On the whole technology has been a powerful force in the development of civilisation, all the more so as its link with science is forged. In today’s world, technology is a complex social enterprise that includes research, design and crafts but also manufacturing. Technology extends our abilities to change the world. We use technology that tries to change the world to suit us better. But the result of changing the world is often complicated and unpredictable. They can include unexpected benefits, costs, and unexpected risks.
The commercialisation of pharmaceuticals has led the corporation to seek patent protection for their pharmaceuticals inventions. Pharmaceuticals help mankind in manifold respects. In the areas of health sector due to inventions made by the pharmaceutical industries, the human life and standard of living has improved alarmingly. However, in the modern intellectual property era, where it gives exclusive right to inventor to exploit his invented technology, it is becoming a cost affair concept and it is not in the hands of a common middle class man.
Intellectual property law regulates the creation, use and exploitation of mental as well as the creative labour. Patent is one of the prominent among all the intellectual property rights. In the modern scientific era, patent is proved to be most used or abused intellectual property. It is expected that grant of patent will reward to original creativity and would thereby foster advanced research and development leading to further inventions and progress. However, more often the patent rights may be subject to abuse by the patent owner.
Drug patenting is the grant of negative right to the holder which excludes others from right of manufacturing of that drug. Monopoly rights granted by IPRs were regarded as crucial to prevent the developing countries from further undergoing the “catching-up” process towards industrialisation based on imitating and copying technologies, as the developed countries themselves had done. In other words, IPR protection was a tool to guarantee the comparative advantage that had so far ensured the developed countries technological supremacy.
Affluent societies are spending vast sums of money understandably on the search for new products and processes to alleviate suffering and to prolong life. In the process, drug manufactures have become a powerful industry. The situation was furthermore complicated after the TRIPS agreement which grants patent to both the product as well as the process as contrast to earlier process protection. The product patent will grant absolute protection of the product while process patent will provide protection to the technology and method of manufacture. Prior to the implementation of the TRIPS agreement various developing countries did not grant patent protection to pharmaceuticals as it was incumbent for the promotion of access to drugs at competitive price. Assenting to TRIPS provisions by recognising and strengthening protection of IPRs on pharmaceutical products and processes will lead to many hardships for developing countries. Implementation of the TRIPS agreement will consequently lead to high drug prices, low access and a weakening of national pharmaceutical industries. The current legal scenario is evidently helping the pharmaceutical industry to flourish in India.
The author opts for the study of Indian patent law as how it is in conflict as well as in sync with the international agreement of TRIPS, that is, the Agreement on Trade-Related Aspects of Intellectual Property Rights, signed by the members of World Trade Organisation. Keeping in view the international obligations, the researcher will address two major issues, what are the repercussions of complying TRIPS on pharmaceutical patenting and the repercussions of TRIPS on public access to health.
Public Health VIS-à-VIS Pharmaceuticals Patent
(i) Right to Health as Fundamental Rights
It is also pertinent to note that Article 21 of our Constitution guarantees right of life, which further includes right to good health. The courts through judicial pronouncements concluded that right to life includes right to health and “access to medical treatment” as well. The Government must make every effort to provide access to the life saving drugs to its citizens. The State is under constitutional obligation to see that there is no violation of fundamental right of any person. The Preamble and the Directive Principles of State Policy (DPSP) of our Constitution need policies in order to balance social and economic rights. So, while formulating patent legislations the balance must be made between public health and the economic interests of pharmaceutical industries.
According to the Ayyangar Committee Report, India being a developing nation, grant of patent confers monopolistic rights which will deny major population of our nation from access to medicines. So policies which grant monopolistic rights violate the Preamble and also the fundamental rights guaranteed under Article 21 of our Constitution. Meeting the needs of its population came before meeting the needs of foreign innovators. As quoted by the former Prime Minister of India, Indira Gandhi in the World Health Assembly in 1982, The idea of a better ordered world is one in which medical discoveries will be free of patents and there will be no profiteering of life and death.
