Lawyers Collective Response to Testimony of Mr. Roy F Waldron, Pfizer Inc.


Recently, several multinational pharmaceutical companies along with the US Chamber of Commerce have been instrumental in mounting pressure on India to decry the alleged state of Intellectual Property (IP) regime in India. On June 27, 2013 a hearing, ‘A tangle of trade barriers’ before the US Energy and Commerce Committee saw witness testimonies including that of Chief Intellectual Property Officer, Pfizer Inc., Mr. Roy Waldron. The testimony by Mr. Waldron makes certain assertions about the recent developments in the Intellectual property regime of India.

These allegations arise from the recent developments that have taken place in the Indian Intellectual Property regime, particularly patents. To outline a few of these developments, firstly, the first ever compulsory license was granted for a cancer drug, Nexavar, which was upheld by the Intellectual Property Appellate body. Secondly, a landmark Supreme Court Novartis decision rejected the interpretation of section 3(d) of the Indian Patents Act, 1970 presented by Novartis. Thirdly, a patent on Sutent, which did not satisfy patentability criteria, was revoked by the Patent Controller’s Office.

Mr. Roy Waldron’s testimony[1] hereinafter ‘the testimony’, in particular alleges that these recent decisions in India threaten to undermine Pfizer’s and the multinational Companies’ ability to innovate, create jobs and provide faster access to life saving medicine. Mr. Waldron stresses that the value of intellectual property protection is crucial for successful creation of new medicines.

He admits that India is crucial for Pfizer’s growth and Pfizer has purportedly made efforts to provide access to medicine through ‘Patient Access Programmes’. However, according to him, India’s environment is not conducive to innovation and investment. He claims that since early 2012, India’s policies and actions have undermined patent rights.

He alleges that India is rolling back protections for US innovators and warns that this approach is going to do more harm than benefit to Indian patients by resulting into reduced foreign investment. He is also apprehensive that these decisions may be followed as a precedent by other emerging economies which often see India as a leader to set the right tone to promote innovation. In conclusion, he asserts that these discriminatory decisions are a blow to the US economy and calls for a priority action against India’s policies which, according to him, exploit US Intellectual Property to benefit its own industry.

We now deal with specific issues in a detailed manner and address them individually:

  1. On R&D in drug development– The testimony asserts that it takes more than $1 billion and 10-15 years of research to develop a new medicine. Drug companies claim that since they spend billions of dollars per drug in research, they are entitled to whatever amount of returns they can recoup within the monopoly period and more. These claims are based on extrapolation from certain industry sponsored studies which are frequently cited by the pharmaceutical companies to justify these multi- billion dollar claims. The first study on pharmaceutical R&D claims the cost per drug to be $231 million (1987 dollar)[2]. This study was sponsored by major pharmaceutical companies such as Merck, Pfizer and Bayer which is based on confidential data submitted by these companies which cannot be independently verified. The results of this study were then exaggerated to multi-million dollar figures. For instance, on Jan 2, 2001, then PhRMA President Alan Holmer announced that it takes about 500 million USD just to get one drug into market. Public Citizen, a non- profit, critiques this figure on the grounds that the 1993 Di Masi study does not represent what companies actually spend on drugs to discover and develop new molecular entities. Rather, it includes the cost of all failed drugs and the expense of using money for drug research than other investments. It also does not account for tax deductions that companies get for R&D. Therefore it substantially overestimates the expenditures on R&D. According to the Public Citizen’s calculations after accounting for tax deductions and discounting the opportunity cost of capital, the 231 million USD figures is reduced to 56 million USD in 1990 dollars which in 110 million USD in 2000 dollars.Then came the second Di Masi study, in 2002, which inflated the 231 million USD figure (1987 dollar) to almost 900 million USD (2000 dollar) after they factored in the costs of post approval R&D. The second Di Masi study was criticized by the US Congressional Budget Study in October, 2006 stating that these figures are highly inflated  since about two thirds of what makes R&D expenditure is just towards coming out with minor improvements (“me- too drugs”).[3]Recently, a new record seems to have been set for the “staggering cost” of developing new drugs according to a recent article published in February, 2012 in the Forbes Magazine, according to which R&D costs average between $4-11 billion per new drug which is 3-5 times more than the Di Masi studies.[4] However, according to Light and Warburton, firstly, what companies count as “R&D” is broader than just drug development. It includes cost of land, infrastructure, equipment, general administrative overhead expenditure, technical upgrades including software, etc. Companies also include the legal expenses for filing, litigating and defending patents. This estimate further includes the large fees paid to doctors to participate in clinical trials and promote drugs. Secondly, to estimate the cost per drug, this entire expenditure is divided by the number of “new drugs”, resulting into huge numbers because the drug companies only consider New Molecular Entities (New Molecular Entities) or new active ingredients as “new drugs”. In reality, companies file numerous applications for minor variations of these “new drugs” which according to the US Congressional Budget Study, account for about 60% of United States Drug Budget. These minor variations are less risky and involve substantial costs since the trials need to be conducted on a much wider population in order to detect a sizable “minor variation” in order for it to get approved. Thirdly, a significant portion of these costs are born by public funded organizations and the Government. For example the early research of Glivec was jointly conducted by Novartis, National Cancer Institute, Leukemia and Lymphoma Society and Oregon Health and Science University.[5] Moreover, the orphan drug status for Glivec entitled Novartis to claim a 50 percent tax credit. Fourthly, there is no credible evidence to support that the failure rate for drug development is as high as it is claimed; on the contrary, the success rate for a drug increases as the drug proceeds in its developmental stage. Lastly, the so called industry’s average cost per drug is not the real out of pocket expenditure, but a highly inflated estimate of the capital cost including profits forgone, had they invested it in an index fund, instead of developing “new drugs”. In sum, according to Light and Warburton calculations, the median, net corporate cost, excluding the profits forgone for a new drug, based on the DiMasi study is $56 million in 2011. Therefore, the billion dollar claims for R&D are completely fallacious.
  2. On Section 3(d)- According to the testimony, in another recent erosion of IP rights, India denied a patent under section 3(d) of its Patents Act for Gleevec, Novartis’ anti cancer therapy that has been patented in 40 other countries around the world. According to him, in that case, the Indian Supreme Court interpreted an “enhanced efficacy” requirement for patentability in a way that led to denial of the patent. He alleges that this decision is inconsistent with India’s obligations under the World Trade Organization’s (WTO)Agreement on Trade- related Aspects of Intellectual Property Rights(TRIPS)  – To understand the rationale behind section 3(d), it is important to understand the history of Indian patents. In post independence India, it was observed that foreign Multinational Companies (MNCs) held product and process patents over drugs and they instituted infringement suits against domestic generic firms. These multinational companies dominated the pharmaceutical industry and would import the patented drugs. This resulted in high prices of drugs resulting in Indian prices being amongst the highest in the world. Aware of the consequence of product patents, ultimately in 1970, based on the recommendations made in Justice Ayyangar Committee Report, namely, that India treat chemical substances, food and medicines differently and only provide process patent protection for inventions in these fields. It also recommended codification of universally accepted principles of what are not patentable.[6]Parliament then enacted the Patents Act, 1970 which treated inventions relating to food and medicines differently from other inventions and did not provide for product patents for these. As a result of there being no absolute monopoly and increased competition, the domestic Indian generic industry flourished, which led to early introduction of new drugs in Indian market; domestic production of bulk drugs while bringing prices down and enabling export of these drugs. Indian generic industry was able to supply high quality life saving medicine at an affordable cost not only for the people in India but also throughout the developing world and India became the “pharmacy to the developing world”.In the late 1980s, the developed countries, at the instance of their corporate sector, sought increased protection for Intellectual Property Rights (IPRs) at the Uruguay Round of multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT). The US, through trade pressures and other unilateral measures, particularly the repeated threats of use of §301 and §301 Special, as well as other developed countries were able to pressure developing countries to yield. India was the last to yield into these threats and agreed to become a signatory to the Agreement on Trade Related aspects of Intellectual Property Rights (the TRIPS Agreement), mainly because India felt it allowed for flexibilities.The TRIPS Agreement lays down minimum standards of intellectual property protection and