Tag Archives: Property

New ‘Modi Government’: Would Restoring Cordial Relationship with America Be As Vital As Calling Its Bluff On IP?

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Newspaper reports are now abuzz with various industry groups’ hustle to lobby before the ‘Modi Government’ on their expectations from the new regime. This includes the pharmaceutical industry too. The reports mention that the industry groups, including some individual companies, have started getting their presentations ready for the ministers and the Prime Minister’s Office as soon as a new government takes charge on May 26, 2014.

Conflicting interests on IP:

While the domestic pharma industry reportedly wants the new Government to take a tough stand on the Intellectual Property (IP) related issues with the United States (US), the MNC lobbyists are raising the same old facade of so called ‘need to encourage innovation’ in India, which actually means, among others, for India to:

  • Amend its well-crafted IP regime
  • Change patentability criteria allowing product patents for even ‘frivolous innovation’ by scrapping Section 3(d) of the Indian Patents Act
  • Introduce Data Exclusivity
  • Implement patent linkages
  • Re-write the Compulsory Licensing (CL) provisions and not bother at all, even if patented drugs are priced astronomically high, denying access to majority of Indian population.

Interestingly MNC Lobby Groups, probably considering rest of the stakeholders too naive, continue to attempt packaging all these impractical demands on IP with unwavering straight face ‘story telling’ exercises, without specificity, on how well they are taking care of the needs of the poor in this country for patented medicines.

This approach though appears hilarious to many, MNC lobbyists with their single minded purpose on IP in India, keep repeating the same old story, blowing both hot and cold, nurturing a remote hope that it may work someday.

Recent views:

On this score, along with a large number of independent experts from across the world, very recently, even the former Chairman of Microsoft India reportedly advised the new ‘Modi Regime’ as follows:

“While the new government must work hard to make India more business friendly, it must not cave in to pressure on other vital matters. For instance, on intellectual property protection, there is enormous pressure from global pharmaceutical companies for India to provide stronger patent protection and end compulsory licensing. These are difficult constraints for a country where 800 million people earn less than US$ 2 per day.”

The Chairman of the Indian pharma major – Wockhardt also echoes the above sentiment by articulating, “I think Indian government should stay firm on the Patents Act, which we have agreed.” 

Other domestic pharma trade bodies and stakeholder groups in India reportedly expect similar action from the ‘Modi Government’.

Strong India matters:

India is the largest foreign supplier of generic medicines to America, having over 40 percent share in its US$ 30-billion generic drug and Over-The-Counter (OTC) product market.

Thus, expecting that Indian Government would wilt under pressure, the 2014 ‘Special 301 Report’ of the US Trade Representative (USTR) on Intellectual Property Rights (IPR) has retained India on its ‘Priority Watch List’, terming the country as violators of the US Patents Law. It has also raised serious concern on the overall ‘innovation climate’ in India urging the Government to address the American concerns in all the IP related areas, as mentioned above. 

My earlier submission in this regard:

In my blog post of February 5, 2014, I argued that patentability is related mainly to Section 3(d) of the Patents Act. and India has time and again reiterated that this provision and all the sections for invoking CL in India are TRIPS compliant. If there are still strong disagreements in the developed world in this regards, the Dispute Settlement Body of the ‘World Trade Organization (WTO)’can be approached for a resolution, as the WTO has clearly articulated that:

“WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations.”

Thus, it is quite intriguing to fathom, why are all these countries, including the United States, instead of creating so much of hullabaloo, not following the above approach in the WTO for alleged non-compliance of TRIPS by India?

How should the new Government respond?  – The view of a renowned pro-Modi Economist:

Subsequent to my blog post of February 5, 2014, as mentioned above, a recent article dated March 4, 2014 titled “India Must Call The US’ Bluff On Patents” penned by Arvind Panagariya, Professor of Economics at Columbia University, USA, who is also known as a close confidant of Prime Minister Narendra Modi, stated as follows, probably taking my earlier argument forward:

“Critics of the Indian patent law chastise it for flouting its international obligations under the TRIPS Agreement. When confronted with these critics, my (Arvind Panagariya) response has been to advise them:

  • To urge the US to challenge India in the WTO dispute settlement body and test whether they are indeed right.
  • But nine years have elapsed since the Indian law came into force; and, while bitterly complaining about its flaws, the USTR has not dared challenge it in the WTO. Nor would it do so now.
  • Why?
  • There is, at best, a minuscule chance that the USTR will win the case.
  • Against this, it must weigh the near certainty of losing the case and the cost associated with such a loss.
  • Once the Indian law officially passes muster with the WTO, the USTR and pharmaceutical lobbies will no longer be able to maintain the fiction that India violates its WTO obligations.
  • Even more importantly, it will open the floodgates to the adoption of the flexibility         provisions of the Indian law by other countries.
  • Activists may begin to demand similar flexibilities even within the US laws.

