Abstract
The Bolar exemption provides an exception from patent infringement to the generic manufacturers from using and importing patented drugs for research and development, for the sole purpose of submission of information for regulatory approvals of generic versions of patented products before the original patents expire. In the competitive generic market of India, it is important to balance the individual interest (patentee’s rights) and societal interest (need for better and cheaper access of products to the society). The present article aims at analyzing the importance of Bolar exception provided under the Indian patent law and its effects on the Indian pharmaceutical industry. The article also reflects some of the problems still existing under the Indian patent law and the need for making some changes into it.
Introduction
Before the ratification of TRIPS agreement, Indian domestic pharmaceutical industry flourished in the absence of product patents. The competitive generic market resulted in production of generic versions of blockbuster drugs at very low prices[1]. These generic drugs cost about 5% of the price of similar drugs sold by US and EU pharmaceutical firms[2]. A generic drug is bioequivalent of a brand named drug in characteristics such as dosage, form, safety etc., but they are much cheaper than the branded drug. Needs of most of the poor population suffering from deadly diseases such as AIDS in India, were satisfied by way of these generic drugs. Thus, for creation of such generic drug, research over the brand named patented drug is required, which is prohibited due to exclusive rights of patentee. Hence, the need for an exception in such circumstances arises. This need is catered by the Bolar exemption which was introduced in India with this purpose of providing access to medicines.
Bolar exemption provides an exception from patent infringement to the generic manufacturers from using and importing patented drugs for research and development, for the sole purpose of submission of information for regulatory approvals of generic versions of patented products before the original patents expire. The intention of this section is to ensure that the generic versions of patented products are ready with the necessary regulatory approval for market launch, immediately after the innovator products go off patent, rather than going through a long rigorous process of getting the regulatory approval only after expiration of the patent term[3].
Thus, this article aims to derive status of Indian law providing for Bolar exemption and its affects thereto upon the pharmaceutical market. This, article starts by tracing the origin of Bolar exemption from US and then proceed to describe the legislative intent behind Bolar exemption along with the circumstances leading to such an amendment in the Indian patent law. The study, at a later stage, also justifies the presence of Bolar exemption in Indian law due to its substantial significance for the overall population of the country. In the end, the article will reflect some problems still existing under the Indian law and the need for some reforms.
History and Basis of Bolar Exemption in Patent Law
Bolar exemption was given statutory cognizance for the first time by the Hatch-Waxman Act (Drug Price Competition and Patent Term Restoration Act, 1984). But to understand the circumstances which led the US Congress to introduce a revolutionary provision like Bolar exemption, we need to look at the chain of events which resulted into its evolution.
History of Bolar Exemption: Emergence from USA Law
Prior to the 1984 Act, the law exempted the use of a patented product for the purposes of research or experimentation and not for profit, from infringing the patent. It is called the “experimental use” doctrine. It was based upon the equitable concept that a court will not redress a de minimis use of a patent. Therefore, at that time, an act to be considered as an infringement of a patent should have been of such a nature that it results into some commercial gain to the patent infringer.
Law Prior to Bolar Case
It was a common practice back then for the generic companies to use the patented invention for the FDA (Food and Drug Administration) approval to market the generic versions of those patented drugs before the expiry of the patent term. This use, in a literal sense, would amount to the infringement of the patent as the use of the patent by the generic companies was with the sole objective of commercial gain[4].However, it seems that such a practice had tacit approval of the owners of the patented inventions which could be deduced from the fact that there are no reported cases in which the patent owner sought to prevent such activities[5]. To the contrary, in Hoffman-LaRoche, Inc. v. Zenith Laboratories, Inc.[6] decided in 1975, the plaintiff acknowledged that it “did not seek to interfere with Zenith’s legitimate activities in seeking FDA approval”[7]. This shows the ignorance of the manufacturers of the patented drugs of the fact that their patent gave them a right to prevent the generic companies from developing a generic copy during the lifetime of patent.
