PRICING
INVESTMENT INFLUX vs PRICE RISE

LETTER OF INVITATION
Respected representatives, Namaste! We welcome you all to the simulation of the
Indian Parliamentary Experts Panel meeting at Genesis Model United Nations
Conference 2015. We request all participant delegates to keep a few pointers in mind
before reading this document of guidance. Since this council is a hypothetical
simulation, we aim to make the mandate defined yet flexible in a manner that simulates
debate substantively and gives an opportunity to all the representatives to express their
opinions without getting hell-bent to keep up with a very rigid mandate. .
Secondly, the sources that will be accepted as proof/evidence in the committee. Since
you are the honourable representatives of the judiciary, conglomerates and
representatives of public as a whole, nothing in particular would be considered as a
final proof of evidence but as a difference in opinion and interpretation is something
that is bound to happen. The executive board shall take into consideration all sources of
proof and trickle down to the policy of
doctrine of eclipse1 and the next best alternative
which would be further debated upon in the council.
However, please do basic research about the role you are assuming, and by that I do not
mean you imbibe the traits and behaviour of the person areas of expertise the person
has acquired and to have known to propagate and represent. It might well be the case
that such detailed information might not be available for every person named in the
matrix, for eg, the CEO of Novartis. Hence, in that case the person must be well versed
with the policies of his company which they publicly represent, such as their
investments, their propositions to invest etc, which can be found by reading the
Memorandum of Association, Draft red herring prospectus, for politicians, the various
statements to be referred to given in real time, records present on various government
websites.
Thirdly, the agenda carries with itself a very wide scope of discussion and deliberation.
Im sure that by the first look of it the agenda must have come across as very complex
and unexpected. The agenda comes with great responsibility to each one of us which
has left a damp hole in the Indian pharmaceutical industry which has been a direct
result of weak policy making, absenteeism of laws which has been directly proportional
to the lack of proper health care leading to the indelible gap for access to health care.
Lastly, the procedure we are going to follow will be flexible which would time and again
shift as per the vote of the council; nevertheless we would be providing a basic
blueprint for the same to start with. I hereby invite you to this simulation and urge you

http://www.lawnotes.in/Doctrine_of_Eclipse

all to contribute to this by way of your experience, knowledge and expertise in your
respective fields.
Regards,
Eklavya Malvai|
eklavyamalvai@gmail.com

MANDATE
This Panel is independent from any legal body and its functioning is absolutely
autonomous. The opinions and documentations in this council aim to be persuasive in
nature for the 3 independent bodies, namely, the legislature, executive and judiciary of
our quasi-federal Republic of India. We would rightly be focusing on the legislative and
executive and analysing the current judicial scenario of our country. We will act as a
recommendatory body publishing and supplying the government of India with its mere
suggestions. Though these would be mere suggestions, nevertheless, they will hold
relevance to the highest order by the virtue of being a direct source of a plethora of
expert opinion.
Politically and Judicially: The council will focus on discussion on the current legal
wave of the country, drafting loopholes of the existing laws, need for reforms. Opinions
of retired judges who will help in giving a better understanding of the law, yet, it would
be considered as an opinion and open for debate.
Business Aspect: Representatives of pharmaceutical conglomerates, who will largely
focus on the direct impact of policy to business, growth, revenue generation and lack of
resources and legal backing to progress technologically.
As mentioned before, the mandate stands flexible and time and again the committee
would discuss provisional agendas, which would be subsets to the main agenda, which
would be time bound as warranted by the council.
The Executive Panel would also be a part of the debate at a minimal level, so the
delegates should be open to contribution by the Executive Board, and unlike
conventional committees, be willing to engage in question answer rounds with the
Moderators as well.