On possible actions against India under the ‘Special 301’ provision of the US trade law, Professor Arvind Panagariya argues:

  • “Ironically, this provision itself was ruled inconsistent with the WTO rules in 1999 and the US is forbidden from taking any action under it in violation of its WTO obligations.
  • This would mean that it couldn’t link the elimination of tariff preferences on imports from India to TRIPS violation by the latter.
  • The withdrawal of preferences would, therefore, constitute an unprovoked unilateral action, placing India on firm footing for its retaliatory action.”

US power play on IP continuing for a while:

United States, pressurized by its powerful pharma lobby groups, started flexing its muscle against India for a while. You will see now, how this short video clip captures the American ‘Power Play’ in this area.

Conclusion: 

It is undeniable that there is moderately strong undercurrent in the current relationship between the United States and India, mostly based on differences over the Intellectual Property Rights (IPRs).

The resourceful MNC pharmaceutical lobby groups with immense influence in the corridors of power within the Capitol Hill, are reportedly creating this difference for unfair commercial gain.

All these are being attempted also to blatantly stymieing India’s efforts to ensure access to affordable medicines for a vast majority of the global population without violating any existing treaty commitments, as reiterated by a large number of experts in this area.

Professor Arvind Panagariya reportedly calls it: “The hijacking of the economic policy dialogue between the U.S. and India by pharmaceutical lobbies in the U.S.”

That said, while cordial relationship with the United States in all economic and other fronts must certainly be rejuvenated and adequately strengthened with utmost sincerity, the newly formed Federal Government at New Delhi with Prime Minister Narendra Modi as its bold and strong face, should not hesitate to call the US bluff on IP… for India’s sake.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

“India is The Biggest Battlefield for Intellectual Property Rights”

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The US Senator Orrin Hatch reportedly made the above comment while introducing the 2014 report on ‘International Intellectual Property (IP) Index’, prepared by an Israel based consultancy firm – Pugatch Consilium for the Global Intellectual Property Centre (GIPC) of the US Chamber of Commerce. In this forum, the Senator further alleged, “India misuses its own IP system to boost its domestic industries”.

Similar comment on South African IP Policy:

It is interesting to note that this ‘Battle Cry’ on IPR follows almost similar belligerent utterance of a Washington DC-based lobbying firm named ‘Public Affairs Engagement (PAE)’, reportedly headed by a former US ambassador Mr. James Glassman.

PAE, in a recent South African IP policy related context, as deliberated in my earlier blog titled, “Big Pharma’s Satanic Plot is Genocide”: South Africa Roars”, had stated in January 2014, “Without a vigorous campaign, opponents of strong IP will prevail, not just in South Africa, but eventually in much of the rest of the developing world.”

The GIPC report:

That said, in the GIPC report, India featured at the bottom of 25 countries on Intellectual Property (IP) protection with a score of 6.95 out of 30. Thailand, Vietnam, Indonesia and Argentina also scored low in overall ranking on protection for patents, copyright and trademarks. The United States ranked at the top, followed closely by Britain and France.

Interestingly, no country could register a “perfect” score in the survey, which used 30 factors ranging from levels of counterfeiting and piracy to patents and legal protections for all kinds of products and services ranging from pharmaceuticals to software to Hollywood films.

Among other BRIC countries, Russia with a score of 13.28, China with 11.62 and Brazil with 10.83, ranked 13th, 17th and 19th, respectively, within the selected 25 countries.

Key reasons, especially related to pharmaceuticals, as cited for the poor rating of India are as follows:

  • “Patentability requirements in violations of TRIPS”
  • “Regulatory Data Protection (RDP) not available”
  • “Patent term restoration not available”
  • “Use of Compulsory Licensing (CL) for commercial non-emergency situation”

The ground reality in India:

The answers to all these questions are much discussed and now an integral part of Indian Patents Act, as enacted by the Parliament of the country after prolong deliberations by the astute lawmakers keeping patients’ interest at the center.

As I had indicated earlier, there does not seem to be any possibility of these laws getting amended now or in foreseeable future, despite the above ‘Battle Cry’, Special 301 Watch List of the US, and continuous poor rating by the US Chamber of Commerce. This is mainly because of humanitarian sentiments attached to this issue, which are robust and sensitive enough to ignore even politically in India. Let me try to address all these 4 points briefly as follows:

“Patentability requirements in violations of TRIPS”:

Patentability is related mainly to Section 3(d) of the Patents Act. India has time and again reiterated that this provision is TRIPS compliant. If there are still strong disagreements in the developed world, the Dispute Settlement Body of the ‘World Trade Organization (WTO)’can be approached for a resolution, as the WTO has clearly articulated as follows:

“WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations.”

Thus, it is quite challenging to fathom, why those countries, instead of creating so much of hullabaloo, are not following the above approach in the WTO for the so called ‘patentability’ issue in India?

“Regulatory Data Protection (RDP) not available”:

In this context, Commerce and Industry Minister Anand Sharma had reportedly asserted earlier at a meeting of consultative committee of the Parliament as follows:

“India does not provide data exclusivity for pharmaceuticals and agro-chemicals which is in the paramount interest of our generic pharmaceutical industry as grant of data exclusivity would have considerable impact in delaying the entry into the market of cheaper generic drugs.”

