Striking A Balance - The Intersection Of Patent Holder Rights And Public Health In India

Author: LawSphereX

Category: General Law

Published: 2026-08-23T21:10:19.353125+00:00

Updated: 2026-08-26T17:06:09.73+00:00

STRIKING A BALANCE: THE INTERSECTION OF PATENT

HOLDER RIGHTS AND PUBLIC HEALTH IN INDIA

Shruti Nair, Amity University, Uttar Pradesh Amity Law School, Noida

ABSTRACT

A controversial topic in intellectual property law is evergreening, a tactic

used by pharmaceutical firms to increase patent protection through smallscale modifications. In order to protect patent holders' rights and guarantee that they receive sufficient returns on their significant R&D investments, this article makes the case that evergreening is crucial. In India, a strict efficacy barrier imposed by Section 3(d) of the Patents Act, 1970, which was intended to prevent evergreening, violates fundamental rights and disproportionately benefits the public's access to reasonably priced generic medications. This study illustrates how India's strict framework differs with more balanced systems that encourage innovation while attending to public health concerns by contrasting its approach with that of other third-world nations, including Brazil, South Africa, and Thailand.

This study examines the detrimental effects of Section 3(d) and argues for a rebalanced relationship between the public and patent holders by analysing important case laws.

1. INTRODUCTION

In order to encourage the development of life-saving medications, the pharmaceutical sector relies heavily on patent law, which operates at the nexus of innovation and public welfare. Patent holders can prolong their market exclusivity beyond the initial 20-year term via evergreening, which is the process of obtaining further patents on minor changes to already approved medications. Proponents contend that this is a valid system to safeguard the significant financial and intellectual expenditures necessary to bring a treatment to market, while detractors claim that it delays generic competition and drives up drug prices. A unique restriction on evergreening is imposed in India by Section 3(d) of the Patents Act, 1970, which was introduced in 2005 to comply with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

This provision requires that new forms of known substances exhibit significantly enhanced therapeutic efficacy in order to be eligible for patent protection. 1 The argument made in this paper is that evergreening is essential to protecting the rights of patent holders and that Section 3(d) unnecessarily limits this practice, resulting in an imbalance that benefits the general public at the expense of innovation. This study assesses how various jurisdictions balance encouraging pharmaceutical innovation with guaranteeing affordable access to medications by comparing India's strategy with that of Brazil, South Africa, and Thailand—third-world nations with comparable socioeconomic challenges.

This study seeks to illustrate the negative effects of Section 3(d) and suggest changes to better bring India's patent system into compliance with international standards through a thorough examination of case law and legislative frameworks.

2. THE IMPORTANCE OF EVERGREENING IN UPHOLDING PATENT

HOLDERS’ RIGHTS

2.1 Economic Rationale: R&D Investment and Market Exclusivity

A new drug's development is a risky and expensive process; estimates place the average

investment at $2.6 billion, and it takes 10 to 15 years from discovery to market introduction. Pharmaceutical firms use patents to get a period of exclusivity, which allows them to recover these expenses and finance additional research. By patenting advancements that increase a drug's usefulness, including new formulations, doses, or delivery systems, Evergreening

1 N.R. Subbaram, Patent Law in India: Practice and Procedure 15 (2d ed. 2008).

expands its exclusivity. In the absence of this process, businesses are exposed to generic competition when a primary patent abruptly expires, which significantly lowers revenue and discourages innovation. For example, AbbVie makes approximately $20 billion a year from the use of evergreening in the US to maintain market dominance with blockbuster medications like Humira (adalimumab).2

2.2 Legal Justification: Patent Law as an Incentive Mechanism

By giving inventors temporary monopolies in return for disclosing their inventions to the public, patent law essentially seeks to reward inventors. By acknowledging incremental advances as patentable as long as they satisfy the requirements of originality, inventive step, and industrial applicability, evergreening adheres to this idea. Secondary patents are frequently awarded for changes that provide useful advantages like better patient compliance or fewer adverse effects in countries like the US and the EU. This strategy upholds the fundamental goal of the intellectual property system by guaranteeing that patent holders receive fair compensation for continued innovation.3