UNDERSTANDING THE BASIC CONCEPTS

INTELLECTUAL PROPERTY
Intellectual property (IP) refers to creations of the mind, such as inventions; literary
and artistic works; designs; and symbols, names and images used in commerce.
IP is protected in law by, for example, patents, copyright and trademarks, which enable
people to earn recognition or financial benefit from what they invent or create. By
striking the right balance between the interests of innovators and the wider public
interest, the IP system aims to foster an environment in which creativity and innovation
can flourish.
For a better understanding, we can further divide it into two parts;
a)
Industrial Property
includes patents for inventions, trademarks,
industrial designs and geographical indications.
b)
Copyright
covers literary works (such as novels, poems and plays), films,
music, artistic works (e.g., drawings, paintings, photographs and sculptures) and
architectural design. Rights related to copyright include those of performing
artists in their performances, producers of phonograms in their recordings, and
broadcasters in their radio and television programs.
The importance of intellectual property was first recognized in the Paris Convention for
the Protection of Industrial Property (1883)2 and the Berne Convention for the
Protection of Literary and Artistic Works (1886)3 . Both treaties are administered by the
World Intellectual Property Organization (WIPO)4.
At times we wonder as to why we require these rights, and why does the law allow
vesting these rights in one particular entity or individual?
Intellectual property rights reward creativity and human endeavour, which fuel the
progress of humankind
.
Without the rewards provided by the
patent
* system,
researchers and inventors would have little incentive to continue producing better and
more efficient products for consumers.

ttp://www.wipo.int/treaties/en/text.jsp?file_id=288514
h
http://www.wipo.int/treaties/en/text.jsp?file_id=283698

4
http://www.wipo.int/portal/en/

2
3

PATENT
*
A patent is an exclusive right granted for an invention a product or process that
provides a new way of doing something, or that offers a new technical solution to a
problem.
A patent provides patent owners with protection for their inventions. Protection is
granted for a limited period, generally 20 years.
Patent protection means an invention cannot be commercially made, used, distributed
or sold without the patent owners consent. Patent rights are usually enforced in courts
that, in most systems, hold the authority to stop patent infringement. Conversely, a
court can also declare a patent invalid upon a successful challenge by a third party.
Rights of Patent Owners
A patent owner has the right to decide who may or may not use the patented
invention for the period during which it is protected. Patent owners may give
permission to, or license, other parties to use their inventions on mutually agreed
terms. Owners may also sell their invention rights to someone else, who then becomes
the new owner of the patent. Once a patent expires, protection ends and the invention
enter the public domain. This is also known as becoming off patent, meaning the owner
no longer holds exclusive rights to the invention, and it becomes available for
commercial exploitation by others.
What role do patents play in everyday life?
Patented inventions have pervaded every aspect of human life, from electric lighting
(patents held by Edison and Swan) and sewing machines (patents held by Howe and
Singer), to magnetic resonance imaging (MRI) (patents held by Damadian) and the
iPhone (patents held by Apple). In return for patent protection, all patent owners are
obliged to publicly disclose information on their inventions in order to enrich the total
body of technical knowledge in the world. This ever increasing body of public
knowledge promotes further creativity and innovation. Patents therefore provide not
only protection for their owners but also valuable information and inspiration for future
generations of researchers and inventors.
What kinds of inventions can be protected?
An invention must, in general, fulfil the following conditions to be protected by a patent.
It must be of practical use; it must show an element of novelty, meaning some new
characteristic that is not part of the body of existing knowledge in its particular
technical field. That body of existing knowledge is called prior art. The invention must
show an inventive step that could not be deduced by a person with average
knowledge of the technical field. Its subject matter must be accepted as patentable

under law. In many countries, scientific theories, mathematical methods, plant or

