India is the largest exporter of generics to the US by volume, with supplies from 35 companies in the country. The nation has around 320 USFDA-approved pharma facilities, the largest number outside the US. While India's pharma exports increased 10 per cent to US$ 14.6 billion during 2012-13, shipments to the US accounted for about 26 per cent of the total.
However the battle over intellectual property (IP) rights has turned into a sore point in the Indo-US pharma trade. While the US is concerned over the deteriorating environment for intellectual property protection in India, particularly of pharmaceutical patents, the Indian pharma considers it as US’s efforts to coerce India to amend its national IP regime to suit their business interest..
The US concern
With markets in the developed world becoming saturated, multinational drug companies are increasingly looking to emerging economies with large populations for sales expansion and growth.
Powerful pharma lobbies are alleging that India is running riot over intellectual property rights. They feel that a poor IP framework can impede the development of new medicines over the long term by creating an environment that all together stop the pharmaceutical industry from investing in innovation.
They feel that Section 3(d) of the Indian Patent Act undermines innovation. It disallows much of the incremental innovation done on existing treatments from being patented in India. At the same time they point out that it is incremental innovation that has delivered outstanding benefits to patients the world over—whether in the treatment of HIV/AIDS or drugs developed for malaria and other tropical diseases.
Innovation is critical to meeting increasing health needs and is particularly relevant in the context of evolving healthcare systems worldwide. Indian decisions that weaken intellectual property protection fail to recognise the fact that innovations are valuable for both breakthrough discoveries as well as for improvements to existing therapies, they add..
If India, a leader among emerging markets, gives short shrift to patent laws, the growth of local companies in these countries and the overall economic growth will be stunted. The country needs to improve its IP regime and promote innovation to attract world-class research to address healthcare challenges , they point out.
The Indian viewpoint
With calls in the US for designating India a priority foreign country (PFC), the worst downgrading of status by the US trade representative for inability to protect IPRs, the Indian government is accusing US authorities of intimidating the Union health ministry over the issue of compulsory licences.
A PFC tag can allow the US to impose unilateral sanctions against India for domestic laws which deny benefits to the US under any trade agreement. According to some officials there seems to be a two-fold agenda behind the "cacophony" emanating from the US.
While pressure is being created on India's health ministry to not consider drugs for compulsory licences , there is also a deliberate attempt to use India to scare away other developing countries like Indonesia and Brazil from introducing legislation to prevent ever-greening of drug patents, like section 3 (d) of Indian Patents Act (IPA),according to a report
The Indian Govt has given a CL in conformity with Indian patent law and WTO obligations. More importantly, the licence was issued after a rigorous judicial process. Despite all this the big pharma continues to remain peeved and has been offering numerous testimonies in the US on how Indian IP law is not respecting global pharma interests. It seems oblivious to the fact that US courts denied injunctions to patentees and effectively granted de facto compulsory licences when they deemed it necessary in public interest.
Making medicines cheaper is a politically sensitive issue in India as many patented drugs are too expensive and unaffordable for most people. Yet, Indian government has not brought the patented drugs under any price control and the percentage of patented drugs marketed in the country is steadily on the rise especially after the amended Patent Act came into effect in 2005. MNCs obtained several hundreds of patents for drugs since then from the Indian patent offices although many of them are not for new molecules.
More over some relevant evidence underscore the performance of the foreign pharmaceutical companies in India. Market audit by AWACS shows that sales of five US pharmaceutical companies grew by 79 per cent in a four-year period (2009-13). They are Abbott Healthcare (57 per cent), Abbott India (104 per cent), Pfizer (105 per cent), Merck (74 per cent) and BMS (59 per cent).
Data for seven foreign companies (Abbott, Bayer, GSK, Merck, Novartis, Pfizer and Sanofi) show rise in imports of finished products by 425 per cent in a seven-year period (2005-12) from Rs1.9 billion to Rs 8 billion.
Dividend remittances of seven foreign companies listed above reported a growth of 281 per cent in a seven-year period (2005-12) from Rs 6.5 billion to Rs18.5 billion.
It is, therefore, obvious that the business environment has not hindered growth of their sales or profits or repatriation of income.
Since 2005, India has granted over 1,500 patents for products and compositions to the top nine global pharmaceutical companies alone. When MNCs talk of ‘denial’ of patents, they are not talking of patents for medicines in general. They are complaining about the second or third patent for the same product. Typically, these follow-on patents are for new forms of the product and invariably prolong patent monopoly. However, such innovations when they enhance efficacy, are granted patents.