Affluent societies are spending vast sums of money understandably on the search for new products and processes to alleviate suffering and to prolong life. In the process, drug manufactures have become a powerful industry. My idea of a better ordered world is one in which medical discoveries would be free of patents and there would be no profiteering from life or death.
(ii) Patent and Right to Health
Health is a basic human right and access to medicine is a basic tool to ensure health. However, the right as well as the means to secure the same are facing a major issue in the current regime. Pharmaceutical patent play a major role in access to medicine in order to guarantee health.
It has been argued that a fully functional patent system would result in an inverse relationship between the cost of such products and affordability of access. This has led some to suggest that the global intellectual property system may be facing a crisis of public legitimacy as patents may be blocking the access of ordinary people to medicines and their “right to health”.
Impact of TRIPS on Pharmaceutical Patents
One of the significant and fundamental changes in the global trade policy is set out by the Uruguay Round of trade negotiations, with the commitment by the World Trade Organisations member to comply with the requirements of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which lays down minimum standard of protection for intellectual property rights and their enforcement, which are mandatory for WTO member countries for implementation. The TRIPS agreement is the most comprehensive multilateral agreement on intellectual property which in its clear terms specifies the idea of patentable subject-matter along with substantive and procedural aspects of patentability.
(iii) Objectives of TRIPS
The prime objective of TRIPS is the protection and enforcement of intellectual property rights which will contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) attempts to strike a balance between the long-term social objective of providing incentives for future inventions and creation, and the short-term objective of allowing people to use existing inventions and creations.
The introduction of patent to pharmaceutical industries has provided incentive to the private sector in the area where they are granted. In the pharmaceutical sector, the private health sector finds them indispensable. One of the advantages for grant of patent to pharmaceutical industries is that it motivates the private players to indulge themselves more in research and development for finding cures for the disease prevalent in developing countries. Invention and creativity in themselves should provide social and technological benefits. Intellectual property protection encourages inventors and creators because they can expect to earn some future benefits from their creativity. This encourages new inventions, such as new drugs, whose development costs can sometimes be extremely high, so private rights also bring social benefits. With such broad objective in consideration, the pharmaceutical patents was made compulsory under TRIPS agreement in member countries of WTO.
(iv) TRIPS not a Beneficial Bargain
However, contrary results have been manifested. Instead of welcoming TRIPS regulation, developing countries have objected the implementation of the same. The developing and the least developed countries did not consider TRIPS to be a favourable negotiation as regime will consequently hike the prices of drugs which will ultimately make the drugs inaccessible to their citizens. Although TRIPS agreement may also lead to increased research on diseases common in developing countries, these benefits can be obtained in alternative ways, without high costs. Thus, TRIPS agreement is not in the national interest, hence it is not a beneficial bargain.
The legislature enacted Patents Act, 1970 which significantly favoured the Indian player as well the poor sections of the society, as the Indian legislation only recognised process patent and not the product patent. This also resulted in the decline of share of multinational firm as the pharmaceutical companies based on developing countries were expecting an increase in sales and profits by the grant of worldwide patent. Pursuant to this, the patent applications filed by foreign entities decreased from 4248 in 1968 to 1010 in 1979. It also resulted in the rise of generic drug manufacturing industry and a reduction in drug prices in India. The domestic players were granted a rapid boost to reproduce and market the newly invented drugs in the Indian market by merely changing the process of production. With such prevailing circumstances, Indian pharmaceutical managed to produce drugs at lower price, thus making the drugs available for the poor sections of society.
However, this smooth functioning of system was interfered with TRIPS agreement. All the countries who are the members of WTO were compelled to implement TRIPS as a result of the dispute settlement body of WTO. India was initially reluctant but India was forced to implement the same, when US complained against India that it was not implementing the TRIPS properly by not providing an appropriate procedure for the filing of patent application and secondly, by not providing the exclusive marketing rights. Consequently, India changed the patent law in 2005. This instance manifests that complying with TRIPS is not a choice rather it is a matter of compulsion.
During the pre-TRIPS regime the patent protection granted was relatively less stringent which was far better as the accessibility and availability of medicine was not a problem but the post-TRIPS scenario, the medicines being priced beyond the reach of the poor, working as detrimental to their interest and causing a serious loss as now they cannot obtain new medicines that they could have in the pre-TRIPS era.
