Patented medicine and affordability

India’s ongoing efforts at safeguarding its intellectual property rights (IPRs) have been facing challenges from different directions.

In the heavily contested area of pharmaceutical patents, the Supreme Court, in an important ruling, stalled a last-ditch effort by German drugmaker Bayer to block the sale of a cheaper generic version of cancer drug Nexavar.

Upholding earlier rulings, the apex court stymied global drugmakers’ efforts to hold on to exclusivity on high priced drugs.

Domestic generic drug maker Natco was granted a patent in 2012 to sell a generic version of Nexavar at Rs.8,800 for a month’s dose, a fraction of Bayer’s price of Rs.2.80 lakh.

Important precedents

From a legal standpoint, India’s case was always strong. Since 2005, patent protection has been incorporated into domestic laws. Under the flexibilities that India has been interpreting the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement, the government can issue compulsory licences to manufacture drugs that are deemed unaffordable to large sections of the people. (Flexibilities are special dispensations given to countries to enact IPR laws to meet certain special circumstances).

Earlier, Swiss drugmaker Novartis was denied a patent for its cancer drug Glivec on the ground that there was only an incremental improvement over the existing version. Indeed, the practice of big pharma companies to tweak an existing drug formulation to extend the life of its patent, in effect seeking a secondary patent, is well documented.

Noted American doctor and author Atul Gaitonde made this point recently. That means, fewer drugs will be available for generic manufacture. In turn, there are serious implications for India’s public health programme, especially in providing affordable drugs without in any way compromising on the treaty obligations with other countries.

Needless to point out, Indian pharmaceutical companies have substantial expertise in manufacturing generic drugs to cater to the vast sections which cannot afford costly patented drugs. It is natural, therefore, that the local pharma industry has been singled out by influential lobbies in the U.S. to make a case against India.

Resist pressure

The debate over IPR, especially pertaining to the pharma industry, extends beyond courts. Of special concern has been the pressure being brought to bear by the U.S. authorities at the behest of influential lobbies.

Almost coinciding with the last national elections, the U.S. Trade Representative (USTR) placed India on a ‘priority watch’ list of countries whose IPR regimes would be scrutinised during the year. The saving grace was that the USTR, part of the executive office of the U.S. President, did not categorise India as a priority foreign country, which might have led to penal action against India.

The consequences would have been serious for India-U.S. trade and economic relationship. Fortunately, better sense prevailed. In a more recent development, the U.S. authorities appear to have back-tracked: an out-of-cycle review (OCR) has apparently cleared India’s IPR regime for the moment at least.

There is speculation as what brought about this change of heart. President Obama’s forthcoming visit may have something to do with it. U.S. Trade Representative Michael B. Froman was in Delhi in November. Whether that has anything to do with the NDA government’s IPR initiatives shall remain a matter of conjecture.

It might be a coincidence, but it was in November that the U.S. formally announced the completion of the WTO’s Trade Facilitation Agreement, first mooted in Bali a year ago and virtually vetoed by India in July. India, of course, has claimed a big victory.

Led by the U.S., the WTO members have agreed not to challenge India’s domestic food procurement programme for an indefinite period. At Bali, it was agreed that the ‘peace clause’ will extend to just four years.

An important initiative of the new government has been the setting up of an IPR think tank, which, among other things, will help in formulating a National Intellectual Property Rights policy for the first time. The calibre of those manning the think tank is not in doubt — the person who heads it — Prabha Sridevan is a retired high court judge and the chairperson of the Intellectual Property Appellate Board.

Transparency helps

Yet, if the government’s reasons are theoretically sound, the question still arises as to what prompted it to undertake such a major revamp exercise at this juncture.

As pointed out, even though India does not have an IPR policy, it has a strong legal foundation. Important precedents have been set, especially in drug-related matters. Besides, there is a well-functioning Patents Office with the expertise to grant patents and uphold consumer interests.

The suspicion that the government is doing all these under external pressure cannot easily be eradicated. The government should dispel even the faintest suspicion of a quid pro quo — a ‘liberal’ IPR regime in return for the U.S. support at WTO.

There is a whiff of fresh air in the Western attitudes to the cost of developing new drugs. There is a realisation that drug majors are inflating the costs of new drug manufacture through questionable practices. India and others who question these estimates are deterred by the association of big names, including leading universities in these calculations.

The influential newspaper, The Economist (November 29), points out that “it is not only patients group and aid charities that are sceptical about the startlingly high estimates of the drug development costs that are bandied about.” Even the head of a major pharmaceutical company, Sir Andrew Witty of GlaxoSmithKLine, has said that it was entirely achievable for drugmakers to make their research more efficient. Fewer failures at the lab and development stage can drastically reduce the cost of a new drug. Such an approach is wholly welcome. In India, policymakers should be equipped to asses the real cost of a patented drug.