
How India's Patent Office Destroyed Gilead's Global Game Plan - suprgeek
http://www.businessweek.com/articles/2015-01-15/how-indias-patent-office-destroyed-gileads-global-game-plan
======
alricb
Here's the decision (pdf):
[http://freepdfhosting.com/985d1c013c.pdf](http://freepdfhosting.com/985d1c013c.pdf)

It relies on section 3(d) of the The Patents Act, 1970 (as amended up to
Patents (Amendment) Act, 2005) [1]:

> What are not inventions. —The following are not inventions within the
> meaning of this Act,— (d) the mere discovery of a new form of a known
> substance which does not result in the enhancement of the known efficacy of
> that substance or the mere discovery of any new property or new use for a
> known substance or of the mere use of a known process, machine or apparatus
> unless such known process results in a new product or employs at least one
> new reactant.

Explanation. — For the purposes of this clause, salts, esters, ethers,
polymorphs, metabolites, pure form, particle size, isomers, mixtures of
isomers, complexes, combinations and other derivatives of known substance
shall be considered to be the same substance, unless they differ significantly
in properties with regard to efficacy;

This is the same section that was opposed to Novartis in 2013 [2]

1:
[http://www.wipo.int/wipolex/en/text.jsp?file_id=295102](http://www.wipo.int/wipolex/en/text.jsp?file_id=295102)

2:
[http://articles.economictimes.indiatimes.com/2013-04-01/news...](http://articles.economictimes.indiatimes.com/2013-04-01/news/38189492_1_glivec-
intellectual-property-appellate-board-indian-patent-act)

~~~
alricb
Gilead argued that 1) its compound is not a mere "new form" of a substance
known in the prior art, and 2) even if it were, it differs significantly since
it is less toxic and more active than other similar compounds.

But the Patent Office says that "efficacy" here means therapeutic efficacy,
and it would need to be proven by a clinical trial.

~~~
throwawaykf05
Not very sure what they mean exactly, but the FDA mandates clinical trials,
right? Can that data not be used to show increased efficacy, if any?

~~~
striking
FDA trials are only required to compete against a placebo. A drug is accepted
if it is safe and more effective than a placebo in a double-blind clinical
trial. That's it.

So they have no data to show with, unless they went above and beyond to get
it. (Which should teach them a lesson about testing their drugs.)

~~~
refurb
You don't have to have head-to-head data to claim your drug is superior to
existing therapies. Yes, head-to-head data is the best way to show it, but if
you have two separate trials, each comparing to a placebo, you can draw
conclusions about relative efficacy. It's not perfect, but in the case of
Gilead, their drug _blows away_ anything else currently on the market.

------
pkaye
Can people in now go to India on medical tourism and get the treatment much
cheaper?

~~~
vishnugupta
This has always been the case [1] :-). Medicines and medical care in India is
cheaper, by many folds, compared to US. Anecdotaly, whenever my Indian friends
working in US visit India (parents, family) one thing they never forget is to
visit dentists. I initially found it very surprising but understood their
reasoning when I came to know that in US you can easily go bankrupt due to
medical condition, something that's unheard of in India.

[1]:
[http://en.wikipedia.org/wiki/Medical_tourism_in_India](http://en.wikipedia.org/wiki/Medical_tourism_in_India)

~~~
gryph0n
>>something that's unheard of in India.

Maybe not if you're in the 'upper middle class'. If you're from the lower
income classes (maids, drivers, helpers), it's very likely that health issues
can bankrupt you.

I personally know an entire family that has sunk into debt that they couldn't
possibly pay-off, due to health related expenses for someone in the family.

------
giis
Is it 84,000 USD(~50 lakh) per person in India too? That's very very
expensive,even for India's software professional with 10 to 12 years of
experience where average yearly salary will be around 14,000 USD to 20,000
USD. This 84,000 not affordable even for so-called 'upper middle class'.

------
refurb
If India wants to break patents in order to make drugs available to low income
citizens that's one thing (in this case Gilead was already offering a cheap
generic), to say the patent on Sovaldi is not innovative is a bit ridiulous.

~~~
chdir
The article explains it better instead of simply saying it's not innovative.
It's worth reading these 2 paragraphs:

"India believes that the patent standards are so low that companies can get
patents for inventions very easily," Amin said in an interview. The patent
office's examiner ruled Gilead's patent claim "lacks novelty and inventive
step," as Bloomberg News noted, and also doesn't demonstrate it's
significantly more effective than already known compounds. Amin explains that
the controller general's decision holds that "there are a number of earlier
compound structures that are very close to what Gilead is trying to get a
patent for."

But Sovaldi is a breakthrough drug. Shouldn't that be worth something? "It's
important to recognize that what the patent office deals with is whether
something is new in science," Amin said. "The decision says there are a number
of earlier compound structures that are very close to what Gilead is trying to
get a patent for. It's a scientific decision and has nothing to do with the
utility of the drug." Gilead didn't offer comment on Wednesday.