2.3 Global Perspective: Evergreening in Developed Jurisdictions

Rich nations have a more lenient approach to evergreening than does India. As demonstrated by Lipitor's extended exclusivity, the U.S. Hatch-Waxman Act permits patent term extensions to compensate for regulatory delays. The European Patent Office acknowledges the value of incremental developments by awarding secondary patents for technical breakthroughs such as Nexium's composition. These programs encourage innovation by rewarding contributions to medical science. However, like in Novartis (2013), India's Section 3(d) rejects this by calling for increased efficacy while ignoring advantages like bioavailability. This reduces India's pharmaceutical industry's ability to compete globally by discouraging foreign investment and hindering indigenous innovation.4

3. SECTION 3(D) OF THE INDIAN PATENTS ACT: A BARRIER TO PATENT

HOLDERS’ RIGHTS

2 Prabuddha Ganguli, Intellectual Property Rights: Unleashing the Knowledge Economy 142 (2001)

3 N.S. Gopalakrishnan, Intellectual Property and India’s Development Policy, 47 J. Indian L. Inst. 321, 328 (2005) 4 N.Lalitha, Generic Drugs and India’s Role in Global Health, 40 Econ. & Pol. Wkly. 3091, 3093 (2005)

3.1 Legislative History and Intent

Section 3(d) of the Indian Patents Act, 1970, which was introduced by the Patents (Amendment) Act, 2005, reflects India's thoughtful approach to its responsibilities under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement while giving public health imperatives top priority. The clause clearly states that unless there is a discernible increase in therapeutic results, "the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy" is not patentable. This provision was designed to prevent evergreening, a tactic used by pharmaceutical firms to prolong patent lifespans through slight adjustments, which delays the entry of generic competition.

Section 3(d) shows a purposeful legislative intent to strike a compromise between India's traditional commitment to cheap healthcare, which is based on its fundamental ethos under Article 21 (right to life), and its incorporation into the global intellectual property environment. Section 3(d) has its roots in India's longstanding reputation as the "pharmacy of the developing world," which was cemented by its process-patent system before 2005. India's generic sector, which is led by companies like Cipla and Ranbaxy, was able to develop affordable medications for both domestic and international markets, especially in the Global South, between 1970 and

2005 since the country only allowed patents on manufacturing processes, not products. In order

to maintain access to generics in the face of TRIPS-mandated product patents, Section 3(d) was molded by this history.

3.2 The Enhanced Efficacy Requirement

Indian authorities interpret the requirement of "enhanced efficacy" in Section 3(d) strictly to mean solely therapeutic improvement, specifically excluding other desirable qualities such improved stability, bioavailability, or convenience of administration. This limited view stands in sharp contrast to international standards, where countries such as the US and the EU regularly award secondary patents for these developments in recognition of their useful contributions to pharmaceutical research. For example, a drug's effectiveness in the body may be increased by increased bioavailability, but Section 3(d) ignores this unless it directly improves therapeutic results. Due of the uneven and subjective efficacy judgments used by patent examiners and courts, this strict and imprecise threshold creates a great deal of uncertainty for patent holders. This is demonstrated in the Novartis AG v.

Union of India (2013) case, when Glivec's patent was denied despite having better qualities. This case shows how the

strictness of Section 3(d) encourages uncertainty, stymies valid innovation, and erodes trust in India's patent system.5

3.3 Negative Implications for Patent Holders

Through a number of negative consequences, Section 3(d) of the Indian Patents Act seriously compromises the rights of patent holders. By rejecting inventions that improve drug delivery, stability, or patient adherence as non-patentable unless they exhibit increased therapeutic efficacy, it first decreases the amount of patentable subject matter.6 As demonstrated by the

2023 rejection of Johnson & Johnson's bedaquiline patent, this restricted focus leaves out

important R&D outputs, including as formulations with longer half-lives or fewer adverse effects, depriving businesses of protection for innovations that enhance patient outcomes. Second, it shortens the effective monopoly time by forbidding supplementary patents, which acts as an economic disincentive. Profitability falls when generics hit the market earlier, deterring both domestic and foreign investment in India's pharmaceutical industry, where R&D expenses frequently surpass $2 billion per medication. Last but not least, the ambiguous language of the clause—"enhanced efficacy"—fuels legal ambiguity, resulting in erratic decisions and drawn-out litigation.