Hence, the question of having RDP in India does not possibly arise, at least, in near to mid term, which would require moving an amendment in the relevant Act through the Parliament.

“Patent term restoration not available”:

Again, this provision does not exist in the Indian Patents Act. Hence, in this case too, a change does not seem likely, at least, in near to mid term, by bringing an amendment through the Parliament.

“Use of Compulsory Licensing (CL) for commercial non-emergency situation”:

Besides situations like, national emergency or extreme urgency, the current CL provisions, as per the Indian Patents Act, specifically state that at any time after the expiration of three years from the grant of patent, any interested person may make an application to the Patent Controller for grant of patent on the following grounds:

  • Whether the reasonable requirements of the public with respect to the patented invention have been satisfied?
  • Whether the patented invention is available to the public at a reasonable affordable price?
  • Whether the patented invention is worked in the territory of India?

It is worth mentioning, the Government has no authority to direct any individual for not applying for any CL under the above provision of the statute, hence law will take its own course in this area too, unless an amendment through Parliament is made in the Patents Act, which seems very unlikely again in the near to medium term.

Eyebrows raised on methodology and motive behind the ‘IP Index’ report:

Media report indicates that IP experts in India have questioned the methodology and even the motive behind GIPC’s ‘International Intellectual Property (IP) Index’ where India has been ranked the lowest among 25 countries.

The same article quotes a well-known IP expert saying, “Underlying this report is a major paradox that protecting weak patents makes the IP regime a strong one. Countries such as India that have stood up for genuine innovation and refused to protect trivial inventions have been accused of having ‘weak’ IP regimes, while it should have been the other way round.”

The article also mentions that Pugatch Consilium, which provides advisory services to top global drug makers and their trade associations, drafted the report for the US Chamber of Commerce.

Conclusion:

Keeping aside the strong allegation that the GIPC report has some ulterior motive behind, the high profile PR blitzkrieg of the pharma multinational trade associations, quite in tandem with South African outburst on the same IP issue, as I wrote in my blog post “Big Pharma’s Satanic Plot is Genocide”: South Africa Roars”, is indeed noteworthy.

However, even if one goes purely by the merits of the report with GIPC’s reasoning on ‘Why is India losing ground’, I reckon, despite so much of cost-intensive efforts and pressures by the global pharma lobbying groups, their expectation for a change in the pharma patents regime in India, any time soon, is probably much more than just a wishful thinking.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

‘Big Pharma’ Prowls Falter: Triggers Off Yet Another Critical Debate

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The ‘Big Pharma’ prowls faltered yet again exposing the ‘fault line’ to all, when the GSK global head honcho, a pharma icon in his own right, Sir Andrew Witty supported the pharmaceutical policy of India, while in the country earlier this month. This support is quite in contrary to arrogant displeasure being expressed by his MNC counterparts against the pharma regime in India up until now.

Sir Andrew reportedly spoke against the usual pharma MNC practices of charging very high prices for patented medicines during an interview and said that multinationals need to look at things from India’s perspective. 

The above comment, when analyzed especially in context of one of the recent actions of Big Pharma MNCs complaining in writing to President Obama against India’s prevailing pharmaceutical regime, the fault line gets clearly visible.

In this context, a recent report captured the anger and desperation of Big Pharma. This hostility vindicates the general apprehensions in India that MNCs are once again pushing for a stringent patent regime in the country, against the general health interest of Indian patients for access to affordable newer medicines.

Quoting US Chamber of Commerce’s Global Intellectual Property Center another report reconfirmed the impatient prowl of the mighty lobby group in the corridors of power. This piece states, “Recent policy and judicial decisions (Glivec judgment and Nexavar) that invalidate intellectual property rights, which have been increasing in India, cast a daunting shadow over its otherwise promising business climate.” 

The ‘fault line’, thus surfaced, triggers off yet another critical debate, especially related to the slugfest on a stringent pharmaceutical product patent regime in India, as follows:

“Does Stricter IPR Regime Spur Pharma Innovation?”

Global innovator companies strongly argue that stringent Intellectual Property Rights (IPR) and stricter enforcement of IP laws have strong link with fostering innovation leading to a robust economic growth for any nation.

However, another group of thought leaders opine just the opposite. They argue that strong IPR and IP laws have little, if any, to do with fostering innovation and economic growth, as there are no robust research findings to drive home the above point.

It has been noticed that the MNC lobby groups quite often very cleverly use their magic word ‘innovation’ on a slightest pretext with an underlying desire of having a ‘very strict patent regime’ in India. Thus they seem to be trying to mislead the common man, as if India is against innovation.