In Pfizer, Inc. v. International Rectifier, Inc.[8]case, for the first time, the proposition that the development of a generic drug for the approval of FDA during the life of patent amounts to patent infringement and does not come under the “experimental use” doctrine was laid down[9]. However, the authority of this judgment on the drug development exemption is questionable as it basically decided the violation of a pre-existing court order[10].
The Bolar Case and the Hatch-Waxman Act
Consequently, in October, 1983 a decision came from a US district court which paved the way for what we today know as the Bolar exemption. In Roche Products, Inc. v. Bolar Pharmaceutical Co.[11], the judiciary for the first time authorized the practice of using or making the patented drugs just for taking the regulatory approval of FDA to market their generic copy. In this case Roche had a patent on flurazepamhcl which was an active ingredient of the prescription sleeping pill, DALMANE, manufactured by Roche. Bolar was a generic drug company that sought to perform required FDA experiments on the patented product of Roche to get FDA’s approval during the lifetime of the patent. Roche filed a suit against Bolar claiming that such an act would infringe its patent. The court embraced the notion that the activities involved in seeking FDA approval to market a patented drug did no harm to the patent owner during the life of a patent and were exempt from the claim for infringement as a de minimus activity[12].
Meanwhile, in the 98th Congress (1983) a new legislation called the Waxman legislation was introduced by Republican Waxman, Chairman of the Energy and Commerce Subcommittee on Health and the Environment to reform FDA’s generic drugs approval process in order to expedite approvals and stimulate competition which would lead to lower drug prices for older drugs[13]. It was the same time when the district court rendered its decision in Roche v. Bolar[14]case. Thereafter, the first draft of the Waxman legislation was released on April 4, 1984 which incorporated the decision of the district court on the ground that the judgment was on the basis of the existing law and thus, its codification would only help in the preservation of the status quo[15].
During same time, the Court of Appeals for the Federal Circuit gave its decision in Roche Products, Inc. v. Bolar Pharmaceutical Co.[16]. The Federal Circuit reversed the decision of the District Court[17]. The Court held that:
“(1) competitor’s use of patented ingredient to perform tests necessary for it to obtain approval of the FDA for its version of the sleeping pill once the patent expired was a prohibited use;
(2) that use did not fall within the experimental use exception to the patent laws;
(3) public policy did not require that exception be created for those using a patented ingredient to create a generic drug”[18].
On June 12, 1984, Senator Hatch introduced an identical legislation referred to as “The Drug Price Competition and the Patent Term Restoration Act of 1984” commonly called as the Hatch-Waxman Act. This Act faced a bit of opposition in the beginning which was later resolved due to the efforts of Senator Hatch. Ultimately, the Act was passed in September, 1984 by the House of Representatives and Senate and was signed into law by President Ronald Regan[19].
Bolar exemption under indian patent law
The Indian Patent Act, 1970 (hereinafter Patent Act) provides an exclusive right to the patent holder to make, use, exercise, sell or distribute the invention in order to protect harm to his commercial interest. Section 48 of Patent Act[20] confers such a monopolistic right to the patent holder. But such right conferred is not absolute and there are few exemptions laid down in the act itself. Bolar exemption is one such statutory exemption laid down under section 107A of the act. This chapter will briefly describe the drafting and introduction of Bolar exemption under the Indian law and its present status in light of TRIPS.
Circumstances Prevailing and Intention behind Bolar Exemption in India
In May 2002, when India’s Patent Act was amended, a new section 107A was introduced as an effort by the Government to continue the supply of life saving drugs at a reasonable price. This provision provides for a research exemption as an exception to the general rules of patent infringement. This amendment was passed under BJP Government with a huge pressure from many groups such as various NGO’s, human rights activists etc. The bill was passed by the Government in order to meet the mandates posed by ratification of TRIPS[21].
