The Controversy Over Drug Patenting: Balancing Health and Innovation

Should a life-saving drug be treated the same as a new smartphone design when it comes to patent protection? This question sits at the heart of one of the most contentious debates in intellectual property law. Drug patents give pharmaceutical companies an exclusive monopoly over their inventions – a necessary incentive for the billions spent on research and development. But when that monopoly keeps prices out of reach for patients in low-income countries, the human cost becomes impossible to ignore. India’s approach to this dilemma has shaped not just its own healthcare landscape, but the global supply of affordable medicines.

Why drugs are treated differently in patent law 🔗

Most patentable inventions – a new machine, a software algorithm, a chemical process – compete in a marketplace where alternatives exist. Pharmaceuticals are different. When a drug is the only effective treatment for a condition, the patent holder is not just a business monopoly; they become a gatekeeper between patients and survival. This moral dimension is why countries have historically been reluctant to extend the full force of patent protection to medicines.

Before 1970, India followed colonial-era patent law that allowed multinational pharmaceutical companies to hold product patents, driving up drug prices and limiting domestic manufacturing. The Patents Act of 1970 deliberately changed this by recognising process patents but excluding product patents in pharmaceuticals, food, and chemicals. This meant an Indian company could legally manufacture a cheaper version of a patented drug as long as it used a different synthesis method – a practice that gave rise to India’s world-renowned generic pharmaceutical industry.

The TRIPS agreement and the 2005 turning point 🔗

The landscape shifted dramatically when India joined the World Trade Organization in 1995 and became bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS required all member nations to recognise pharmaceutical product patents, effectively mandating that India open its drug market to the same level of patent protection enjoyed in the United States and Europe.

India was among the most vocal opponents of TRIPS during the Uruguay Round negotiations of the late 1980s and early 1990s, resisting the inclusion of pharmaceuticals in any IP framework. Once TRIPS was finalised, India used the maximum transition period allowed and waited until 2005 – the last possible moment – to amend its Patents Act to permit pharmaceutical product patents. Even then, the government ensured this compliance came with significant safeguards.

What Section 3(d) actually does 🔗

The most significant of those safeguards is Section 3(d) of the Indian Patents Act, 1970, introduced through the 2005 amendment. At its core, it bars patents on new forms of known substances – such as a new salt, ester, polymorph, or particle size of an existing drug molecule – unless the applicant can demonstrate a significant enhancement in therapeutic efficacy compared to the original substance.

The provision directly targets a practice known as evergreening. Evergreening occurs when a pharmaceutical company makes minor, incremental modifications to an existing patented drug – changing its salt form or adjusting its crystalline structure – and then files a fresh patent to extend its market monopoly beyond the original 20-year term. By doing so, companies can effectively delay the entry of cheaper generic versions into the market indefinitely. Section 3(d) draws a clear line: cosmetic molecular tweaks do not qualify as genuine innovation deserving patent protection.

The explanation appended to Section 3(d) explicitly states that salts, esters, ethers, polymorphs, metabolites, and other derivatives of a known substance are considered the same as the original substance for patenting purposes, unless they differ significantly in properties with regard to efficacy. This is a higher bar than what most countries impose, and it is this elevated standard that makes India’s pharmaceutical patent framework unique on the world stage.

The Novartis case: a landmark moment 🔗

No discussion of drug patent restrictions in India is complete without the Novartis AG v. Union of India case, decided by the Supreme Court of India in 2013. Novartis applied for a patent on a beta-crystalline form of imatinib mesylate – the active ingredient in Gleevec, a blockbuster cancer drug used to treat chronic myeloid leukemia. The company argued that this new crystalline form had better bioavailability and flow properties than the original compound.

The Indian Patent Office rejected the application, citing Section 3(d). The Supreme Court confirmed this rejection, holding that improved bioavailability does not automatically translate into enhanced therapeutic efficacy. The court emphasised that for a drug, efficacy must mean therapeutic efficacy – how effectively it treats a disease – and not just any improved physical or chemical property. Since the beta-crystalline form of imatinib did not demonstrably treat leukemia better than the known compound, it failed the Section 3(d) test.

The court also made clear that preventing evergreening was the legislative intent behind Section 3(d), and that this was particularly important in the context of life-saving drugs where large patient populations depended on affordable access. This ruling reverberated globally. Approximately 80 percent of the AIDS medicines used by Médecins Sans Frontières to treat patients across 30 countries come from Indian generic manufacturers – a statistic that underscores just how much global health outcomes depend on India’s patent policy decisions.

The case for drug patents: innovation needs incentives 🔗

The counterargument from the pharmaceutical industry deserves serious consideration. Developing a new drug from molecule to market takes an average of 10 to 15 years and costs hundreds of millions to billions of dollars. Without the promise of a patent-protected period during which the company can recoup its investment and generate profit, the rational economic incentive to fund that research simply does not exist. Critics of India’s Section 3(d) point out that it creates an unusually hostile environment even for genuine incremental innovation.