~~~
analog31
This is what I think is the vital issue. Taking a known compound and searching
for every possible form in order to find one that doesn't happen to have been
documented is in fact something that is "obvious to one skilled in the art,"
because it's a widespread activity. There are specific rules in the US patent
system surrounding this issue.

So it's not like the drug maker was necessarily whacked by some rogue judge
issuing a weird decision out of the blue. It may very well be that Gilead was
taking a known risk at the hands of the Indian patent system.

Does Sovaldi satisfy India's standards for novelty? I don't know. I've had a
patent application struck down over novelty, so I know it's not a happy day
when it happens.

~~~
throwawaykf05
_> Taking a known compound and searching for every possible form in order to
find one that doesn't happen to have been documented is in fact something that
is "obvious to one skilled in the art," because it's a widespread activity._

But it is not the activity (which describes, essentially, most research) being
patented, it is the _result_ of that activity. If the search space is very
large, that is actually an indication of the non-obviousness of a solution
that works in practice. Drug discovery certainly meets that criteria.

~~~
analog31
Yes, you're quite right. As I understand it, drug discovery has special rules.
The search space is large but not infinite. It involves the original drug
compound in different "forms" such as crystal structures, particle sizes,
counter-ion (whatever thingy attaches to the molecule and makes it soluble,
etc.). The chemical effect of the drug in the body is the same, i.e., it bonds
with the same receptor molecule in some cell somewhere. But changing those
things can have a pharmacological effect such as the speed with which the drug
is taken into the body, thus it is a different drug within the context of US
and I believe European patent law, but I can't talk about India.

This could be a case of a bad decision in India, of course, but it also could
be one where the patent examiners in US and Europe were more lenient than they
should of been.

(Disclaimer: I helped work on equipment designed to assist in this kind of
chemical searching).

------
chdir
According to Wikipedia:

Sofosbuvir costs US$84,000 for 12 weeks of treatment used for genotypes 1 and
2 (about US$1,000 per pill) [...] health care costs in California could
increase by US$18–29 billion per year because of this medication

~~~
adventured
Calculate the annual cost (which isn't $18-$29 billion, that's the one time
cost to cure _everyone_ in CA with it) to cure a portion of the population in
CA that has Hep C. Most likely we're talking $3-$5 billion per year.

Calculate the savings that curing those people produces over time (1, 5, 10,
20 years).

I'd be willing to bet the math works out in favor of spending $84,000 one
time.

~~~
danielweber
> I'd be willing to bet the math works out in favor of spending $84,000 one
> time.

I'd love for the state to announce ahead of time how much they would pay for,
say, a cure for diabetes. Have them calculate what the NPV is for a lifetime
of diabetes treatment. Publish that figure.

Then some drug company can show up with a cure, charge 90% of that figure, and
we can see people whine that the drug company is costing the state money.

------
danmaz74
I'm all against "obvious" patents, but suing to be free to produce a product
because it "also doesn't demonstrate it's significantly more effective than
already known compounds" is a contradiction in terms. If the other compounds
were just as good, then you wouldn't be suing to be able to produce this new
one.

~~~
Drakim
That logic doesn't always hold up. You could make tiny tiny alterations to
some plastic container, put some random bump here or there, or make the flap
stick out a little more, and the plastic container might suddenly not be
usable due with a third party automatic coffee maker. That's a huge effect,
despite the tiny change.

But I doubt that would make that case that because of that huge effect, those
random bumps and extended flap deserve patents. We are after all talking about
basic shapes here, nobody should be able to patent "a round shape with a tiny
bump sticking out" so that others cannot use that shape.

~~~
throwawaykf05
I don't see how this addresses grandparent's comment: if it does not have
increased efficacy, why are so many people desperate to use it? The amount of
alteration is a separate issue.

------
geetee
I'm all for patents to protect pharmaceutical companies, but there needs to be
a profit limit where the patent expires early.

~~~
refurb
What would that profit limit be? How would it be enforced? What is a "fair"
profit?

------
norikki
I'm disappointed this article doesn't mention the effect this will have on
future pharmaceutical investment. Companies spend billions researching and
testing drugs for safety and effectiveness. Companies capable of developing
successful drugs need an adequate period in which to recoup their investment
and earn enough to fund new drug research. If companies know they won't have
meaningful ownership over medicines they develop, they won't spend the huge
amounts of capital necessary to develop them. When countries like India let
competitors produce generics of American drugs, they are stealing the fruits
of other people's labor. That isn't to say this theft isn't justified;
generics will save the lives of those who can't afford the original. But those
lives would have been lost all the same if no such drug had been developed in
the first place. Stealing drugs will certainly help India in the short run,
but it will slow the advance of medicine in the long run, for Indians and
everyone else.