The Amendment Act aimed to balance the competing interests of a variety of stakeholders, including domestic generic medicine producers, the domestic research and development community, foreign multinational pharmaceutical companies, civil society groups concerned with access to medicines and intellectual property lawyers[22]. In order to materialise this aim, a Joint Parliamentary Committee was set up to recommend changes to India’s patent regime which submitted its report to the Parliament on 19 December 2001[23]. This report suggested for insertion of section 107A in the existing act, so as to provide for a research exemption which was in accordance with the leverages given under TRIPS[24]. Hence, this amendment no doubt made efforts to help generic manufacturers, who were exploring all possible means to help mitigate the adverse consequences of a pharmaceutical patent regime[25]. Thus, the Government came up with 2002 Amendment Act inserting section 107A in the existing patent Act through section 44 of the amendment act which read as follows:
44. Insertion of new section 107A-After section 107 of the principal
Act, the following section shall be inserted, namely:-
107A. Certain acts not to be considered as infringement-For the purposes of this Act,-
(a) any act of making, constructing, using or selling a patented invention solely for uses reasonably relating to the development and submission of information required under any law for the time being in force, in India, or in a country other than India that regulates the manufacture, construction, use or sale of any product.
Thus, section 107A was inserted in the same way as suggested by the Joint Parliamentary Committee and since then, it has served as an effective way to tackle the need for cheaper medicines, etc. Later on, the 2005 Act expanded this provision to bring even the act of ‘importing’ within its ambit[26] and since then, the law has remained untouched.
Present status and scope of Indian Law providing for Bolar Exemption
The Indian law for Bolar exemption contained under section 107A of the Patent Act is the best known of many limited exceptions to the patentee’s exclusive rights provided for under Article 30 of the TRIPS[27].Thus, the Indian law for Bolar exemption is in consonance with TRIPS by virtue of Article 30 which allows the member nations to impose certain restrictions on exclusive patent right of a patentee[28].The Indian law is almost similar to the Canadian law providing for Bolar exemption or it can be said that Indian law is borrowed from Canada. The Canadian law was challenged by the European Union through a complaint with the WTO and the WTO dispute panel upheld the use of the Bolar exception as conforming to TRIPS[29].
Even the Doha Declaration unequivocally stated at the outset that TRIPS Agreement does not and should not prevent Members from taking measures to protect public health[30]. Thus, Article 7 and 8 of the TRIPS Agreement require that WTO Members must ensure that the laws relating to all forms of IPRs covered by the Agreement give due consideration to issues like protection of public health and nutrition and do not merely serve the interests of the owners of intellectual property[31]. Article 8 complements the provision of Article 7 and provides that while formulating their IP laws, the Member States can adopt ‘measures necessary to protect public health and nutrition and to promote the public interest in sectors of vital importance to their socio-economic and technological development”[32]. India being one of the developing countries and the highest producer of generic drugs around the world, the law of Bolar exemption can be largely justified by the way of Doha Declaration and persisting need for providing cheaper medicines.
But, the contrasting observation regarding this provision comes when issue of use for commercial purposes is raised. In this regard idea can be borrowed from the US decisions where Court disallowed the defence of Bolar exemption where the soul motive was to earn profit and not to satisfy curiosity or intellect demand[33]. Although, till date section 107A has not gone under judicial scrutiny, but with the frequent development of generic drugs industry, it is accepted that soon this provision would be subjected to judicial examination. Already the heat around this provision can be seen from the judgment of Delhi HC in Bayer-Cipla case[34] in which the Court has ordered Cipla to seek the High Court’s permission before market launch of the generic version of Bayer’s patented product[35]. Hence, very soon a settled Bolar exemption can be anticipated in India which will come by way of judicial decision.
RELEVANCE AND CRISIS OF BOLAR EXEMPTION IN INDIA
This part aims to chalk out some important points reflecting necessity of Bolar exemption in India so as to balance the individual interest (patentee’s righd societal interest (need for better and cheaper access of products to the society).