animal varieties, discoveries of natural substances, commercial methods or methods of
medical treatment (
as opposed to medical products
) are not generally patentable
.
IPR in INDIA
IPR plays a key role in almost every sector and has become a crucial factor for
investment decisions by many companies. All the IPR laws in India are at par with
International standards. India is now TRIPS-compliant. This is an international
agreement administered by the World Trade Organization (WTO), which sets down
minimum standards for many forms of intellectual property (IP) regulations as applied
to the nationals of other WTO Members. The very well-balanced IPR regime in India acts
as an incentive for foreign players to protect their Intellectual Property in India. This
can be established by the very fact that approximately 80% of patent filings in India are
from the MNCs.
While the IPR regime in India consists of robust IP laws, it lacks effective enforcement,
for which least priority given to adjudication of IP matters is often quoted as a reason.
The key challenge is to sensitize the enforcement officials and the Judiciary to take up IP
matters, at par with other economic offences, by bringing them under their policy radar.
Further, it is imperative that there be established a Think Tank or a group, which can
bring the varied sets of stakeholders on to a common platform, leading to
extensive/exhaustive and an all inclusive debate/discussion, facilitating well-informed
policy decisions in accordance with Indias socio-economic-political needs.
The challenges also lie in having an IP fund, which can be utilized for further developing
the IP culture in the country. There is also the need to have a National IP Policy for
India, which will help in working towards realizing the vision of India in the realm of IP.
This will facilitate the creation of a strong socio-economic foundation and deep
international trust.
IPR and Pharmaceutical Laws in INDIA
The stakes of the developers of technology have become very high, and hence, the need

to protect the knowledge from unlawful use has become expedient, at least for a period,
that would ensure recovery of the R&D and other associated costs and adequate profits
for continuous investments in R&D. IPR is a strong tool, to protect investments, time,
money, effort invested by the inventor/creator of an IP, since it grants the
inventor/creator an exclusive right for a certain period of time for use of his
invention/creation. Thus IPR, in this way aids the economic development of a country
by promoting healthy competition and encouraging industrial development and
economic growth.

More than any other technological area, drugs and pharmaceuticals match the
description of globalization and need to have a strong IP system most closely. Knowing
that the cost of introducing a new drug into the market may cost a company anywhere
between $ 300 million to $1000 million along with all the associated risks at the
developmental stage, no company will like to risk its IP becoming a public property
without adequate returns. Creating, obtaining, protecting, and managing IP must
become a corporate activity in the same manner as the raising of resources and funds.
The knowledge revolution, which we are sure to witness, will demand a special pedestal
for IP and treatment in the overall decision-making process
The Drugs and Cosmetics Act of India came into force in the year 1940, and since then
there have been a few amendments to the same, which have been not been at par with
the changing socio- economic circumstances and advancements in the science and
technology sector of the health-care industry.
Even though the Foreign Direct Policy (FDI) of India allows 100% investment by foreign
companies in India, yet it has done little to inject foreign capital to the Indian
Pharmaceutical Industry due to the IPR regime in India.
Effective patent protection is necessary for continued investments in innovative
lifesaving drugs. All World Trade Organisation members have committed to ensuring
favourable policy environment that supports continued research for new medicines
through a system of patents. If countries show scant respect for IP protection, the future
of new medicines is at risk, because incentives for the research-based pharmaceutical
industry to invest over $ 1 billion and 10-15 years in the development of a single new
medicine will be undermined. To truly improve access to medicines in India, one must
to continue to work together to advance sustainable policy solutions to healthcare
financing, infrastructure, and human resources challenges, among others, rather than
focus on compulsory licences or other ways of undermining patent protection of
innovative medicines.

IPR vs Access to Healthcare

Time and again India has been confronted with the issue of access to healthcare Vs the
patent regime, where India has sublimely disregarded the patent regime for the sake of
access to quality healthcare.
India faces a huge economic and social gap in its population where the legislature has
faced a challenge to strike a balance between providing for its people and at the same
time keeping its economy at bay by infusing huge foreign capital by allowing 100%
investment by foreign entities in its healthcare industry. Lately, the foreign firms have
become apprehensive due to Indias saturated patent policy and strict norms to grant a
patent to a new class of drug. This has led to a major economic and social impact,
Economic
: Low foreign investment had had a direct impact on the Indian Economy.
Social
: Low influx of foreign technology has led to a sacrifice on the R&D which has left
the Indian healthcare industry stagnant in terms of providing better healthcare for the
masses.
With markets in the developed world becoming saturated, multinational drug
companies are increasingly looking to emerging economies with large populations for
sales expansion and growth. However, their model of intellectual property protection as
an incentive for innovation is running into obstacles in low- and middle-income
countries. Supporters of the pharmaceutical industry believe that without patent
protections, there will be no breakthrough innovations and no new life-saving
technologies. They argue that the high costs of research and development for new drugs
can only be compensated by patent monopolies that allow expensive drug prices. Yet,
developing economies are keen on providing affordable healthcare products for their
citizens. The developed world itself is beset with unsustainable rising healthcare costs
and is looking for cost-effective innovation. A reassessment of patent monopolies,
especially in the case of life-saving products, is essential if health care access is to be
broadened beyond wealthy patients.
In the recent times, a judgement of the Supreme Court of India set an example that India
is yet not ready for a strict IPR regime and is not ready to sacrifice on its access to
healthcare for its developing population who cannot afford expensive healthcare, which
has raised questions from a lot of Pharmaceutical companies involved in R&D of drugs
for diseases such as cancer and HIV. The judgement was
Novartis Vs Union of India
,
which has been further summarised below.
Novartis vs. Union of India
This judgment attracted worldwide press coverage. It received severe criticism from a
number of originator pharmaceutical companies, including Novartis, and from the US
Chamber of Commerce, to the effect the judgment of the Indian Supreme Court has dealt

