India's Supreme Court has set an important precedent in refusing to grant a patent to Novartis for an updated version of its cancer drug Glivec.

The verdict will allow generic drug makers within the country to continue selling cheap versions of the drug, which is used to treat chronic myeloid leukemia and other cancers. The BBC notes that Novartis' drug costs $2,600, while generic versions of the drug cost just $175.

The court's decision is based on one specific part of India's patent law: section 3(d).

Here's how it reads:

“It's all about interpretation of section 3(d) of the Indian Patent Act,” Ran Chakrabarti, a commercial lawyer based in New Delhi, told the Telegraph.

“Essentially, it says that you can't tweak something that already exists and then patent it, if it doesn't enhance the known efficacy of that thing, or result in a new product," he said.

The Court denied the patent as it said it offered only minor improvements on the old patent, which had expired after 20 years. According to Reuters, shares in Novartis' Indian arm ended 1.8 percent lower after falling 6.8 percent after the verdict.

Novartis and other big drug companies say the ruling will hurt innovation in India, and Novartis has threatened to stop supplying India with its drugs following the ruling.

Others argue that the ruling helps India's many poor cancer sufferers who cannot afford brand name drugs.

40% of the Indian population live under the poverty line (living on $1.25 or less), and Reuters has reported that the average citizen spends just $4.50 in medical costs per year. According to the Financial Times, some 70 percent of these healthcare costs are paid for by the consumer themself.

The verdict may also even force drug companies to push for real innovations, rather than "evergreening" with minor improvements to keep the patent. Crucially, 3(d) calls for improved "efficiency" in requirements for a new patent — something can't just be new, it has to be better.

"Drug companies are going to have to come up with something pretty unique to get patent protection, and while that's good news for consumers, it pushes the threshold for innovation northwards." Chakrabarti told the Telegraph.

The ruling could set a precedent as a patents on a variety of other drugs are due to expire soon. In a statement about the ruling, Novartis makes clear that they feel this is Section 3(d) is an unfairly high hurdle:



Glivec has been awarded patents in nearly 40 other countries, including China, Russia and Taiwan, but the IPAB is denying one for India. The IPAB acknowledges that Glivec satisfies the international requirements for novelty and inventiveness, but it does not find Glivec to meet the requirement under Section 3(d) of the Indian Patents Act of 2005. This act introduced a new efficacy enhancement hurdle for patenting new forms of known compounds. We believe that Section 3(d), the Indian legal paragraph intended as a hurdle for evergreening, should not be applicable to the breakthrough medicine Glivec, which has changed the lives of patients with rare cancers.



India's generic drugs manufacturers are some of the largest in the world, thanks to laws that used to allow patents only for drug manufacture processes, not the final product, allowing companies to reverse-engineer many drugs.

While those laws were changed in 2005 to gain World Trade Organization membership, generic drug manufacturers still find loopholes that allow them to undercut big pharmaceutical firms, sometimes by as much as 75 percent.

It's a big business for the country, as India exports generic drugs worth $11 billion, according to the BBC.



International drug companies may also lament Indian plans to give away $5.4 billion in prescription drugs over the next 5 years, with branded drugs banned from the plan. The Indian government has also discussed plans to cap prices on some drugs,