Comment of the Chairman of National Innovation Council of India:

On September 15, 2012, while delivering his keynote address in a pharmaceutical industry function, Dr. Sam Pitroda, the Chicago based Indian, creator of the telecom revolution in India, Chairman of the National innovation Council and the Advisor to the Prime Minister on Public Information, Infrastructure & Innovations, made a profound comment for all concerned to ponder, as follows:

“Everyone wants to copy the American model of development.  I feel that this model is not scalable, sustainable, desirable and workable.  We have to find an Indian Model of development which focuses on affordability, scalability and sustainability.”

Recent Indian stand:

On March 5, 2013, the Government of India made a profound statement on the subject of ‘Innovation and Small and Medium Enterprises (SMEs)’ at the TRIPS Council meeting covering the following points:

  • There is no direct correlation between IP and Innovation even for the Small and Medium Industries.
  • The technological progress even in the developed world had been achieved not through IP protection but through focused governmental interventions.
  • The proponents of this Agenda Item have reached the present stage of technological development by focusing solely on the development of their own domestic industry without caring for the IPRs of the foreigners or the right holders.
  • After achieving a high level of development, they are now attempting to perpetuate their hold on their technologies by making a push towards a ‘TRIPS plus’ regime.
  • Their agenda is not to create an environment where developing countries progress technologically, but to block their progress through stringent IP regime.
  • It is essential that the flexibilities provided by the TRIPS Agreement need to be secured at any cost, if the people in the developing countries are to enjoy the benefits of innovations.

A Wharton Professor’s view:

As the Wharton professor of Healthcare Management Mark V. Pauly has been quoted saying that the link between patent protection and innovation has never been definitely proven.

However, Pauly reportedly is aware that the innovator global pharma companies do say, ‘If you don’t allow us to reap the benefits of our R&D expenditure, we won’t put as much into it, and we won’t invent as many great things’.

However, the Wharton Professor counters it by saying, “The problem is that nobody really knows how much less innovation there would be if there were less patent protection. We just don’t know what the numbers are.”

The above report says, according to Pauly, the onus to prove that patent protection matters should be on the drug industry itself.

He argues, “Rather than always just insisting you should never limit intellectual property protection, they really ought to develop some evidence to show that without that protection, there would be an impact on the rate of adoption of new products. Everybody has an opinion, but nobody knows the facts.“

A French Professor’s view:

In another WIPO seminar held on June 18, 2013, Margaret Kyle, a Professor at the Toulouse School of Economics and the Université de Toulouse I in France, reportedly presented preliminary findings of a study.

This paper explored in detail the impact of World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in various areas related to the speed of launch, price, and volume of sales of drugs across countries and across different drug products.

In this study, as the above report states, Kyle analyzed the trade-off between the dynamic and static effects of Intellectual Property Rights (IPRs).

The dynamic effect of IPRs was considered as an incentive for innovation based on the general belief that patent protection, through granting market exclusivity, incentivizes companies to invest in the research and development (R&D) to develop new drugs.

On the other hand, the static effect of IPRs in the short term is that granting market exclusivity often leads to innovator companies pricing their products at levels, which will be unaffordable by a large number of patients, especially in lower-income countries.

Kyle explained that the results implied as follows:

  • IPRs are neither necessary nor sufficient to launch new pharmaceutical products.
  • The existence of a product patent does not always inhibit generic imitation, nor does the lack of such a patent necessarily deter an originator from making a product available in a given market.

Other eminent voices:

While highlighting that TRIPS-Plus intellectual property protection is passed by some developing countries in order to implement FTA obligations, another recent paper presents the following examples in support of the argument that there no correlation between strong IP laws and fostering innovation:

  • UK Commission on Intellectual Property Rights. Integrating Intellectual Property Rights and Development Policy. 2002. (Link)

“…Strong IP rights alone provide neither the necessary nor sufficient incentives for firms to invest in particular countries… The evidence that foreign investment is positively associated with IP protection in most developing countries is lacking.”

  • Robert L. Ostergard., Jr. “Policy Beyond Assumptions: Intellectual Property Rights and Economic Growth.” Chapter 2 of The Development Dilemma: The Political Economy of Intellectual Property Rights in the International System.  LFB Scholarly Publishing, New York. 2003

“…No consistent evidence emerged to show that IPR contributed significantly to economic growth cross-nationally.  Furthermore, when the nations are split into developed and developing countries, results to suggest otherwise did not emerge.”

  • Carsten Fink and Keith Maskus. “Why We Study Intellectual Property and What We Have Learned.” Chapter one of Intellectual Property and Development: Lessons from Economic Research. 2005. (Link)

“Existing research suggests that countries that strengthen their IPR are unlikely to experience a sudden boost in inflows of FDI.  At the same time, the empirical evidence does point to a positive role for IPRs in stimulating formal technology transfer.”

“Developing countries should carefully assess whether the economic benefits of such rules outweigh their costs. They also need to take into account the costs of administering and enforcing a reformed IPR system”

“We still know relatively little about the way technology diffuses internationally.”

  • Keith Mascus. “Incorporating a Globalized Intellectual Property Rights Regime Into an Economic Development Strategy.”  Ch. 15 of Intellectual Property, Growth and Trade. (ed. Mascus). Elsevier.  2008.

