The Central government has initiated discussions to lay specific norms for issuance of compulsory licensing (CL) for medicines under the Patent Act, 1970, while strictly adhering to the provisions under the trade-related aspects of intellectual property rights (TRIPS) agreement.
The effort is to explore the scope of provisions under TRIPS for compulsory licensing, since there are rising concerns over the availability and affordability of medicines in the backdrop of increased acquisition of Indian pharma majors by foreign companies, the marketing tie ups signed between the both and the decline in domestic sales of companies even as there is growth in sales of drugs in Indian industry.
The draft discussion paper issued by the Department of Industry Policy and Promotion (DIPP) suggests four options to block the emerging threat - invoking the provision at the time of public emergency, invoking the Competition Act 2002 to scrutinize whether the price or availability of a drug is a consequence of an anti competitive agreement or a combination which has an adverse effect on competition, review of foreign investment policy for pharmaceutical companies and to expanding the ambit of the the drug pricing authority to regulate the prices of a larger number of drugs than the present 74.
However, the option for discussion has been narrowed down to invoking the provision at the time of public emergency, since the other options to be implemented on short term basis deals with broader areas for discussion, says the paper.
The discussions would be on various related issues, including whether there is a requirement of guideline for compulsory licensing and whether the licenses should be issued under Section 92, and 92A Patents Act 1970 as amended in 2005 where the controller invokes the provisions in case of emergency either following a notification from the central government or to export to another country in case of insufficient supply of the particular medicine to that country.
The options of Section 84 under the Act where general CLs to be issued by the Controller on application and Section 91 for issuance of CL by the Controller for a related patent on application where the controller is independently empowered to issue a compulsory licence on application and on the satisfaction of the relevant conditions are also matter for discussion.
Other major areas posed for discussion are the need of guidelines to emphasis CL notification under Section 92, whether anti competition law should be invoked for compulsory licensing, whether working of a patent in the territory of India be interpreted to mean that it should be manufactured within the territory of India and the details of royalty payments to compensate for CLs and the timeline to be maintained by the Patent Controller in issuing such a licence.
The department has also raised question that whether the publicly funded Indian research organisations should stipulate that the ownership of patents they transferred or sold to the Indian private sector companies should be reverted to them in case the ownership of those companies passes on to foreign hands. It has claimed that some of the recently acquired Indian firms has received tax benefits and technology support from the government and its research organisations, which will now be beneficial for the foreign investor.
The discussion paper states that though imports have been growing, the emphasis on exports has resulted in a significantly lower growth of domestic consumption when compared to exports during most years during this period. During 2008-09, domestic consumption in value terms fell from Rs 45,953 crore to Rs 44,579 crore which records a decline of three per cent in domestic medicine sales.
While the 65 per cent of the Indian population still lacks access to essential medicines, "The gross sales turnover increased from Rs 14,200 crore in 1994-95 to Rs 75,500 crore in 2008-09. This has been accompanied by a more than proportionate growth in exports. Pharma exports have risen from Rs 2512 crore in 94-95 to Rs 39,538 crore in 2008-09. During 2008-09, the export growth rate was 29 per cent against the industry growth rate of only 8 per cent," explains the discussion paper.