Need and Relevance of Bolar Exemption in India
India being a developing country with low per capita income is highly market sensitive, that is, people are highly depended upon market conditions for their survival. Since patent law also deals and affects the market, it can be said that a patent right is market oriented right or market monopolistic right. Therefore, in a market sensitive country like India, critical issues of patent law such as Bolar exemption gain critical importance for the public at large.
1. Bolar Exemption is necessary for promoting competition in the market.
The purpose of the Bolar exemption is not to subsidize new research at the expense of the patentee, but rather to allow research when market forces prevent it[36].So, if research for developing generic products has to start after the expiry of its bioequivalent patented product then the market launch of generic product will only take place after several years of expiry of the patent term of the patent. Hence, in such a case de facto extension of patentee’s monopoly takes place for a period after expiration of patent term[37]. Since competition in market has already suffered substantial loss during the patent term, so such an implied extension of monopoly and curtailment of competition results in further considerable harms. Since lack of competition is detrimental to the consumer interest, is harmful for the market in long run and is against national interest and economy, the Bolar exemption is necessary in a country like India. Therefore, public interest here is heavily outweighing the individual interest of the patentee. Thus, such an exception is valid as a limited restriction on the intellectual property right.
2. Bolar Exemption is essential in pharmaceutical industry to provide cheap access to lifesaving drugs to citizens.
One of the most detrimental aspects of amendments brought under the Patent Act was the introduction of product patent for pharmaceutical products, which resulted in sudden increase in price of life saving drugs. Due to the product patent, the well flourishing generic industry in India declined, which directly affected low per capita income class of India which constitutes considerable proportion of the population. If this right of patent holder is extended in a de facto manner beyond the patent protection period then the situation will become even more threatening. Such a situation even leads to violation of right to health which is a recognized human right under various international conventions. Thus, Bolar exemption is significantly relevant in such a scenario because it helps in progress of the generic industry, which further results in availability of cheaper life-saving medicines for the consumers. Even WHO has recognized that reasonable research exemption could help to address public health issues in developing countries[38].
In other words, the “Bolar” exception in the Indian patent law, would allow Indian generic manufacturers to compete among themselves, ensuring the continuous availability of medicines at low prices for domestic, as well as international, consumers[39].Thus, Bolar provision in many ways has facilitated improved affordable access to anti- retroviral for AIDS[40] and is necessary for the majority of population of the developing country like India to ensure easy access to cheaper medicines.
3. Bolar Exemption promotes and enables further Research and Development.
It has been regarded by most of the patent law theorists that research leads to further innovation, but due to patents sometimes research gets prohibited, thus exceptions such as Bolar exemption enables research at an earlier stage than it would have taken place in its absence[41].For a variety of drugs, it is essential to provide such an exception so that research can start at an earlier stage which will result in better inventions and outcomes in future.
Problems and Issues Associated with Bolar Exemption in India
In India there are still problems emerging in law providing for Bolar exemption. Apart from enforcement difficulties that may arise in future, there is an inherent problem present in the statue itself, which is a concern relating to data exclusivity. Data exclusivity is the period of time before a follow-on competitor can enter the market with an abbreviated filing that relies in whole or in part on the innovator’s data on safety and efficacy[42]. Therefore, data exclusivity, in effect, extends the term of the monopoly rights that a patentee enjoys. It becomes important because the most innovative, truly revolutionary products involving new chemical entities ordinarily take a very long time to come to market because of extensive pre-marketing product development, clinical trials and delays in regulatory approvals[43]. In such a case, the patentee does not get to utilize the whole of its patent term to exercise its monopoly rights and reap out the cost of developing that product and the subsequent benefits emerging from it. In such a case, extension of patent term becomes vital for the patentee and thus, the patentee is left with the following options:
- Patent term extensions designed to compensate for product-development and regulatory delays help companies to recapture some of their rights to exclude, but extension provisions are subject to stringent upper limits, meaning that patent terms are often too short to secure market exclusivity during the entire period of the medicine’s therapeutic advantage[44].