enforcements that countries must provide. It also provided for certain flexibilities which include transition periods to developing countries to comply with various requirements under TRIPS. The flexibilities also include freedom to member countries to determine the patentability standards and exclude certain types of patenting. The TRIPS Agreement which deals with private rights does not detract from India’s existing international obligations  under International Covenant on Economic, Social and Cultural Rights (ICESCR) and International Covenant on Civil and Political Rights (ICCPR) which deal with Fundamental Human Rights with public interest element which includes a right to life, right to food, right to health.In 2002, in order to comply with the TRIPS Agreement, Indian parliament amended the patent law to re- define “invention” and introduce a 20- year patent term. During the transition period available to India under the TRIPS Agreement, developments relating to lack of access to medicines due to patent barriers globally, especially for HIV and cancer drugs, came to fore. Data regarding patenting activity and research efforts in developed countries during this period also indicated a trend of “evergreening”. By that time, it had also been noted by various authors and reports that in developed countries patents were being granted increasingly not for new molecules but largely for new forms of already known active moiety, without enhancement in efficacy, i.e. allowing evergreening. This holds good even today as it is evidenced by the findings of the European Commission Pharmaceutical Sector Inquiry Report showing that for 219 INNs between 2000 and 2007, nearly 40,000 patents had been granted or patent applications were still pending, of which 87% were secondary patents (primary v. secondary patent ratio was 1:7). In addition to that, it was also known that, in the United States, pharmaceutical patents were delaying the entry of generic medicines and patents were being invalidated on a challenge in patent infringement suits.[7]The challenge for Parliament, therefore, was to amend India’s law to make it TRIPS- compliant and provide product patent protection to pharmaceuticals while preserving the capacity of the domestic generic industry to produce high quality drugs at affordable prices by preventing patenting new forms of already known molecules. Parliament, therefore, further amended section 3(d) to prevent patenting of new forms of known substances which do not demonstrate enhanced efficacy. The purpose of section 3(d) was to restrict the grant of patents on new forms of known substances, particularly patents on medicines which did not exhibit significant enhancement of efficacy thereby preserving maximum competition in the Indian pharmaceutical industry with a view to keeping prices of medicines low.In 1997, Novartis AG, had filed a patent application for a polymorph of imatinib mesylate (Novartis Application) which was examined in 2005 after India amended its patent laws.  The Patent Controller rejected the Novartis application based on grounds, including that it was hit by section 3(d). In 2006, Novartis challenged the decision of refusal of grant of patent and the validity of section 3(d) before the Madras High Court. The Madras High Court upheld the validity of section 3(d). In June 2009, the Intellectual Property Appellate Body (IPAB) overturned the Patent Controller’s decision on grounds of novelty and inventive step but upheld the non- grant of patent on grounds of section 3(d) as Novartis failed to show that the ß-crystalline form of imatinib mesylate exhibited significantly enhanced therapeutic efficacy over imatinib mesylate, the known substance.  Challenging the IPAB order directly before the Supreme Court, Novartis tried to argue that the physico-chemical properties of the polymorph had better flow properties, better thermodynamic stability and lower hygroscopicity which resulted in improved efficacy. The Supreme Court rejected this contention holding that in the case of medicines, improvement in ‘therapeutic effect’ must be shown. While, improvement in physico- chemical properties does not mean improvement in efficacy, bioavailability may or may not lead to improvement in efficacy. They also held that efficacy will be determined strictly on a case-by-case basis. In any case, to fulfill the requirement of section 3(d), data has to be supplied proving the efficacy requirements. The rejection of the Novartis Application was also justified because in 1993 Novartis had already obtained a patent in the United States and other jurisdictions for the active molecule, imatinib, which disclosed its salts and that the present application only concerned a polymorph of that salt. Therefore, the Novartis application was rightly rejected. If Mr. Waldren feels that this decision is inconsistent with India’s obligations under TRIPS, he should follow the Dispute Settlement Procedure and request for consultations.
  3. On Compulsory licenses – Mr. Waldron states in the testimony that Compulsory licenses are used by competitors as a means to obtain authorization to use technology developed by others without having to pay the substantial costs associated with developing and testing the product. He further stated that, India sought to justify its 2012 compulsory license, in part, on the basis of “failure to work the patent” because the product was being imported rather than manufactured locally. He added that while Compulsory licenses should only be used in certain extraordinary circumstances, the local manufacturing requirement initially used to justify the compulsory license was clearly inconsistent with India’s international obligations.Firstly, The TRIPS Agreement does not prevent member governments from taking measures to protect public health. The Doha Declaration reinforced the fact that developing countries could use the TRIPS flexibilities to take measures for public health. Compulsory Licenses are a recognised flexibility under the TRIPS Agreement which may be used normally and not merely in emergencies. Article 31(b) provides for use without authorization of the right holder which may be done away with in situations of emergency. This means Compulsory licenses may be used in normal circumstances as well as in emergencies. In India, under normal circumstances a compulsory license may be granted if three conditions are satisfied- firstly if the patentee has failed to satisfy the reasonable requirements of the public, secondly if the patentee has failed to provide the invention at a reasonable price and lastly if the invention is not being worked in India.[8] In addition to that, Section 92 is a special provision which provides for issuing a compulsory license in emergencies. Section 92A further provides for issuing a compulsory license for export of patented pharmaceutical product to countries with insufficient manufacturing capabilities.
    Secondly, the working requirement gains its rationale from Article 7&8 of the TRIPS Agreement which specify that patents must be instrumental in achieving technology transfer. The first and only compulsory license granted so far by India fulfilled all three grounds of the above mentioned requirements. Bayer had refused generic drug manufacturer NATCO’s attempt to enter into a voluntary license and in the compulsory license proceedings before the Controller, it was proven by the patentee’s own statement of working that the quantity imported for Indian use was hardly commensurate with the requirements of the Indian public. The demand and supply table shown in the IPAB order[9]shows the flagrant disparity between the demand and the supply.The table is reproduced here as under:

    Total patients Demand for 80% of patients Bottles per month (required) Bottles imported in 2008 Bottles imported in 2008 Bottles imported in 2010
    Liver Cancer ~20,000 ~16,000 ~16,000 Nil ~200 bottles Unknown
    Kidney cancer ~8,900 ~7,120 ~7,120

    Further, Nexavar is India’s first compulsory license as against Malaysia’s three, Indonesia’s six, and four each by Italy and Canada. The grant of the compulsory license was therefore justified.

  4. On Government list- Mr. Waldron alleges that there have been reports circulating regarding the Indian Government preparing a list of medicines for which Compulsory license may be issued. Secondly, according to the Indian Patent Act, 1970 the Central Government is empowered to use inventions for the purposes of the Government. Further if the Central Government is satisfied that a patent or should be acquired for the public purpose publish a notification to that effect, vesting the patent/ invention in the Government.[10] The government may also issue a compulsory license under section 84 of the Patents Act, if the abovementioned three grounds are not satisfied. It is the Governments prerogative as to how it plans to ensure its commitment to provide access to healthcare while staying TRIPS complaint. The means of issuing compulsory licenses by the Government should be well known to Mr. Waldron since United States has effectively used this remedy in numerous situations. In 2001, Department of Health and Human Services (DHHS) Secretary Mr. Tommy Thompson used a Compulsory license threat to authorize import of generic ciprofloxacin for stockpiles against a possible anthrax attack. Later, in 2005, the US Department of Justice defended its right to use compulsory licenses while defending itself against injunctive relief on patents relating to Blackberry email services. Then again, in November 2005, the DHHS Secretary Michael Levitt testified before the US House of Representatives that he required the patent owners of Tamiflu to invest in US manufacturing facilities in case they have to confront avian flu pandemic. In 2007, when the US Supreme Court was petitioned to hear Zoltek Corp v. U.S. which concerned with the import of material from an unlicensed manufacturer used in F-22 jets for which Zoltek had a US process patent. The United States argues that it may, in effect, have a royalty-free compulsory license for government use of the product because the patented process is carried out in a foreign country, meaning that the patent holder is not entitled to “reasonable and entire compensation”.[11] The Government list of drugs is therefore justified.
  5. On Section 8 of the Indian Patents Act –The testimony alleges that the Indian patent law is riddled with pitfalls for the pharmaceutical patent owner. For example, Section 8 of the Indian Patents Act, a provision with vaguely worded requirements on reporting of activity of other patent offices. It is well known that the Patent Controller may not be in possession of all relevant information in order to examine the application, which is why Patent laws in most jurisdictions require patent applicant to furnish information material to the patent application. For instance, the US Manual of Patent Examining Procedure specifies that an applicant must file an Information Disclosure Statement which furnishes all prior art or background information which typically includes other issued patents, published patent applications, scientific journal articles, books, magazine articles, or any other published material that is relevant to the patent application.[12] This is to assist the Patent Office in prosecution. As regards material information, it includes foreign prosecution history.  In Therasense, Inc. v. Becton, Dickinson & Co[13]., the US federal circuit affirmed the District Court’s ruling that one of the patents at issue was unenforceable due to the applicant’s failure to disclose statements made to a foreign patent office during an opposition proceeding, which were inconsistent with the arguments made by the applicants before the United States Patent and Trademark Office (USPTO). Even before the European Patent Office, it is mandatory for an applicant to submit copies of search results received from the national patent office of the priority country under rule 141(1) of the EPC.[14] The rule stems from the understanding that the list of prior arts submitted by the Patentee is not sufficient. Similarly, in India, according to section 8, an applicant for a patent in India who is prosecuting the same or substantially the same invention in a country outside India, shall file along with his application, a statement setting out detailed particulars of such application and an undertaking that he would keep the Controller informed of detailed particulars of such applications subsequent to filing of the statement within the prescribed time-period as the Controller may allow. The purpose behind this disclosure is to provide assistance to patent office in prosecution of the Indian patent application by providing information of other foreign patent offices as regards novelty, non-obvious, utility and other observations.[15] The spirit of the section is to make full disclosure regarding the application to the Controller in good faith. Therefore, section 8 requirements are neither new nor objectionable.