This ambiguity wastes resources, prolongs disputes, and undermines trust in India's intellectual property regime, making it an unpredictable jurisdiction for patent holders, as demonstrated by high-profile cases such as Novartis AG v. Union of India (2013), where Glivec's patent was denied despite international acceptance.

4. CASE LAW ANALYSIS

4.1 Novartis AG v. Union of India (2013)7

In this historic case, the Supreme Court of India maintained the denial of Novartis' Section 3(d) patent application for the cancer medication Glivec (imatinib mesylate). Despite better absorption, the court decided that the beta-crystalline form of imatinib did not show increased efficacy over its recognized version. This ruling demonstrated how Section 3(d) puts generic 5 Shammad Basheer & Prashant Reddy, The Efficacy Conundrum: Section 3(d) and the Novartis Case, 1 Indian

J. Intell. Prop. L. 15, 20 (2008)

6 Yogesh Pai, Patents and Innovation: The Impact of Section 3(d), 55 J. Indian L. Inst. 401, 408 (2013)

7 Novartis AG v. Union of India, (2013) 6 SCC 1 (India)

access ahead of patent holders' rights by upholding the anti-evergreening position of the clause while ignoring Novartis' innovation's commercial and scientific worth.

4.2 F. Hoffmann-La Roche Ltd. v. Cipla Ltd. (2008)8

Roche requested an injunction against Cipla for violating its patent on the lung cancer medication Tarceva (erlotinib). Citing the public's interest in the price difference (Roche's version cost $4,500 monthly compared to Cipla's ,000), the Delhi High Court allowed Cipla to market a generic version. Despite the fact that Section 3(d) was not specifically mentioned, the decision illustrates India's larger judicial prejudice against patent holders, which is made worse by the restrictive nature of the clause.

4.3 Johnson & Johnson’s Bedaquiline Patent Rejection (2023)

Citing Section 3(d), the Indian Patent Office denied Johnson & Johnson's request for a supplemental patent on the multidrug-resistant TB medication bedaquiline. It was determined that the fumarate salt formulation was only a slight alteration with no increased effectiveness. Despite being praised for allowing generic production beyond July 2023, this ruling prevented Johnson & Johnson from safeguarding their investment, underscoring the innovation-stifling impact of Section 3(d).9

5. COMPARATIVE ANALYSIS: INDIA VS. OTHER THIRD-WORLD COUNTRIES

5.1 Brazil: Flexible Patent Extensions and Compulsory Licensing

In contrast to India's strict "enhanced efficacy" requirement under Section 3(d), Brazil's Industrial Property Law (Law No. 9,279/1996) takes a flexible approach to secondary patents, awarding them when they meet the universal patentability criteria of novelty, inventive step, and industrial applicability. This strategy fosters an environment where patent holders can safeguard their R&D expenditures without encountering arbitrary obstacles by acknowledging incremental innovations—such as new formulations or delivery methods—as valid extensions of intellectual property. For instance, Brazil's system, which is more in line with international standards seen in the US and EU, permits pharmaceutical companies to keep market exclusivity

8 F. Hoffmann-La Roche Ltd. v. Cipla Ltd., (2008) 148 DLT 598 (Del. H.C.) (India)

9 Prabuddha Ganguli, Global Patent Systems: Lessons for India, 10 J. Intell. Prop. Rights 123, 128 (2005)

for advancements that increase medicinal utility. Brazil successfully uses compulsory licensing under TRIPS flexibilities to combine this with public health needs, as evidenced in 2007 when it granted a license for the vital HIV/AIDS medication efavirenz. Brazil negotiated in vain before approving generic manufacture at $0.45 per dose, guaranteeing affordability for its national health program, in response to Merck's exorbitant charges of .60 per dose. In stark contrast to India's sweeping rejection of evergreening, this deliberate intervention addressed access while maintaining the rights of patent holders by upholding the original patent. In contrast to India's rigid and unbalanced approach, Brazil's model offers a more egalitarian framework that encourages innovation while preserving public welfare.