“Middle income countries must strike a complicated balance between promoting domestic learning and diffusion, through limited IP protection, and gaining greater access to international technologies through a strong regime… it makes little sense for these nations to adopt the strongly protectionist IP standards that exist in the U.S., the EU and other developed economies.  Rather, they should take advantage of the remaining policy space provided by the TRIPS Agreement.”

“It is questionable whether the poorest countries should devote significant development resources to legal reforms and enforcement of IPR.”

  • Kamal Saggi. “Intellectual Property Rights and International Technology Transfer via Trade and Foreign Direct Investment. Ch. 13 of Intellectual Property, Growth and Trade. (ed. Mascus). Elsevier.  2008.

“Overall, it is fair to say that the existing empirical evidence regarding the overall technology-transfer impacts of increased IPR protection in developing countries is inconclusive at this stage.  What is not yet clear is whether sufficient information flows will be induced to procure significant dynamic gains in those countries through more learning and local innovation.”

  • Alexander Koff, Laura Baughman, Joseph Francois and Christine McDaniel. “Study on the Economic Impact of ‘TRIPS-Plus’ Free Trade Agreements.”  International Intellectual Property Institute and the U.S. Patent and Trademark Office. August 2011.

“TRIPS-Plus IPRs viewed as ‘important, but not essential’ for attracting investment. Many other factors matter like, taxes, human capital, clustering, etc.”

Patients versus Patents:

Another recent  article on this subject states as follows:

“Compulsory licensing and stricter patentability standards allow domestic manufacturers to produce lower-cost versions of patented NCD medications and break into lucrative therapeutic areas, such as oncology, in which multinational drug firms are heavily invested.”

The paper clearly highlights, “If patients are pitted against patents, international support for IP protection—upon which drug firms and many other developed country industries now heavily rely—will again diminish.”

Yet another article published in The New England Journal of Medicine, July 17, 2013 states:

“Patents are government-granted monopolies. As monopolies, they can drive the prices of drugs up dramatically. For example, in 2000, when only patented antiretroviral drugs for Human Immunodeficiency Virus (HIV) infection were widely available, they cost approximately $10,000 per person per year, even in very poor countries. Today, these same medicines cost $150 or less if they are purchased from Indian generics companies…. patents cause especially acute problems for access to medicines in developing countries – not only because of low incomes but also because insurance and price-control systems are often absent or inadequate.” 

A WHO Report:

To chart the way forward at the backdrop of ongoing global debate elated to the relationship between intellectual property rights, innovation and public health, the World Health Assembly decided in May 2003 to give an independent Commission the task of analyzing this key issue. Accordingly, the Director-General of WHO established the Commission in February 2004. This report titled, “Public health, innovation and intellectual property rights” was published in 2006 and articulated that neither innovation nor access depend on just intellectual property rights and highlighted, among others, the following:

  • Intellectual property rights have an important role to play in stimulating innovation in health-care products in countries where financial and technological capacities exist, and in relation to products for which profitable markets exist.
  • In developing countries, the fact that a patent can be obtained may contribute nothing or little to innovation if the market is too small or scientific and technological capability inadequate.
  • In the absence of effective differential and discounted prices, patents may contribute to increasing the price of medicines needed by poor people in those countries.
  • Although the balance of costs and benefits of patents will vary between countries, according to their level of development and scientific and technological infrastructure, the flexibility built into the TRIPS agreement allows countries to find a balance more appropriate to the circumstances of each country.

India – now the most attractive global investment destination:

Trashing the anger and displeasure of pharma MNCs, as per the latest international survey, India reportedly has emerged as the most attractive global investment destination followed by Brazil and China. It is worth noting that even recently, during April- June period of 2013, with a capital inflow of around US$ 1 billion, the pharma sector became the brightest star in the FDI landscape of India.

Conclusion:

In the Indian context, a 2013 paper titled, “Intellectual Property Protection and Health Innovation: Concerns for India” published by Center for WTO Studies highlights that the regime change in the patent system has not been very supportive for improving access to medicines in India. It reiterates, it has not been established yet that a stricter patent regime in the developing countries like India, has helped health innovation and access to medicines at economically viable prices.

The paper recommends, although India is trying to incorporate all the flexibilities under TRIPS in its Patents Act, the ‘Indian Policy Makers’ should not give in to the pressure of western powers to make IPR more stringent in the country.

In the backdrop of arrogance exhibited by Big Pharma MNCs, in general, against Indian policies and judicial verdicts on this subject, the comments made by Sir Andrew on the issue, as deliberated above, are indeed profound and far reaching. However, it clearly exposes the fault line in the collective mindset of pharma MNCs, without any ambiguity.

I shall not be surprised either, if clever attempts are made now by the MNC lobby groups to negate or trivialize the profoundness of this visionary statement not just in India, but beyond its shores, as well.