a harsh blow against the future of innovation, particularly in India. It is somewhat

5
difficult to know why this decision interpreting Section 3(d) of the Indian Patents Act
,
should come as a major surprise to anyone. Perhaps more important, it is difficult to
understand what it is about the Supreme Court judgment that might so offend the
sensibility of patent lawyers or government policymakers. The judgment is well-crafted,
with close attention to the facts presented, and appears to take a balanced view of the
matters brought before the Court.
The case involves a substantial number of fairly complex technical issues, including
some fairly complex legal issues. Without intending an injustice to that complexity, the
main points made by the Court are these:
a)
International legal rules accepted by India, in particular the WTO TRIPS
Agreement; provide sufficient leeway or flexibility in the adoption of patenting
standards to allow the approach adopted by the Indian Parliament.
b)
The Supreme Court interpreted the meaning of efficacy in Section 3(d). It said
that the new form of a drug must demonstrate an improvement in its therapeutic effect
or curative property as compared to the old form in order to secure a patent. Novartis
offered evidence that the beta crystalline form differed regarding certain properties
relating to production and storage (e.g., heat stability). The Court held that these
properties may be important from storage point of view, but would not be relevant to
showing enhanced therapeutic efficacy.
EB comments: The basic argument of the SC was that there was no prominent change
in the property of this drug from its previous one, hence the application for the
renewal of the patent was rejected on the grounds of no new invention

The Supreme Court affirmed that India has adopted a standard of pharmaceutical
patenting that is stricter than that followed by the US or the EU. For India, a patent
applicant must not only show that a new form of known compound is different than an
old form, but that the modification will result in an improvement in the treatment of the
patient. There is in fact nothing new about such a standard.
The Indian Parliament, supported by the Supreme Court, has decided that Indian
consumers should only pay for expensive patented products when those products
represent a genuine advance over older versions. It is important to note what the
Supreme Court did not say as well.

http://ipindia.nic.in/ipr/patent/eVersion_ActRules/sections/ps3.html

IPR as a HUMAN RIGHT

Article 27, the most relevant part of The Universal Declaration of Human Rights for
intellectual property protection states:
1. Everyone has the right freely to participate in the cultural life of the community, to
enjoy the arts and to share in scientific advancement and its benefits.
2. Everyone has the right to the protection of the moral and material interests resulting
from any scientific, literary or artistic production of which he is the author.
The most advanced and expensive biomedical technologies applied to prevention,
diagnosis and treatment continue to expand in very sophisticated ways and the right to
enjoy the benefits of such scientific progress is also coined as a fundamental human
right.
This tension between investing in granting immediate access to basic healthcare when
resources are lacking and developing novel solutions that can only benefit a few in the
short-term but promise to offer widespread progress later, requires rational and
reflexive analysis in order to strike the right balance and prioritization. Innovation is
indeed fundamental and therefore the funding and the creation of incentives to public
and private research cannot be neglected, otherwise the novelty in healthcare can
stagnate and with it the endless possibilities to continue to efficiently minimize human
suffering. That outcome is undesirable even to those who are most critical of the way
healthcare research and innovation are currently designed, financed and executed,
particularly concerning well documented unethical practices.
The area of contention here being that what must actually constitute as a human
right, and what must be given precedence in the area of healthcare and policy making,
Patent to pharmaceutical companies to determine indefinite pricing for their drug or
providing access to healthcare to the required population.