Ensuring Right To Health under Current Patents Regime
Although, TRIPS is not seen as a beneficial bargain, it cannot be criticised thoroughly also. Various clauses of the agreement (Articles 7, 8, 27, 30 and 31) reflects liberal treatment towards the developing nations and seeks to achieve a balance between rights and obligations thereby driving a way towards public policy goals including access to essential drugs.
(i) Article 7 of TRIPS tries to maintain the balance between innovation and social and economic welfare. Intellectual property rights should be regulated in such a way that it should contribute to the promotion of technological innovation, and similarly, it should be transferred in a manner conducive to the social and economic welfare.
(ii) Article 8 provides autonomy to the States that they can adopt measures necessary to protect public health and to promote the public importance in sectors of vital importance to their socio-economic and technological development.
(iii) Article 27(2) allows a State to restrict the patentability of inventions on various grounds such as, threat to human life or health.
(iv) Article 30 of Trips provides that the WTO members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with the normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, provided that the legitimate interests of third parties have been taken into consideration.
(v) Article 31 lays down a list of provisions applicable in all situations where the law of a WTO Member country permits use of the subject-matter of the patent without authorisation of the patent-holder.
TRIPS and Patent Exclusions
The Patents Act should interpret the concept of exclusions from patentability through the literal rule of interpretations. The literal rule always suggests the human right dimension to the exclusions. The ideals of public health and social welfare in consonance with advancement in technology enshrined in the Constitution is given due importance.
(i) Compulsory Licensing
With the introduction of a product patent regime in 2005 for pharmaceuticals and the consequent increase in patent scope thereof, concerns of compulsory licensing have assumed a great significance in India. Compulsory licensing is defined generally as the granting of a licence by a Government to use a patent without the patent-holder’s permission. Compulsory licence is an involuntary contract between a willing buyer and an unwilling seller imposed or enforced by the law. The TRIPS agreement allows compulsory licensing as part of the agreement’s overall attempt to strike a balance between promoting access to existing drugs and promoting research and development into new drugs. But the term “compulsory licensing” does not appear in the TRIPS agreement. Instead, the phrase “other use without authorisation of the right holder” appears in the title of Article 31. Compulsory licensing is only part of this since “other use” includes use by Governments for their own purposes. Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties. Compulsory licensing is when a Government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself. It is one of the flexibilities in the field of patent protection included in the WTO’s agreement on intellectual property — the TRIPS.
The effort of the Government of India to provide a National IPR Policy in 2016 has provided an impetus in enabling “strong and effective IPR laws, which balance the interests of rights owners with larger public interest”.
Further, amendment of 2017 enlarges the scope of compulsory licence as, if any developing country needs to turn to the option of compulsory licensing to produce needed affordable pharmaceuticals, producers overseas can step up and supply that need, even if a compulsory licence is needed in that country. It is therefore a compulsory licence especially for production in one country, for export, to meet the public health needs of one or more other countries. The rational justifying the idea of compulsory licence is that, patent so granted should not impede protection of public health and should act as an instrument to promote public interest in the sectors of vital importance for socio-economic and technological development of the nation. Patents are granted to make the benefit of the patented product at a reasonable price that is affordable to a large section of public. To access the benefits of patent compulsory licence can be granted.
(ii) Indian Legislation
Provisions related to the grant of compulsory licence in India are prescribed under Sections 82-94 (Chapter XVI) of the Patents Act, 1970, and Rules 96-102 (Chapter XIII) of the Patents Rules, 2003. The Controller of Patents can issue compulsory licence under the following situations: compulsory licence under Section 84; licensing of related patents under Section 91; special provision for compulsory licences on notifications by Central Government under Section 92; and, compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances under Section 92-A.
It is to be noted that Natco case has pioneered a revolution in Indian pharmaceutical industry on working of patents and established a consonance between TRIPS and domestic laws. It has showcased that all the developing countries including India can use the TRIPS flexibility effectively to provide healthcare to public and also fulfil the constitutional obligation of right to life as envisaged under Article 21. Further, even the Bombay High Court agreed with the findings of the Controller General of Patents and the Tribunal regarding compulsory licensing under Section 84 of the Patents Act.