Further, as stated above recent emergence of India as the most attractive global investment destination with pharma leading the deck is a point worth noting, more in the context of policy and statutes that India has decided to follow.

Be that as it may, it is beyond the scope of any doubt that innovation or for that matter encouraging innovation still remains the wheel of progress of any nation.

However, have we garnered enough evidence yet, to establish that stringent IPR regime with absolute pricing freedom would lead to fostering more innovation leading to well-being of people of the developing countries, like India?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

 

 

Patented Drugs’ Pricing: Apprehensive Voices Could Turn into a Self-Defeating Prophecy

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On February 21, 2013, the Department of Pharmaceuticals in a communication to the stakeholders announced that the committee to examine the issues of ‘Price Negotiations for Patented Drugs’ has since submitted its report to the Department. Simultaneously the stakeholders were requested to provide comments on the same urgently, latest by March 31, 2013.

This committee was constituted way back in 2007 to suggest a system that could be used for price negotiation of patented medicines and medical devices ‘before their marketing approval in India’.

In that process, the Committee reportedly had 20 meetings in two rounds, where the viewpoints of the Pharmaceutical Industry including FICCI, NGOs and other stakeholders were taken into consideration.

Simultaneously, the Committee had commissioned a study at the Rajiv Gandhi School of Intellectual Property Law and Indian Institute of Technology (IIT), Kharagpur to ascertain various mechanisms of price control of Patented Drugs in many countries, across the world. The Committee reportedly has considered this ‘Expert Report’ while finalizing its final submission to the Government.

Scope of recommendations:

The Committee in its final report recommends price negotiations for Patented Drugs only for:

  • The Government procurement/reimbursement
  • Health Insurance Coverage by Insurance Companies

Issues to remain unresolved despite price negotiation:

In the report, the Committee expressed the following view:

  • Even after calibrating the prices based on Gross National Income with Purchasing Power Parity of the countries where there are robust public health policies, with the governments having strong bargaining power in price negotiation, the prices of patented medicines will still remain unaffordable to a very large section of the population of India. Such countries were identified in the report as UK, Canada, France, Australia and New Zealand
  • The government should, therefore, extend Health Insurance Scheme covering all prescription medicines to all citizens of the country, who are not covered under any other insurance /reimbursement scheme.

Three categories of Patented Drugs identified:

The committee has identified three categories of patented drugs, as follows:

1. A totally new class of drug with no therapeutic equivalence

2. A drug that has therapeutic equivalence but also has a therapeutic edge over the  existing ones

3. A drug that has similar therapeutic effectiveness compared to the existing one

The Committee recommended that these three categories of Patented Drugs would require to be treated differently while fixing the price.

A bullish expectation of the Government on Patented Drugs market:

The report highlights that the Indian Pharmaceutical Industry has currently registered a turnover exceeding US$ 21 billion with the domestic turnover of over US$ 12 billion.

The report also estimates that the total value turnover of patented medicines in India, which is currently at around US$ 5 million, is expected to grow at a brisk pace due to the following reasons:

  • Rapid up-gradation of patent infrastructure over the past few years to support new patent laws with the addition of patent examiners.
  • Decentralization of patent-filing process and digitization of records.
  • Increase of population in the highest income group from present 10 million to 25 million in next 5 years.

All these, presumably have prompted the Government to come out with a ‘Patented Drugs Pricing’ mechanism in India.

Pricing Mechanism in China: 

Just to get a flavor of what is happening in the fast growing neighboring market in this regard, let us have a quick look at China.

In 2007, China introduced, the ‘New Medical Insurance Policy’ covering 86 percent of the total rural population. However, the benefits have so far been assessed as modest. This is mainly because the patients continue to incur a large amount out of pocket expenditure towards healthcare.

There does exist a reimbursement mechanism for listed medicines in China and drug prices are regulated there with the ‘Cost Plus Formula’.

China has the following systems for drug price control:

  • Direct price control and competitive tendering

In this process the Government directly sets the price of every drug included in the formulary. Pharmaceutical companies will require making a price application to the government for individual drug price approval.The retail prices of the drugs are made based on the wholesale price plus a constant rate.

Interestingly, unlike Europe, the markup between the retail and wholesale price is much higher in China.

Apex body for ‘Patented Drugs Price Negotiation’: 

The Report recommends a committee named as ‘Pricing Committee for Patented Drugs (PCPD)’ headed by the Chairman of National Pharmaceutical Pricing Authority (NPPA) to negotiate all prices of patented medicines.

As CGHS, Railways, Defense Services and other Public/Private institutions cover around 23 percent of total healthcare expenditure, the members of the committee could be invited from the Railways, DGHS, DCGI, Ministry of Finance and Representatives of top 5 health insurance companies in terms of number of beneficiaries.