ISSUE OF PRICING
Unlike the pharma sector in countries such as the US, Indian pharma market is a price
controlled one. Pricing remains a contentious issue and more often than not, the
pharma industry and the regulators lock horns on pricing issues.
The pricing conflict has been raging in India since the 1970s, where for the first time the
government had restricted the profitability of pharma companies through Drug (Prices
Control) Order (DPCO). Since then a number of DPCOs have been brought in for
controlling drug prices.
In 1997, through a resolution of the Ministry of Chemicals and Fertilisers, an
independent body of experts was established called the NPPA. One of the primary
objectives of the NPPA was to fix /revise the prices of controlled bulk drugs and
formulations and to enforce prices and availability of the medicines in India. In addition
to the National List of Essential Medicines, NPPAs mandate extends to monitoring the
prices of decontrolled drugs in order to keep them at reasonable levels.
Recently, the NPPA has been flexing its muscles and has issued orders for price control
of various drugs and some of these decisions have been challenged in the courts of law.
This trend of a more active NPPA has been welcomed by the general populace as it
prevents patients from being priced out of affordable healthcare. At the same time, price
control is seen as a major setback for many pharma companies as consequential
revenue losses may make the production of price controlled drugs commercially
unviable.
In view of the recent spike in the drug prices in the US, the question of decontrolling the
Indian pharma industry has been laid to rest and many believe that price control
mechanisms are here to stay. It is expected that with an ever more vigilant regulator
and a growing industry, pricing of drugs is to remain a contentious issue.
INVESTMENT INFLUX vs PRICE RISE
There is a general belief that MNCs will cause prices of medicines to go up and will
reduce availability of generics in the market. It is also believed that there may be a
concerted strategy by foreign companies to take over the Indian drug industry and
divert its capacity towards Western markets thus depriving Indian consumers of low
cost medicines. On the other hand there is a well substantiated view that MNCs
recognize that the future growth in the global drug market will be far more in countries
such as China, India, and other developing countries, and therefore their strategies are
to enter and sell more in these markets, which will have a positive impact on the
competition in the pharmaceutical Industry. The attractiveness of the local market will
grow substantially with social and economic progress and inevitable increase in public

expenditure on health. India is also seen as an attractive base for manufacturing of

generics for exports both by multinational and Indian Companies.
Acquisitions of other companies already established in the market are a universal
business strategy in all industries and in all countries, to save time and also ensure
more surety of success. Therefore the recent acquisitions of Indian pharma companies
by MNCs could as well be an expression, as some evidence suggests, of these foreign
companies to grow their business by investing more India to produce and sell more in
India itself. This could be in Indias interest, by bringing in more investments and more
technologies into our health sector and may not have an adverse effect on competition.
The Department of Pharmaceuticals has analysed data regarding prices and availability
of medicines over the past few years and also exports and imports. The data does not
substantiate that acquisitions so far have led to stoppage of nationally relevant drugs.
Also a relationship between acquisition and increase in prices is not seen. It is of course
to be recognized that acquisitions are recent and more definitive trends will become
evident over time.
It must also be recognized that monopolistic situations and unreasonable upward
pressure on prices, can also result from strategies of acquisitions, cartelization, and
unfair trade practices of domestic players within the Indian market even if there were
no foreign companies.
Further, Indian industry itself may diversify investment into other areas as the pressure
on drug innovation increases with the growing stringency in regulatory requirements.
Therefore a properly equipped institutional mechanism is required to handle this issue.
While addressing the issues relating to FDI and its adverse effect on competition it must
be taken care that Government does not come up with very stringent measures that
may restrict FDI and thus deprive India of its spillovers.

Hence, the underlying question which we must address here is how to tackle Indias
need for both, cheap healthcare and need for greater economic investment. How does
India tackle the issue of macro level investments and micro level issue of cheap
medicines?