In mid-September, Novartis began what was expected to be a two-month hearing before the Supreme Court of India, asking that body to grant the company a patent on a new form of its novel cancer drug Glivec. The case is widely seen as a test of India’s willingness to recognize intellectual property rights. Novartis notes that 40 other countries have approved patent extensions of this new form of imatinib mesylate. A ruling against Novartis would mark the third instance this year of an Indian court invalidating or ignoring a patent on a drug produced by its innovator:

• In March, the Indian Patent Office revoked the exclusive patent rights held by Bayer to cancer drug Nexavar, and awarded the nation’s first-ever compulsory license to the domestic generic drug producer Natco Pharma. In May, and with the blessing of the government, the Indian drug maker Cipla also began marketing a generic version of Nexavar.
• In September, the Delhi High Court upheld Roche’s patent on the cancer drug Tarceva, but ruled that Cipla’s generic version of that product did not violate that patent.

Non-Indian drug companies seeking to market more products in India are facing yet another type of governmental involvement in that activity. Using cost-based pricing formulas, the National Pharmaceutical Pricing Authority (NPPA) already sets prices for domestic drug companies’ products. The NPPA is seeking to amend the 1995 Drug Price Control Order to give it the authority to use a similar methodology to set the maximum retail price of all imported medicines. Initially, it will seek to set price caps on more than 340 separate products. The government clearly is more interested in giving its citizens greater access to inexpensive medicines than about the profitability of the companies developing and marketing those products.

The Impact on Clinical Research
It’s logical to suggest that difficulties in patenting and marketing drugs in India will affect the growth rate of clinical research in that country. But it’s also apparent that the growth once anticipated for that business has not occurred, despite analyst forecasts for a boom in the Indian clinical trials market. In 2005, the government removed a number of regulatory barriers to performing such trials. And the country was known to have a large population of treatment-naïve patients, a great number of hospitals and western-trained physicians, and a cost structure that was about half that of the U.S. and western Europe. As recently as 2009, it was possible to read a market study suggesting the country would account for about 15% of the global clinical research market by 2011. Based on that forecast, the size of India’s clinical research industry would then approximate $1.5 billion. The reality turned out far differently. Frost & Sullivan recently reported a market size of $485 million — less than 2% of the global clinical trials market.

In hindsight, it’s apparent that the infrastructures of the economy and the healthcare system were not prepared to handle a new wave of clinical research. Hospitals were busy and overcrowded, and employed few if any research coordinators; very few investigators operated independent research sites; and regulators did not willingly accept the SOPs that CROs and drug companies had been using for years. Decisions concerning trial initiations, protocols, and oversight became trapped in bureaucratic tangles.

India’s clinical research business was damaged further in March 2012 by media reports of lax regulatory oversight, unscrupulous recruiting tactics, and an unusually high number of trial-related injuries. In August, responding to calls for tighter scrutiny of the industry, the country’s top regulatory body proposed new rules calling for mandatory registration of all studies and CROs, more timely adverse event reporting, compensation for trial-related injuries, and an annual updating of all ongoing trials. It also asserted the right to inspect and confiscate records, data, documents, and investigational drugs at any time, and without advance notice. At press time, a panel of India’s Central Drugs and Standards Control Organization (CDSCO) is evaluating the public comments to those proposals.

Drug companies around the world are likely to continue their efforts to conduct more studies and sell more drugs in emerging markets. But the eventual promulgation of the proposed CDSCO rules and the drug companies’ problems with patents and pricing we noted could have a dampening effect on both clinical research and pharmaceutical sales.

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Michael A. Martorelli is a Director at the investment banking firm Fairmount Partners. For additional commentary on the topics covered in this column contact him at [email protected] or at Tel: (610) 260-6232; Fax (610) 260-6285.