Recommended pricing methodology:

For ‘Price Negotiation of Patented Drugs’, the report recommends following methodologies for each of the three categories, as mentioned earlier:

  1. For Medicines having no therapeutic equivalence in India:
  • The innovator company will submit to the PCPD the details of Government procurement prices in the UK, Canada, France, Australia and New Zealand for the respective Patented Drugs.
  • In the event of the concerned company not launching the said Patented Drug in any of those reference countries, the company will require to furnish the same details only for those countries where the product has been launched.
  • The PCPD will then take into consideration the ratio of the per capita income of a particular country to the per capita income of India.
  • The prices of the Patented Drug would be worked out for India by dividing the price of the medicine in a particular country by this ratio and the lowest of these prices would be taken for negotiation for further price reduction.
  • The same methodology would be applicable for medical devices also and all the patented medicines introduced in India after 2005.

2. For medicines having a therapeutic equivalent in India:

  • If a therapeutically equivalent medicine exists for the Patented Drug, with better or similar efficacy, PCPD may consider the treatment cost for the disease using the new drug and fix the Patented Drug price accordingly
  • PCPD may adopt the methodology of reference pricing as stated above to ensure that the cost of treatment of the Patented Drug does not increase as compared to the cost of treatment with existing equivalent medicine

3. For medicines introduced first time in India itself:

  • PCPD will fix the price of such drugs, which are new in the class and no therapeutic equivalence is available, by taking various factors into consideration like cost involved, risk factors and any other factors of relevance.
  • PCPD may discuss various input costs with the manufacturer asking for documented evidence.
  • This process may be complex. However, the report indicates, since the number of medicines discovered and developed in India will not be many, the number of such cases would also be limited.

Negotiated prices will be subjected to revision:

The report clearly indicates that ‘the prices of Patented drugs so fixed will be subjected to revision either periodically or if felt necessary by the manufacturer or the regulator as the case may be.’

Strong voices of support and apprehension:

A.  Support from the domestic Indian Pharmaceutical Industry

Interestingly there have emerged strong voices of support on this Government initiative from the domestic Indian Pharmaceutical Industry, as follows:

  • Indian Pharmaceutical Alliance (IPA) has commented, “This policy is in the right direction as we know that Compulsory License (CL) cannot address the need of price control for all patented drugs, so this policy takes care of that issue of a uniform regulation of price control for all patented drugs”. IPA had also suggested that the reference pricing should be from the developed countries like UK, Australia and New Zealand where the 80 percent of the expenditure being incurred on public health is borne and negotiated by the government.
  • Pharmexcil - another pharma association has commented, “This report is balanced and keeps India’s position in the global market in mind while recommending a pricing formula.”
  • Federation of Pharma Entrepreneurs (FOPE) & Confederation of Indian Pharmaceutical Industry (CIPI) had submitted their written views to the Committee stating that FOPE supports price negotiation mechanism for Patented Drugs and strongly recommends that Compulsory License (CL) provisions should not get diluted while going for price negotiation.
  • Indian Drug Manufacturer Association (IDMA) supported price negotiation for all Patented Drugs and recommended that the issue of CL and price negotiation should be dealt separately.

However, the Organization of Pharmaceutical Producers of India (OPPI) feels, as the report indicates, ‘Price Negotiations for Patented Products’ should be made only for Government purchases and not be linked with ‘Regulatory Approval’. They have already expressed their serious concern on the methodology of ‘Patented Products Pricing’, as detailed in the above report.

B. Apprehension within the Government

Even more interestingly, such apprehensive voices also pan around the Government Ministries.

Though the DoP has proposed in the report that once the Patented Drug Policy is implemented the issuance of CL may be done away with, the Department of Industrial Policy and Promotion (DIPP) has reportedly commented with grave caution, as under:

“If it is decided that Price Negotiations on Patented Drugs should be carried out then, the following issues must be ensured:

(i) Negotiations should be carried out with caution, as the case for Compulsory License on the ground of unaffordable pricing of drugs [Section 84(b) of the Patent Act] will get diluted.

(ii) Re-Negotiations of the prices at periodic intervals should be an integral part of the negotiation process.”

C. Apprehension of other stakeholders 

The NGOs like, “Lawyer’s Collective HIV/Aids Unit” and “Medicines Sans Frontiers (MSF)” reportedly have urged that the price negotiation should not be allowed to weaken the position of CL for the Patented Drugs.

They had mentioned to the Committee as follows:

“As regards the plea of the patent holder that they had spent a large sum on R&D, one should note that most of the funds for R&D come from the Governments of their respective countries”. They further stated, “when the cost of production of the patented drugs is not known, it would be impossible to negotiate the price in a proper manner.”

The DoP report states that the other members of the NGOs also seconded these views.

Conclusion:

Not so long ago, on January 12, 2013, one of the leading dailies of India first reported that in a move that is intended to benefit thousands of cancer patients, Indian Government has started the process of issuing Compulsory Licenses (CL) for three commonly used anti-cancer drugs:

-       Trastuzumab (or Herceptin, used for breast cancer),

-       Ixabepilone (used for chemotherapy)

-       Dasatinib (used to treat leukemia)

For a month’s treatment drugs like, Trastuzumab, Ixabepilone and Dasatinib reportedly cost on an average of US$ 3,000 – 4,500 or Rs 1.64 – 2.45 lakh for each patient in India.