~~~
girishso
I don't think companies spend as much as we believe in researching drugs.
Companies spend most on advertising and incentivizing the doctors to prescribe
their medicines. The book: Bad Pharma [1] is an eye opener.

The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is
almost $12 billion a year. I don't believe they spent tens of billions in
developing the drug. [2]

1: [http://www.amazon.com/Bad-Pharma-Companies-Mislead-
Patients-...](http://www.amazon.com/Bad-Pharma-Companies-Mislead-Patients-
ebook/dp/B008RLTUUA/ref=cm_cr_pr_product_top)

2: [http://www.bloomberg.com/news/2014-10-28/gilead-reports-
lowe...](http://www.bloomberg.com/news/2014-10-28/gilead-reports-lower-than-
estimated-sales-of-sovaldi.html)

~~~
shoyer
It's not what they spent developing Sovaldi -- it's the fortune the industry
as a whole spends developing drugs that never make it to market.

That said, it's quite likely true that marketing is a bigger share of costs
than R&D. Pharma companies are out there to maximize revenue, just like any
other corporation. It's a reflection of the poor state of regulation in the US
that we pay far more of than our share (compared to the rest of the world).

~~~
chime
Here's the piece of the picture that everyone's missing from this particular
example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no
longer matters what it cost Pharmasset to research/test/approve/produce the
medicine anymore. Certainly all of that was factored into the acquisition
price but since Gilead's total cost ended up being $11b, that is what they
need to recoup at the least.

There are 3.2 million hep C patients in the US [2] but most don't feel ill or
even know they have hep C. If every single person buys the drug, Gilead must
still sell it for at least $11b / 3.2m = $3500/person! But if only 5% buy the
drug, they need to sell it for $69,000 just to break event on the acquisition
without even taking any other costs into account.

This is just rough calculation to highlight that a sky high acquisition price
resulted in a company demanding an equally high price per dose. Gilead paid
the high price to acquire Pharmasset because they thought they could sell the
drug for at such a high price per dose. If Gilead is proven right (and their
stock price from $18 in 2011 to $100 in 2015 seems to reflect that indeed),
then this just encourages more and more drug companies to be bought at
astronomical prices.

And the worst part of this is that the very government that gave this company
the right to operate a monopoly via a patent is now asking them why they're
charging so much [3]. None of this happened because of some singular evil
cabal. It happened due to misaligned incentives.

Government grants pay researchers, who develop medicines at paid-for-by-
public-funds university labs, which sell the patents back to the researchers
at fire-sale prices, who then go on to create biotech startups, which
productize the research, and then sell to Fortune 100 pharmas, who can then
demand almost any amount of money, which CMS will have to pay because USPTO
said nobody else can sell this drug, FDA agreed that the drug works, and ACA
ensures that the patients cannot be denied any drugs that work at any cost.

[1]
[http://en.wikipedia.org/wiki/Pharmasset](http://en.wikipedia.org/wiki/Pharmasset)
[2] [http://www.hhs.gov/opa/reproductive-
health/stis/hepatitis-c/](http://www.hhs.gov/opa/reproductive-
health/stis/hepatitis-c/) [3]
[http://www.finance.senate.gov/imo/media/doc/Wyden-
Grassley%2...](http://www.finance.senate.gov/imo/media/doc/Wyden-
Grassley%20Document%20Request%20to%20Gilead%207-11-141.pdf)

~~~
saiya-jin
well that's nice and all, so next time CEO wants a new fleet of jet aircrafts
for him, all should pay more for the medicines? Because, you know, we can?

Companies should definitely make profit, but their default modus operandi is
"milk the cow as long as possible", which would directly result in many
deaths... not much sympathy from the crowd there. Let's not forget simple math
here - company is/was charging for medicine that doesn't cost more than few
tens of bucks to produce... 69,000? Sorry, ridiculous all the way through.
Don't care about research bla-bla

Just turn on that weird device that used to be called TV. During winter, 1/3
of the adds are medicines. Who pays for those adds? All those who buy
medicines...

~~~
throwawaykf05
_> Don't care about research bla-bla_

Of course you wouldn't, since that's what costs billions to discover the
medication that eventually costs "tens of bucks" to produce, which completely
undermines your argument.

------
mariuolo
What I don't understand is how this would ease the export of this now-generic
drug to other countries.

Surely each of them has a patent office, doesn't it?