- Ever-greening strategies, that is, efforts to extend the period of patent protection through incremental modifications to the product[45], could be resorted to by the patentee to get an indirect extension of patent but many a times such a modification may not even fulfill the criteria of novelty or inventive step or utility.
Due to these reasons, data exclusivity becomes the only way to ensure market exclusivity of such products[46]. However, in India, the Patent Act does not provide for a period of data exclusivity. Section 107A of the Patent Act, which inculcates the Bolar provision, is silent about this aspect. Therefore, it addresses only one side of the issue. It is a statutory gap which may result in discouraging the Indian pharmaceutical industry to invest in the research and development of drugs. The absence of data exclusivity legislation in India results in clash between research-based pharmaceutical companies and local generic companies[47].
Since protection of data exclusivity can also be implicitly traced in TRIPS[48], so the Indian law excluding data exclusivity protection although providing for Bolar exemption often faces criticism from brand named drug companies and developed countries. This is why, industry groups and some developed countries, for example, the United States and the European Union, have argued that Article 39(3) of the TRIPS agreement requires countries to create a regime of “data exclusivity,” a form of time-limited intellectual property right. In the United States and in the countries in the European Union, the data exclusivity regime for both medicines and agrochemicals was adopted prior to the TRIPS agreement (for example, in 1984 in the United States and in 1987 in the European Union, for medicines)[49].As a result, the law in India which absolutely excludes the protection for data exclusivity is highly volatile and subjected to criticism.
Further, there are few subjective approaches laid down under section 107A(a) that again lead to several issues concerning pharmaceutical market and are likely to be judicially scrutinized in the near future. For instance, the term used under section 107A(a), ‘uses reasonably related to the development’, is a subjective term not defined by any statute. Therefore, several questions arise in this regard as to what constitutes reasonable use? How much quantity of drug may be required for ‘uses reasonably related to development’ and for the submission of information? Can manufacture or import of excessive quantity of drugs and subsequent stock piling be allowed under the pretext of ‘uses reasonably related to development’ in the Indian scenario?[50] “Stockpiling” of drugs in anticipation of patent expiration are NOT considered as valid practices under a 2000 WTO ruling involving the Canadian Bolar provision. Canadian law in question allowed a “stockpiling exception” 6 months prior to the expiration of the patent. This was ruled by WTO as contrary to TRIPS[51].
Moreover, another valid question that arises in the present context is whether a regulatory approval can be granted for a drug which is still having 10 to 15 years of patent term left? Often it has been the case that the generic company after receiving the marketing approval eventually launches the product in market in contravention of patentee’s right[52]. Thus, the Indian law still is highly arguable and still suffers several shortcomings which are likely to be exposed in the near future.
CONCLUSION
From the above discussion, it is fair to evaluate that Bolar exemption is highly relevant in the Indian scenario. This exemption is essential to protect lifeline of considerable amount of population of the country suffering from deadly diseases. Already, the Bolar exemption has started to serve needs of the pharmaceutical industry and it is serving as a blessing for generic drugs producers. But the lack of judicial interpretation in this regard is posing several questions that bring Indian patent law under light of various criticisms.
Some problems that need to be reformed in the existing law are such as recognition of data exclusivity period, prohibition of over stockpiling of drugs etc. As regards the data exclusivity, it can be regarded as one of the major threats to the patent regime in India because its absence is leaving branded pharmaceutical industry unprotected, which in turn is resulting in reduction in presence of genuine drug companies. Thus, for meeting the international requirements, a need persists to adequately amend the law so as to ensure that the patent rights are respected, resulting in encouragement for research and development, and increase in presence of these genuine drug industries in the pharmaceutical market. These amendments are essential, so that the Indian law at a later stage is protected from penalties by the WTO settlement body for violation of TRIPS provisions.
Submitted by:
AAKSHITA BANSAL
B.A LL.B 5th year
AMITY LAW SCHOOL ,DELHI