Why drugs cost so much isn't really that hard to figure out.
Drugs cost a lot of money to develop. On average it costs somewhere between $250M (for an orphan disease) to $1B (for a primary care drug). The problem is that most drugs fail during development and when you take that into consideration, it's typically over $1B to develop a drug.
Where does that money come from? Just like money for anything else, it comes from the marketplace. People (not unlike readers of HN) take their money and put it into investments that get them an optimal return. If you eliminate patents, you eliminate the mechanism to get a return on R&D dollars invested. No patent (or at least a mechanism to get a return on an R&D investment) and you have no drug.
The issue here isn't getting a patent to cover the R&D costs, it's a case of the patent expiring, the drug company reformulating the drug slightly and then applying for a "new" patent on what amounts to a slightly modified version of the previous drug.
In India, the only patent you can get is the initial "composition of matter" patent. These patents are typically obtained very early in the R&D process (right after the drug is discovered).
For most drugs you can't just give the drug to a patient, it has to converted to a salt (this is why most drugs have "hydrochloride" or "sulfate" after their name). The right salt to use is usually determined a few years after the drug is discovered. The company typically gets a patent on this as well.
Since India doesn't recognize patents other than novel "composition of matter" patents, Bayer can't rely on their formulation patent to extend their market exclusivity. The patent in question is NOT a new formulation, it's the original formulation. The patent in question would only extend their market exclusivity for a few years.
I looked up the drug in question and apparently it was patented in 1993. That's 20 years. Even if the second patent was filed in 2007 it's still quite more than "a few years".
Drugs cost a lot of money to develop. On average it costs somewhere between $250M (for an orphan disease) to $1B (for a primary care drug). The problem is that most drugs fail during development and when you take that into consideration, it's typically over $1B to develop a drug.
Where does that money come from? Just like money for anything else, it comes from the marketplace. People (not unlike readers of HN) take their money and put it into investments that get them an optimal return. If you eliminate patents, you eliminate the mechanism to get a return on R&D dollars invested. No patent (or at least a mechanism to get a return on an R&D investment) and you have no drug.