Other applications for compulsory licensing has also been filed, however, they were rejected by the Controller. One such application was filed by BDR Pharmaceuticals to manufacture the generic version of anti-cancer drug Dasatinib, patented by Bristol-Myers Squibb in India. Further, in 2015, Lee Pharma filed an application for seeking the grant of a compulsory licence for manufacturing and selling the drug Saxagliptin used in the treatment of type II diabetes mellitus. Both applications were rejected as they failed to convince the Controller of Patents to make a prima facie case for the grant of compulsory licensing.
Although the comparative study concludes that compulsory licensing provisions in India are fully TRIPS compliant. However, compulsory licences are conceptually oxymoronic and fundamentally problematic. Till date, only one compulsory licence has been granted in India. The prime reason that can be attributed for such restricted usage of flexibilities is the procedural complexities. The paper version of the concept is very overwhelming but the actual construction is in the hands of the patent office. To further strengthen the compulsory licensing provisions in India, there is a need of policy formulations. A detailed guideline must be issued by Indian Patent office.
(iii) Doha Declaration and Public Health
As regards to the flexibilities various Governments extended their difficulty in interpreting these flexibilities and are also unsure of the boundary of protection of the rights. A large part of these flexibilities and right and obligations of the nations were settled at the Doha Ministerial Conference in November 2001. In the main Doha Ministerial Declaration of 14-11-2001, WTO member Governments stressed that it is important to implement and interpret the TRIPS Agreement in a way that supports public health by promoting both access to existing medicines and the creation of new medicines i.e. without obstructing the research and development. It emphasises that the TRIPS agreement should not restrict the nations to make legislations according to their socio-economic status. They have freedom to act in furtherance of their public health. TRIPS agreement posed a serious threat upon the developing nations as to the impediment caused by it on implementation of measure to promote access to affordable medicines in the interest of public health. While acknowledging the role of intellectual property protection “for the development of new medicines”, the Declaration specifically recognises concerns about its effects on prices. “Doha Declaration”, which affirmed that public health took precedence over private patent rights, and reaffirmed the rights of Governments to use inbuilt WTO public health safeguards and other available measures to gain access to cheap medicines. The Declaration also refers to the exhaustion of intellectual property rights, and therefore addresses the question of a member’s right to allow parallel imports. The Declaration makes it clear that the Trips agreement’s provisions on exhaustion in effect, leave each member free to establish its own regime without challenge but subject to the general TRIPS provisions prohibiting discrimination on the basis of a person’s nationality.
It can be noted that, the TRIPS agreement and the Doha Declaration represent an attempt at the international level to achieve the sensitive task of balancing the need for providing incentives for research and development on the one hand and the need to protect public health interests of making access of drug reality, on the other. Despite having such mechanism the plight of developing countries is not solved. It is pertinent to note that many developing nations choose to issue the same, since it could be perceived as indifference towards intellectual property rights and thereby seriously weakening trade relations with other nations and might discourage investors. It is a well-known fact that developing countries have strict patent regime much flexible in granting compulsory licensing, due to no or minimal incentives. Developed countries have no incentive to issue compulsory licence for exports. Such obstacles are rendering these flexibilities granted by TRIPS inaccessible.
Section 3(d), Patents Act, 1970: A Check on Evergreening
According to the WHO Report 60% of the essential life saving drugs manifests incremental innovations which thereby enhances the need to encourage pharmaceuticals to invest more in innovation and to motivate investment in pharmaceutical industry; companies need to be rewarded with efficient patent protection. However, India places itself in quite different pedestal as reflected in Novartis AG v. Union of India decision. India incorporated Section 3 of the Patents Act, 1970 which limits the scope of subject-matter eligible for patents which are not “inventions” within the meaning of Indian Patents Act. Section 3(d) was enacted primarily to prevent “evergreening” as it specifically rejects the patents for the mere discovery of a new form of known substance unless such product manifests significant enhanced “therapeutic efficiency” over the original and known substance. Section 3(d) does not allow patent protection for the mere discovery of any new form of known substance unless it enhances the efficacy of the original substance. It also acts as a bar on the new use patents by stipulating that mere discovery of any new property or new use of a known substance would not be patentable.
