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India’s rising global presence is often associated with its booming tech sector. But in many poor countries, India’s role is that of a low-cost pharmacy. The country has become a leading supplier of affordable HIV/AIDS and Tuberculosis medications and is the second leading provider of medicines distributed by UNICEF in the developing world. This, however, may change.

On Wednesday, the Indian Supreme Court is set to hear a landmark patent case that could limit Indian companies’ right to make inexpensive copies of pricey drugs developed and patented in the U.S. and Europe. The high-profile case — the first of its kind to reach India’s highest court — has created a sharp divide between defenders of intellectual property rights, who demand that India do more to protect patented drugs developed in the West, and international aid groups who say excessive pharmaceutical patenting stifles generic competition that makes life-saving medication accessible to patients around the world. “This case is key because the scaling up AIDS treatment around the world has come from Indian made medicines,” says Leena Menghaney, manager of Doctors without Borders’ access to medicines campaign in India. “If they did not exist or were not available most governments would not have ventured into starting large scale AIDS treatment programs.”

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At the heart of the current dispute is the breakthrough cancer drug Glivec (Gleevec in the U.S.). Novartis, the Swiss drug company that helped develop the drug, is appealing the rejection of its 2006 patent application in India. In the U.S., where patent laws make it easier to register a patent claim, a monthly dose of Glivec can cost as much $5,000. In India, locally made generics cost patients $200.

In 1970, the Indian government disallowed the patenting of drugs, paving the way for Indian pharmaceutical companies to freely produce medicines pioneered by foreign drug companies at a fraction of the cost. Today, India’s pharmaceutical industry is worth $10 billion a year and is one of the nation’s largest sectors. The price of HIV/AIDS treatment, a first-line combination of stavudine, lamivudine, and nevirapine, which cost patients $10,000 a year in 2000, now sells for $150 worldwide, due primarily to Indian companies’ low cost manufacturing. This rush of cheap drugs, which are also produced in the U.S. and Europe, now provides medication for 80% of the 6 million people receiving treatment in the developing world today, according to Doctors Without Borders.

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In 2005, as a requirement of admission into the WTO, India reenacted patent protections for intellectual property, which included medicines. The Indian patent law, however, set the bar much higher than in the U.S. “India has time and again really expressed a strong preference for public health concerns over private patent rights,” says Shamnad Basheer, a professor of intellectual property law at the National University of Juridical Sciences in Calcutta. Earlier this year, the Indian patent office reasserted its preference for generic competition, stating that if a patented drug in the Indian marketplace is not made widely available at a reasonable price, then generic manufacturers are entitled to make their own versions of the drug and pay a royalty to the patent holder.

Novartis’ first attempts at patenting Glivec were rejected in India because it was considered to be an updated version of an existing Novartis drug, and therefore not eligible for patent protection. To protect consumers of low-cost medicines — and its pharmaceutical industry — Indian patent law aims to curtail a process known as ‘evergreening,’ in which pharmaceutical companies make sometimes minor improvements to an old medicine, allowing them to renew their patent. Under India’s tough standards, modifications that do not improve the efficacy of the drug are not eligible for extended patents.

Novartis cites modifications that make its new drug more effectively absorbed into the bloodstream, an improvement that was granted a patent in the U.S. in 2001. “All the drugs that come out from USDA are not new molecules that are formed every year,” says Ranga Iyer, former head of the Organization of Pharmaceutical Producers of India. “They are newer versions of penicillin and other drugs. Do we call that evergreening? No. There’s a lot of work going on to do that.” Iyer and other critics of India’s patent laws claim they are stifling innovation on new groundbreaking drugs. “If you tell an innovator to set prices low enough that everybody can afford it, how can a company recover cost?” says Iyer. “If innovation is not protected, people will not innovate.”

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But international pharmaceutical companies aren’t the only ones innovating. Generic drug manufacturers have also pioneered new treatments, creating pediatric HIV/AIDS drugs to cater to a segment of the market in developing countries that the big global drug manufacturers tend to overlook. Breakthroughs often come from publicly funded labs making the cost of research and development not as high as it seems, says Yusuf Hamied, chairman of the Indian pharmaceutical company CIPLA. “If you look at the world’s top 50 drugs being sold today, they are being marketed and sold by companies that did not invent them,” says Hamied. “I respect patents. I’ll pay a royalty. But I shouldn’t be denied the right to produce drugs for poor people at reasonable prices.”

For both proponents and critics of India’s patent laws, the supreme court’s interpretation will set an important precedent. Foreign drug companies see India as a growing market, but perhaps more importantly as a potential model for other developing countries’ patent regulations. If the court rules in favor of Novartis’ claim, aid groups worry it will set off numerous new patent claims making it impossible for India to produce cheap generics of all sorts. But the court is unlikely to lower the standard thereby granting Novartis a patent, says Shamnad Bhasheer. The Indian laws were designed specifically to favor public health interests, and the court would likely only lower the standard if it believed that innovation, particularly by Indian companies, was being stifled.

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