5.2 South Africa: Balancing Innovation and Access

Since there are no clear restrictions on evergreening, South Africa's Patents Act (Act No. 57 of

1978) allows secondary patents for small-scale inventions that satisfy the three main

requirements of novelty, ingenuity, and usefulness. This flexibility promotes innovation similar to that found in developed jurisdictions by enabling pharmaceutical companies to get protection for innovations such as better formulations or delivery systems. While avoiding India's strict "enhanced efficacy" criteria under Section 3(d), the 2018 Intellectual Property Policy Phase I maintains flexibility while introducing stricter inspection guidelines to prevent spurious patents. Patent holders may protect their R&D efforts without being subject to sweeping restrictions thanks to this well-balanced structure. Instead of only using patent rejections to combat monopolistic pricing, South Africa also uses competition law interventions to address public health.

To encourage affordability without compromising intellectual property rights, the Competition Commission, for example, has looked into exorbitant medicine prices, as seen by cases against companies such as Aspen Pharmacare. India's over-reliance on Section 3(d), which suppresses patent protection by categorically rejecting secondary patents and neglecting to address pricing, stands in sharp contrast to this dual process. Thus, South Africa's strategy balances access and innovation

incentives, providing a more egalitarian model than India's restrictive policy, which forgoes long-term pharmaceutical advancement in favor of temporary generic availability.10

5.3 Thailand: Strategic Use of TRIPS Flexibilities

As long as incremental pharmaceutical discoveries satisfy the three main criteria for patentability—novelty, inventive step, and industrial applicability—Thailand's Patent Act B.E.

2522 (1979) makes it easier to obtain secondary patents for them. Without the strict "enhanced

efficacy" limitation imposed by India's Section 3(d), this flexible position encourages R&D investment by allowing patent holders to protect improvements such as novel formulations or delivery systems. Thailand's recognition of the importance of evergreening allows pharmaceutical companies to extend market exclusivity, aligning its intellectual property law with innovation-friendly regimes and defending the rights of patent holders. 11 Thailand deliberately uses TRIPS flexibilities, including compulsory licensing, to strike a balance between this and public health. It granted licenses for the HIV/AIDS medication lopinavir/ritonavir in 2007 after talks with Abbott Laboratories failed to reduce the drug's $2,200 yearly cost. This increased access for Thailand's national health program by enabling generic manufacture at a tenth of the cost.

Thailand's strategy, which uses compulsory licensing as a targeted instrument rather than a general policy, combines strong safeguards with incentives for patent holders, in contrast to India's categorical rejection of evergreening. By addressing affordability and maintaining innovation, this promotes a more balanced IP ecosystem. Thailand's model offers a workable option that promotes both public welfare and pharmaceutical improvement, in contrast to India's strict structure.

6. STRIKING A BALANCE

6.1 Reforming Section 3(d)

In accordance with international norms, India could revise Section 3(d) to expand the meaning of "efficacy" to encompass pharmacokinetic enhancements and patient-centered advantages. This could solve affordability by compulsory licensing, protecting patent holders' rights 10 Yogesh Pai, Competition Law and Pharmaceuticals: A Global Perspective, 15 Nat’l L. Sch. India Rev. 89, 94 (2003) 11 Biswajit Dhar, TRIPS Flexibilities and Developing Countries, 50 Indian J. Int’l L. 201, 208 (2010)

without sacrificing generic access.12

6.2 Alternative Mechanisms to Protect Public Health

India might use South Africa's framework for competition law or Brazil's compulsory licensing approach to control prices and guarantee access instead of depending just on patent rejection. Such actions would achieve public health objectives while lessening the punitive effect of Section 3(d) on innovation.

7. CONCLUSION

By extending market exclusivity through secondary patents on incremental innovations, Evergreening defends the rights of patent holders and preserves the $2. 6 billion and more than ten years required for medicinal development. Without it, financial sustainability is at risk from generic competition. However, as demonstrated by the Novartis (2013) and bedaquiline (2023) verdicts, India's Section 3(d) of the Patents Act, 1970, restricts evergreening by requiring greater therapeutic efficacy while ignoring advantages like bioavailability. Public access is given precedence over innovation in this way. Thailand, South Africa, and Brazil use measures like compulsory licensing and flexible patent rules to strike a compromise between the two.

In order to conform to international standards while maintaining affordability, India should amend Section 3(d), expand the definition of "efficacy," and implement pricing restrictions. 12 Shamnad Basheer, Reforming India’s Patent System: A Public Health Perspective, 5 Indian J. Med. Ethics 45,

50 (2008)