Research by the Geneva Network found that Indian generic pharmaceutical companies that actively file patents for improvements to existing medicines in the United States do not pursue similar filings in India – not because the innovations are different, but because the Section 3(d) bar makes success unlikely. This represents a missed opportunity: incremental innovations, such as better drug delivery systems, improved formulations, or reduced side-effect profiles, can meaningfully benefit patients even if they build on existing molecules. A system that refuses to recognise this can stall the kind of step-by-step scientific progress that often delivers the most practical therapeutic advances.

Global drug manufacturers represented by the Organisation of Pharmaceutical Producers of India (OPPI) have repeatedly sought a legislative review of Section 3(d) and a clearer redefinition of the efficacy criteria, arguing that the vagueness of the term “efficacy” creates legal uncertainty and discourages R&D investment in the country.

Compulsory licensing: the government’s override tool 🔗

Alongside Section 3(d), India’s Patents Act contains another powerful mechanism for balancing health priorities with IP rights: compulsory licensing. Under Section 84 of the Patents Act, any interested party can apply for a compulsory license three years after a patent is granted, on grounds that the drug is not meeting public needs, is priced unreasonably high, or is not being worked within India. Section 92 allows the government to act directly in cases of national emergency.

India’s first – and so far only – compulsory license was granted in 2012 in the case of Natco Pharma v. Bayer Corporation. Bayer’s cancer drug Nexavar (sorafenib) was priced at approximately ₹2.8 lakh per month, placing it entirely beyond the reach of the vast majority of Indian patients. The Controller of Patents granted Natco Pharma a compulsory license, allowing it to manufacture a generic version at a fraction of the price, with Bayer receiving a royalty of 6% of Natco’s net sales. The Intellectual Property Appellate Board upheld this decision, and it became a landmark demonstration that India was willing to use TRIPS flexibilities in practice, not just in theory.

Even during the COVID-19 pandemic, when global pressure mounted for India to issue compulsory licenses on antiviral drugs and vaccines, the government chose a different path – relying on voluntary licensing arrangements, price controls, and accelerated domestic manufacturing rather than invoking compulsory licensing. This cautious approach drew criticism from public health advocates who argued the system needed to be far more agile in genuine emergencies.

Historical resistance grounded in public interest 🔗

India’s resistance to drug patents has never been purely ideological. It was grounded in a practical reality: a country with a massive population, a significant disease burden, and limited healthcare spending could not afford to let patent monopolies dictate the price of essential medicines. The amended Patents Act of 2005 struck a considered balance, incorporating an opposition system for challenging weak patents, stringent patentability thresholds, compulsory licensing provisions, and parallel importation – all designed to preserve India’s role as a supplier of affordable medicines both domestically and globally.

The Doha Declaration on the TRIPS Agreement and Public Health, adopted in 2001, reinforced the legitimacy of this approach at the international level. The Doha Declaration confirmed that TRIPS should not prevent member nations from taking measures to protect public health, and that countries retain full rights to grant compulsory licenses and determine the grounds on which such licenses are issued. This gave India – and countries like it – the international legal backing to design IP frameworks that prioritise access to medicines.

The ongoing tension: no easy resolution 🔗

The debate over drug patenting is not a problem with a clean solution. Section 3(d) has triggered polarised views among policymakers, pharmaceutical companies, generic manufacturers, and patient advocates worldwide. Multinational companies argue it undermines innovation incentives; health activists argue it is the most important public health safeguard in Indian patent law. Both are partly right.

What makes India’s framework notable is that it refuses to treat either interest as absolute. It accepts that pharmaceutical product patents are now a reality under international trade law, but insists that patents must represent genuine innovation. It maintains compulsory licensing as a real tool – not just a paper right – for situations where public health demands it. And it continues to export affordable generic medicines to developing countries across Asia, Africa, and Latin America, playing a role in global health that no other country currently replicates at the same scale.

What do you think? Should countries like India adopt even stricter restrictions on drug patents to prioritise affordable healthcare – or does that risk discouraging the very pharmaceutical research that produces life-saving treatments in the first place? And given that India never invoked compulsory licensing even during the COVID-19 pandemic, does the current legal framework do enough to protect public health in genuine emergencies?

References

1. https://www.aipla.org/list/innovate-articles/the-global-significance-of-india-s-pharmaceutical-patent-laws
2. https://journalofethics.ama-assn.org/article/intellectual-property-and-access-medicine-poor/2006-12
3. https://pmc.ncbi.nlm.nih.gov/articles/PMC5880378/
4. https://www.lawteacher.net/free-law-essays/commercial-law/section-3-of-the-indian-patents-act-commercial-law-essay.php
5. https://www.ipandlegalfilings.com/explanation-of-section-3d-of-patents-act-1970-and-medicines/
6. https://geneva-network.com/research/copy-or-compete-how-indias-patent-law-harms-its-own-drug-industrys-ability-to-innovate/
7. https://www.mondaq.com/india/patent/486342/understanding-the-section-3d-of-the-patents-act-1970-is-essential-to-appreciate-the-patent-law
8. https://www.iiprd.com/the-evolution-of-compulsory-licensing-in-india-post-covid-trends/
9. https://www.tinnitusjournal.com/articles/harmonizing-access-to-medicine-exploring-indias-process-patent-in-intellectual-property-rights-amid-global-pressures-30127.html