------
lazylizard
1\. they'd already licensed it, so the patent holders are already compromising
2.patents are really not that long..5yrs? 20 yrs? nothing like life+99 or
whatever it is for copyright.. 3.because patents are relatively short lived
the pharma firms have to turn up "hits" which have to pay for all the other
misses.. i'm guessing they would really rather market+brand their existing
products than invent new ones if the protection they get from patents start to
get eroded..not sure thats a good thing..

------
Agustus
A definite case of seen and unseen consequences.

Developing a biopharmaceutical product requires the following:

1\. A professional who discovers the possibility of a new chemical entity,
requires infrastructure: comprised of medical grade equipment (centrifuges,
beakers, pipets, filters, microscopes, testing equipment, etc.), experts
capable of understanding applications of drug, and many iterations of tests.
There will be about 5,000 to 10,000 opportunities for these to address
something like Hepatitis C.

2\. The NCE is developed for dosage and scheduling. Again more testing.

3\. The drug needs to be optimized for manufacturing: infrastructure requires
additional experts and assessments

4\. Preclinical testing is completed. Only 250 products out of that initial
5,000-10,000 NCE group make it here.

5\. Only now is a submission made to the FDA.

6\. Go through the process of FDA approval starting with human trials. Only
around 10 of these from the 250 will be instigated.

7\. FDA human trials, a three to four step process that only 21.5% entering
the process will make it through.

8\. Production of drug.

9\. Sale of drug for seven years to recoup costs

10\. Post-Surveillance of drug

11\. In people with an asymetric heart ventricle that exhibits heart murmurs
but only on Wednesdays, the approved drug causes uncontrollable urination. The
drug company has to deal with trial lawyers who develop a lawsuit in the
general area of $300 million. And this lawsuit can be brought against the
company throughout the lifecycle of the drug and in some cases, the original
patent holder can be held liable for the generically produced NCE's.

12\. Drug finally goes to generic and the generic manufacturers in Brazil and
India sell it for pennies, wiping out all profit margins for your product.

13\. A third world nation tries and successfully invalidates a patent that you
hold, wiping millions off of the revenue forecasts, thus eliminating the
monies needed to test up and coming NCE's. Then someone on a forum

The amazing part in all of this is that a drug gets made at all. The argument
that it costs pennies to make, apply the same logic to a cars production. The
modern car costs about $1,000 to manufacture, this includes materials and
labor costs, the other monies include research, development, marketing, and
all the other accouterments that make it possible; why are people not
screaming for the costs to be lower, because they understand that there are
costs and regulatory capture involved.

[1] [http://www.forbes.com/sites/matthewherper/2013/08/11/the-
cos...](http://www.forbes.com/sites/matthewherper/2013/08/11/the-cost-of-
inventing-a-new-drug-98-companies-ranked/) [2]
[http://en.wikipedia.org/wiki/Drug_development](http://en.wikipedia.org/wiki/Drug_development)

~~~
dman
Can you cite a source for the $1000 to manufacture a car?

~~~
Agustus
Unfortunately, this is anecdotal information as my professor, he had worked at
Ford, in our finance engineering class made a lecture that raw materials and
labor for a vehicle would be $1,000. The additional costs are from tooling,
r&d, and other items that ensure a profit margin for the company. I have very
unreliable page here:
[http://www.answers.com/Q/How_much_does_it_cost_to_manufactur...](http://www.answers.com/Q/How_much_does_it_cost_to_manufacture_a_car_in_America)

I tried to find additional information to back up this claim through the web,
sadly, sources will either be: 1\. Sales representatives within car sales
pointing to an invoice sheet from the manufacturer showing a percent
difference or dollar difference, but this would include the tooling, r&d, and
operation costs.
[http://www.reddit.com/r/cars/comments/2bvxn5/how_much_does_i...](http://www.reddit.com/r/cars/comments/2bvxn5/how_much_does_it_really_cost_car_companies_to/))
2\. Manufacturers who make statements about profitability.
[http://singletrackworld.com/forum/topic/how-much-does-a-
new-...](http://singletrackworld.com/forum/topic/how-much-does-a-new-car-
really-cost-to-make#post-5335226) 3.

You can find further information about how the $40,000 Volt obfuscates its
costs: [http://www.treehugger.com/cars/how-much-does-chevy-volt-
cost...](http://www.treehugger.com/cars/how-much-does-chevy-volt-costs-make-
bob-lutz-weighs.html)

~~~
dman
Thanks!

------
forrestthewoods
And the US continues to subsidize health care across the world. You're welcome
world, you're welcome.

Ok, so that's unnecessarily strong sarcasm, but it has more than a few ounces
of truth to it. Even Canada has significantly cheaper drugs because US
citizens get the privilege of paying more.

~~~
rcha
Thats so great, But remember the all old technologies/ Maths/Science/Writing
system/ Languages are not developed in US, US is using rest of world patents
with paying anything, May this how they should pay back.