The term “evergreening” has not been defined in Patents Act, 1970 but this patent strategy consists of securing patents on minor, more often trivial, modifications of existing pharmaceuticals products or process in order to indirectly extend the period of patents protection over previously patented compounds. It is an improper extension of life of patent beyond 20 years without actually being benefiting the pharmaceutical sectors. It is argued that, Novartis has attempted to do so by applying patent for beta form of the compound.
The 2013 judgment of Novartis AG v. Union of India has a major implication in shaping the Indian legislation regarding patent protection. The Novartis pronouncement was made after considering many socio-economic factors. The Supreme Court upheld the intent of the legislature behind Section 3(d) of Patents Act by providing strict and narrow interpretation of test mentioned therein. As mentioned by the Supreme Court that Section 3(d) was introduced to prevent evergreening, to provide access to the life saving drugs and to discharge their constitutional obligation of providing good healthcare to its citizens. This shows that external economic and social factors are a priority for India. But this pharmaceutical based specific test of “therapeutic efficacy” has brought various uncertainties. It is pertinent to note that, more uniform standard also provides a more predictable system for multinational pharmaceutical companies and allows them to invest in research and development aimed at addressing the health needs in developing countries. In 2003, WHO reported that more than 50% of the population in Asia and Africa did not have access to essential drugs. Many factors contribute to this problem of limited access. One of the prime reasons could be the inadequate production and inadaptability to the specific local conditions that can be addressed if multinational corporations have the right incentives, such as patent protection for incremental pharmaceutical innovations in the developing country. The concern of high price of drug is also one of the facets but can be tackled by alterative measures like compulsory licensing.
However, a subsequent study manifested that Section 3(d) has not been effectively utilised in preventing secondary patents from being granted. It has also been noticed that there has been many inconsistencies in the way the “Novartis standard” is dealt with by the Patent Office. Despite the fact that Section 3(d) is useful, it appears that Section 3(d) is being deliberately ignored by the Patent Controller’s office. As a result, it is not being applied correctly always. Further, patent office has provided with unfettered discretion to devise its own policy for determining what constitutes significant enhancement of therapeutic efficacy and goes no further while defining what “therapeutic efficacy” actually means.
In developing countries like India, the way healthcare is organised has created condition for the gross violation of fundamental rights. The principal of justice is being violated when majority of the population do not have access to basic minimum healthcare. The coming future of public health in India largely depends upon the way pharmaceuticals industry responds to the TRIPS agreement. Manufacture of the patented product or application of the patented process in a local industry is generally called as “local working of patent”. Inventive activity should result in innovation, which thereby leads to the development of technology as well as the industrial and economic welfare which is possible only through local working of patented inventions.
The monetary interest of big players in the drug industry remains under a constant threat to the access of life saving drug at moderate prices in India. Innovation and patent are two sides of the same coin. Innovations should be for serving the humanity especially in the field of medicine and patents should not have only one objective to amass profit.
(i) While recognising its international obligations, each country should shape its patent law according to its socio-economic needs and objectives including public health.
(ii) Moulding patent regulations to improve access to medicines, particularly by the poor is an important public health objective.
(iii) A health sensitive legal regime should allow Governments to act efficiently in cases of emergency, including epidemic crisis.
(iv) Government should create a framework for pharmaceutical patenting, especially regulating the accessibility of life saving drugs.
(v) Flexibilities of compulsory licence should be exercised in reality in developing and least developed nation. Easy process must be formulated for the grant of compulsory licensing.
(vi) Parallel import of some essential life saving drugs should be permitted.
With such reforms we can optimistically foresee a picture where picture people are walking out of the shadow of the incurable disease into the sunshine, singing merrily with smiles, on the green meadows, in refreshing woods or on the breezy beach.
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