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ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

AUDIE CORNISH, HOST:

And I'm Audie Cornish.

Today, India's Supreme Court issued a landmark ruling that has pharmaceutical companies on edge, but global health experts cheering. At the center of the case is a practice known as evergreening. When the patent on a popular drug is set to expire, manufacturers will make slight changes to the drug and apply for a new patent. If granted, the new patent allows the company to keep a foothold in a lucrative market.

In India, drug-maker Novartis had applied for a new patent on a slightly modified version of a cancer drug. And today, the Supreme Court said no.

For more, we're joined by Kaustubh Kulkarni. He's been covering the story for Reuters. And to begin, give us some back story. Just how big is India's role in the global pharmaceutical industry?

KAUSTUBH KULKARNI: India has traditionally been known as the cheaper supplier of generic medicines to poorer countries or emerging markets, such as Africa, the Middle East and Latin America. This has been happening for quite a few years. That is why India is called as the pharmacy to the poorer countries.

CORNISH: Now, what exactly did the Supreme Court have to say than to Novartis ?

KULKARNI: Novartis had challenged a provision in Indian patents law which bans companies from extending patents on their products by making slight changes to an existing compound. This practice is called an evergreening. Other words, when Novartis was refused a patent protection for a cancer treatment called Glivec in 2006, it eventually approached India's Supreme Court. Wherein, it claimed that the modified form of Glivec was an improved drug from the older form.

However, the Supreme Court clearly said that Glivec fails both the tests of invention and patentability, according to the Indian laws.

CORNISH: Does this ruling really set India apart from how the U.S. approaches the issue of evergreening or drug patents?

KULKARNI: It does. And this is not the first time or this is not something new that has happened. When India agreed to sign the global TRIPS agreement in 2005, that time itself India had introduced this provision of not granting multiple patents on a single drug. Because India believes that it's people who are mostly poor cannot afford patented medicine. And hence to prevent this practice, India had clearly introduced a section which does not allow evergreening within the country.

And, yes, it is quite significantly different from the provisions that exist in the United States or, say, in China or in many other countries where Glivec has been patented.

CORNISH: Now, the pharmaceutical makers argue that this ruling could have a kind of chilling effect on innovation; that it would just incentivize companies from developing new drugs, if it means that they're going to lose control of it and their ability to make money from it.

KULKARNI: There is American argument, but it's not entirely true. Because when new compounds are discovered and when they're launched, they're mostly launched in advanced markets such as the United States, Europe and Japan. Now, when these drugs are sold in these markets were patent regimes are very strict, companies try and make most of the cost recovery from these markets. And at a later stage such drugs are introduced in India.

KULKARNI: Hence, their claim that just because they are not having a great patent regime in India it doesn't mean that they will be making heavy losses on their innovation. It just means that their attempts to make more and more money from countries like India would get curtailed. But it is not true that they would be making heavy losses on patented or innovative drugs.

CORNISH: That's Kaustubh Kulkarni. Thank you so much for speaking with us.

KULKARNI: Thank you.

CORNISH: Reuters' correspondent Kaustubh Kulkarni joined us from Mumbai.

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