  6. On Indian IP System’s fairness– The testimony asserts that India’s protectionist and discriminatory policies exploit US IP to benefit its own industry. Indian patent system does not distinguish applications/ examination procedure based on nationality of the applicant. Patents are granted by the Patent Controller’s office which is a quasi judicial body deriving its authority from the Patents Act 1970, which is TRIPS compliant. The litigation procedures are equally accessible to all and the judicial decisions are based on the Patents Act, 1970. There cannot be any interference by the government at all. India has firmly stood by its commitment to protecting intellectual property in compliance with TRIPS, which is reflected in the fact that Pfizer has been granted 161 patents in India since 2005 alongside Sanofi SA getting 333 patents, followed by Swiss pharma companies F Hoffmann La Roche Ltd with 243 and Novartis AG with 200 patents.[16] Such numbers of patent grants would not have been possible had the Indian patent office been biased according to the nationality of the applicant.
  7. On Pfizer market expansion in India– The testimony asserts that Pfizer employs numerous individuals in India and has created more than 15,000 jobs and has almost 70 ongoing trials. It is well known that multinational pharmaceutical companies are hunting for cost- effective locations for conducting drug trials which is why India amongst other developing countries is a favourable market for Pfizer. Most of these trials involve phase 3&4 trials which involve minimal R&D. In addition to that, these trials conducted often involve a disregard for the consent norms.[17] To note, Pfizer has conducted 3 trials in malaria in India and out of its 12 trials for tuberculosis and 19 trials for diarrhea, none are being conducted in India. Therefore, Pfizer may be concerned about the diseases prevalent in India but the trials are not being conducted in India.[18]
  8. Questionable legal theories– The testimony states that in the last year, Pfizer has struggled to defend its patent for compound sunitinib, the active ingredient in Sutent, against efforts to revoke it. The patent has now been revoked twice under questionable legal theories and is currently back in force pending new proceedings before the Indian Patent Office, an administrative body of the Ministry of Commerce and Trade. Firstly, patents in India are granted by the Patent Controller’s Office which is a quasi- judicial body deriving its authority from the Patents Act, 1970 which is TRIPS compliant. It is not an administrative body and the Government has no role to play. While it is factually correct that the patent for Sutent has been revoked twice, it was not certainly under questionable legal theories. In the first round of patent prosecution the report of the opposition board which may have been instrumental in the revocation was not made available to the patentee. The opposition procedure laid down in the Patents Act does not mandate that a copy of the report be supplied to the patentee. However this was held to be contrary to the principles of natural justice by the Supreme Court of India and remanded for fresh prosecution. In the second round, the Patent Controller failed to provide ‘further evidence’ submitted by the patentee to the opposition board. The ‘further evidence’ submitted by the applicant during prosecution is admissible subject to the discretion of the Patent Controller. It cannot be filed as a matter of right. However, this was held to be an irregularity of procedure and the decision of revocation was again sent for consideration afresh. India has a multi layered adjudicatory process, to eliminate this kind of error in decision making by an authority, which provides opportunity for recourse from an unfavourable decisions. Pfizer has sought recourse against the revocation twice though this very legal system during pending litigation and has been able to obtain orders based on principles of natural justice.
  9. Infringing goods- According to the testimony, during the back and forth revocation proceedings, one generic manufacturer (NATCO) launched its product in the Indian market as a result of which the market is now flooded with about two years’ worth supply from this manufacturer. According to him, in order for there to be effective patent protection, the system of IP enforcement ought to include mechanisms to recall infringing goods from the market. Pfizer had sought to enforce its patent against NATCO based on an interim order by the Intellectual Property Appellate board (again a quasi judicial body) staying removal of the patent from the register after the controller had revoked the patent for the second time. NATCO was not a party to the consent based order according to which CIPLA had agreed to not market its product while the patentability of Sutent is decided. According to section 64 of the Patents Act, a manufacturer may file for revocation or assert it as a counterclaim in response to a suit for infringement, because the remedy for infringement once established can be obtained in the form of damages. NATCO may have infringed the patent, but it is within its right to invite a suit for infringement and contest the validity of the patent in the counterclaim. This is so in most patent jurisdictions.
  10. On Pfizer Agenda- Achieving low standards of intellectual property protection worldwide has been on the agenda of the pharmaceutical companies, since the beginning. Pfizer particularly, has been instrumental in putting the TRIPS Agreement on the table for negotiations; therefore, it is not surprising to see this statement furthering the same agenda.[19] However, the level of pharmaceutical companies’ influence over the US policymakers is disturbing. An example of Pfizer’s influence over the USPTO can be seen in a 2009 meeting in Mumbai which was jointly organized and co- sponsored by Pfizer and the USPTO.[20] The agenda of the meeting was to push for TRIPS-plus measures. The USPTO later admitted it as a mistake[21]. Is the USPTO meant to fill the coiffeurs of the MNC heads? The testimony makes it clear that Mr. Waldron is concerned only about the US interests and particularly that of Pfizer. We reject this twisted agenda which Mr. Waldron is trying to enforce at the cost of Indian interests.