As regards compulsory licensing, at least eight of the 12 Western European countries as well as Asian and Latin American countries have provisions for grant of compulsory licences in the ‘public interest’. The Indian law is therefore neither unusual nor a cause of concern. So far only two applications for compulsory licences have been made since 2005. The first was for Bayer’s Nexavar, which has resulted in the grant of a compulsory licence. The second was for Bristol-Myers Squibb’s Sprycel, which was rejected.
India and global pharma
This is not the first time that India has taken a strong stance in the pharmaceutical patent wars. In 2001, Indian generic manufacturers played a crucial role in slashing prices of anti-retroviral (ARV) drugs used against HIV, bringing down the cost of the drugs per patient per year from around $15,000 to about $300. Today, the cost of ARV drugs is as low as $60 per patient per year. This was only possible because at the time, India was not party to WTO agreements on patent protection.
Indian generic manufacturers were able to disregard patents, and supplied over 80 per cent of all ARV drugs purchased in the world. India was recognised as a leader in providing quality healthcare to people in developing countries.
It is evident that India’s role in the pharmaceutical patent wars has great implications for poor people’s access to healthcare, not just at home but around the world. Emerging economies like Brazil and South Africa follow the Indian model when they modify their intellectual property laws in order to bar awards to frivolous and obvious patents, and to allow pre-and post-grant challenges. For instance, Brazil’s proposed changes to its patent policy quote provisions in India’s Patents (Amendment) Act, 2005. Doctors Without Borders, meanwhile, has publicly encouraged South Africa to borrow from India when drafting its new patent policy.
Some of the Indian industry leaders point out that despite liberal attitude of the Indian government towards MNCs, the aggressive posture of the US Chamber is nothing but unfair. The US government should not succumb to the pressure tactics of the Chamber. The US government should note that any obstructive action in this regard can have an adverse impact on the trade relations between the two countries. India needs to strongly resist if the US government resorts to any such inappropriate action. Indian pharmaceutical companies also have an international obligation of making available generic drugs to poor patients in the US and several other countries, they added.
Need to improve regulations , manufacturing
Apart from the economic interests in the success of this $15 billion export industry, it needs solid regulation to ensure this success is sustainable. A parliamentary standing committee on health in May last year found out a major chaos in domestic drug regulation, even in terms of granting licences.
Manufacturing laxity aside, it found that many drugs were being marketed before being put through the required clinical trials and drugs banned in other markets were available here. Regulatory dossiers were missing for several drugs, and in many cases, approvals were granted by non-technical staff. Expert testimonials were suspiciously similar in many cases. State issued licences operated in their own orbit, and these authorisations were not sent back to the central regulator.
The centre has moved a new drugs and cosmetics amendment bill, which conceives of a professionally managed Central Drugs Authority like the FDA instead of the existing CDSCO. But it will take more than surprise inspections to change this regulatory culture . It will involve breaking the collusion between certifiers and companies, and more than anything, it will require greater investment.
The USFDA has a strength of some 14,000 people, while the Indian regulator had 327 in 2012. While the pharma industry is exploding, and the CDSCO’s workload is growing by 20 per cent every year, it lacks the staff and infrastructure, advisors and independent testing labs to do its job. All this needs to change first, if the government is serious about a regulatory overhaul.
Moreover despite the fact India has become a global leader in manufacturing high quality affordable pharmaceutical and bio pharmaceutical medicinal products, many players are still following the traditional processing methods, which needs constant upgradation, industry experts point out.
As the pharma and bio pharmaceuticals industry is knowledge- intensive and needs to maintain highest standards to ensure quality and efficiency, the drug manufacturing companies should adopt advanced manufacturing standards .Manufacturing process in India needs to be continuously upgraded, they opine.
Newer funding models
Since large funds are required for the development of new medical technologies, experts have proposed the creation of attractive prizes, along the lines of the XPrize, which was instituted to encourage space exploration by giving successful teams up to $10 million in awards. The idea behind prizes is that while the winning team receives a large one-time payment, it cannot patent the solution, which ensures that the technology remains in the public domain.
Other models of funding innovation have already seen success such as the public-private partnership that created a new rotavirus vaccine, Rotavac, which is being sold by Bharat Biotech.
Millions of patients suffering from many other poorly managed diseases, such as diabetes or dengue fever would greatly benefit if companies were incentivised to create therapies at affordable prices.
India, the worlds largest democracy and the US, the richest and most technologically advanced nation,need each other. Both countries share common interests in Asia and around the world,beyond trade. It would be in the interest of both the nations if they jointly chart action plan favourable to both like the new models of incentivising medical research being proposed by medical experts.