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The Test of ‘Therapeutic Efficacy’ in Medicinal Drug Patents

Updated: Jan 4, 2021

Author: Aditya Bhadra Ray

Designation: Fourth year, BA LL.B (Hons.); Jindal Global Law School (O.P. Jindal Global University)

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The Indian pharmaceutical industry, with an annual global revenue of over $38 billion, is referred to as the ‘Pharmacy of the World’, due to its status as the largest global supplier of generic medicines, occupying a 20% share in global supply by volume. Despite the robust growth of products in the Indian drug market, patented drugs only comprises 4.5% of the domestic pharmaceutical market in India. A big factor behind this disparity is the issue of ‘patent eligibility’. This paper focuses explores this issue of patent eligibility and seeks to find how the legislative intent and framework behind Section 3(d) of the Patents Act, 1970 combined with the judiciary’s interpretation of the same, is the catalyst behind this lopsided balance.


According to the Guidelines for Examination of Patent Applications in the Field of Pharmaceuticals, “In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be therapeutic efficacy”.

According to Section 3(d), unless the changes to an already existing patented product enhance the efficacy of the product or have a distinctive use, the new product will not be patentable.

The primary purpose of the Section was to increase the availability and lower the cost of medicinal drugs on the pharmaceutical market as other generic drugs would be manufactured once the patent on the product expired. The effect of the provision was the prevention of ‘evergreening’, which essentially referred to the practice of thwarting competition by extending the patentee’s exclusive right over a product through making minor changes. On closer look, it is possible to notice a fallacy of this rationale which essentially is that even if the new product with no changes to the efficacy was patented, the generic versions of the previous product could still be manufactured since there would be no difference in their efficacy.


In the Supreme Court case of Novartis AG v. Union of India, the Apex Court reinforced the legislative intent behind the provisions by interpreting the ‘efficacy test’ to further restrict the patentability of medicinal products to only cases where the enhanced “therapeutic efficacy” of the drug could be proved. The Court, in an attempt to avoid evergreening and enable the manufacture of generic drugs, argued that changes to an existing patented drug such as shelf life or bioavailability did not increase the efficacy of the medicinal drug and therefore should not be patentable. However, what the Court failed to appreciate was that if patents were granted without enhanced efficacy, it would promote innovation instead of evergreening as the previous drug would still be available to a large pool of budget concerned Indian consumers as there would be no difference in efficacy.


While there is no doubt that this strict interpretation enabled the increased availability of generic drugs, the negative consequences of disincentivizing of innovation cannot be ignored. It is especially important to honour such ‘incremental innovations’ as Indian pharmaceutical companies do not have the infrastructure and the capital required to undertake and accomplish major drug innovations and most of them solely focus on such ‘incremental innovation’ to secure new patents for their products and operate their business. In the Novartis Case, the Court also failed to lay own parameters for sufficiently determining and defining this ‘enhanced therapeutic efficacy’. The Court only laid down the vague qualification in that sufficient data research should be available to support the claim of ‘enhanced therapeutic efficacy’ instead of laying down sufficient parameters for determining the same. Such requirement on Drug Manufacturers to produce sufficient proof of enhanced efficacy through years of clinical trials at the nascent stage drug innovation places an additional burden on the already lengthy and costly process of drug innovation.


Taking into consideration that provisions in the Patents Act, 1970, such as Section 2(1)(j) providing for the ‘inventive step test’ and Section 92A providing for compulsory licensing, already serve the purpose of restricting the patentability of medicinal drugs, it seems to be highly unnecessary to introduce additional restrictions under Section 3(d). Therefore, there is a need to reconsider whether the narrow interpretation of the Efficacy test in the Novartis Case which has the effect of prioritizing the short term positive effect of a fall in the price of generic drugs over the long term negative connotations on innovation is really worth it. Instead, it becomes clear that there is a need to revisit and revise such legislations and precedents with the aim of potentially striking a balance between both the short-term availability of cheap generic drugs and the long-term policy perspectives of innovation and community welfare.















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