EVERGREENING IN BANKING & PHARMA

 EVERGREENING:

“Evergreening” refers to the practice whereby pharmaceutical  firms extend the patent life of a drug for next 20 years only by minor reformulations or other iterations  without necessarily increasing the therapeutic efficacy. 

• Evergreening allows a prolonged monopoly that unfairly denies the public access to medicines at equitable prices. 
• In 2013, Supreme Court refused to grant a new patent to Swiss Company Novartis  for its Leukaemia drug Glivec as the drug was not substantially different from original one.
• It was case of Evergreening.

INDIAN PATENT ACT AND EVERGREENING: 

• As per Section 2(1) (ja) of the Patents Act, the product in question must feature a technical advance over what came before. 
• Section 3(d) necessitates a demonstration of improvement in its therapeutic efficacy.
• Section 3(e) ensures that patents for combinations of known substances are allowed only if there is synergistic effect.
• So, Indian Patent Act after 2005 amendments under TRIPS regime does not allow Evergreening.

EVERGREENING IN BANKING:

• Financial practice of extending additional loans to borrower who is unable to repay the existing loans.
• The main objective of Evergreening is to hide the status of Non Performing Asset (NPA).
• Evergreening creates false impression of quality of the assets and the profitability of the banks which delays the identification and hence resolution of the stressed assets.
• Loan evergreening may provide temporary relief, but it can negatively impact banks’ performance and the entire economy over some time.