In conclusion, the testimony asserts US interests in terms of US leadership, US jobs, US companies, US turnover, etc., which indicates that this statement is nothing but a propaganda driven by the US pharmaceutical industry with little legal standing or significance. We urge the US senators to reevaluate the irregularities plaguing the US Patent system which seemingly has got slightly ahead of itself.


[2] Joseph DiMasi et al., “The Cost of Innovation in the Pharmaceutical Industry,” Journal of Health Economics, 1991.

[3] A CBO study, Research and Development in the Pharmaceutical Industry, October 2006, Available at,

[4] ‘The truly staggering cost of inventing new drugs’, Matthew Herper, February 10, 2012,(Available at,

[5] ‘Novartis R&D on Glivec’, April 3, 2013, (Available at,


[7] See “Generic Drug Entry Prior to Patent Expiration: An FTC study”( US Federal Trade Commission), July 2002

[8] §84 of the Indian Patents Act, 1970 lays down these requirements.

[10] Section 100 and 102 of the Patents Act, 1970

[11] KEIRN 2007:2 Recent examples of compulsory licensing of patents(Available at,

[12] Section 609, Chapter 0600, US Manual of Patent Examining Procedure, (Available at,

[13] US Court of Appeals for the federal Circuit, May 25, 2011 (Available at

[15] Tata Chemicals v. Hindustan Unilever [ORDER (No.166 of 2012)]

[16] Pfizer’s India patents, revenue grow despite adverse testimony, June 14, 2013, (Available at

[17] Indian drug trials fuel consent controversy, The Washington post, By Rama Lakshmi,January 01, 2012, Available at,

[18] Based on data obtained from US trial data as disclosed on the Government website,

[19] Peter Drahos, ‘Expanding Intellectual Property’s Empire; Role of FTAs’ in November 2003, Available at,

[20] ‘Alert: USPTO- Pfizer pushing for a TRIPS plus measures in India’ September 9, 2009, Available at,

[21] ‘Tie up with Pfizer in India a mistake, says USPTO’ March 22, 2010, Available at


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