I reckon, a robust mechanism of ‘Price Negotiation for Patented Drugs’ could well benefit the global pharmaceutical companies to put forth even a stronger argument against any Government initiative to grant CL on the pricing ground for expensive innovative drugs in India. At the same time, the patients will have much greater access to patented drugs than what it is today, due to Government procurement of these drugs at a negotiated price.

On the other hand, apprehensive voices as are now being expressed on this issue, just hoping for drastic measures of grant of frequent CL by the Government for improved patients’ access to innovative drugs, could well turn into a self-defeating prophecy – making patients the ultimate sufferers, yet again, as happens most of the time.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Counterfeit Drugs and ACTA: Should the global menace related to ‘Public Health and Safety’ be mixed-up with Intellectual Property Rights?

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Here in this article, I am talking about drugs or medicines, which you may ultimately land up into buying, quite innocently though, against your doctor’s prescriptions, without having an inkling that these drugs can push you into serious health hazards, instead of addressing your ailments, as your doctor would have desired to.

These are ‘Counterfeit’, ‘Fake’, ‘Spurious’ or ‘Sub-standard’ drugs, in whatever name we may call them. Such substances in the guise of drugs are therapeutically harmful for the patients and are a global menace. This needs to be addressed urgently and with a military precision.

However, public health policy experts have been arguing since long that the issues of such dimension related to critical ‘Public Health and Safety’ needs to be addressed expeditiously by all concerned with focus, without mixing it up with any other commercial considerations or IP related matter, as is being done by some vested interests across the world. India, in this case as well, is of course no exception.

Some reports:

Following are examples of some reports regarding deliberations on this critical issue:

  • A new study published recently in ‘The Lancet’ reported that 7% of anti-malarial drugs tested in India are of poor quality and many were found fake.
  • A February, 2012 report of ‘The National Initiative against Piracy and Counterfeiting’ of FICCI highlighted that the share of fake/counterfeit medicines is estimated at 15% – 20% of the total Indian pharmaceutical market.
  • Another recent report of the US Customs and Border Protection highlighted, “India and Pakistan both made it to top 10 source countries this year due to seizures of counterfeit pharmaceuticals. Pharma seizures accounted for 86% of the value of IPR seizures from India and 85% of the value of IPR seizures from Pakistan.”

However, in this context, it is worth mentioning that the Indian Pharmaceutical Industry along with the Government has been continuously questioning the original source of fake drugs with prominent ‘made in India labels’ on the outer packaging material. It will not be difficult for many to recall that a couple of years ago consignments of ‘counterfeit or fake drugs’ wearing ‘made in India’ labels were confiscated by the drug regulator of Nigeria (Africa), which after a thorough investigation were found to have originated from China.

A contrarian report – CDSCO Survey:

Central Drugs Standard Control Organization (CDSCO) of the Government of India released the following details on ‘Counterfeit Drugs’ in India from 2006 to 2010, which shows that the issue is not as acute as it is shown above:

Year Drugs samples tested % of sub-standard drugs % of spurious drugs Prosecution for crime Persons arrested
2006 – 07

34738

5.8

0.22

115

12
2007 – 08

39117

6.2

0.19

120

122
2008 – 09

45145

5.7

0.34

220

133
2009 -10

39248

4.95

0.29

138

147

TOTAL

158248

5.66

0.26

593

414

This ‘Pan-India survey report of CDSCO’ shows that from 2006 to 2010 the percentage of both ‘Substandard’ and ‘Spurious’ drugs were quite low in India.

However, the more worrying fact, as seen in the report is, the arrests and prosecutions for this heinous crime are also abysmally low in India.

IP related ‘counterfeit’ drugs are relatively smaller in numbers: 

WHO has identified following types of counterfeit medicines:
• Without active ingredients: 32% • Wrong ingredients: 21.4% • Incorrect quantities of active ingredients: 20.2% • Right quantities of active ingredients but in fake packaging: 15.6% • High levels of impurities and contaminants: 8.5% • “Substituted ingredients of anything from paracetamol to boric acid, talcum powder, rat    poison or road paint”: 2.3%

In addition, 50% of medicines purchased online from illegal internet are ‘counterfeit or fake’

From the above data, it appears that IP related ‘counterfeit or fake’ drugs are relatively small in number.

‘Anti-Counterfeiting Trade Agreement (ACTA)’:

The subject gets more complicated when such critical ‘Public Health and Safety’ related issue is leveraged to further strengthen Intellectual Property Rights (IPR) and address commercial issues in different ways.

One such initiative was ‘Anti-Counterfeiting Trade Agreement (ACTA)’. This was signed mostly by the developed countries of the world in October 2011.

ACTA is a plurilateral international trade agreement aimed at countering more efficiently not only the menace of counterfeit goods, generic medicines and copyright infringement on the internet, but also Intellectual Property (IP) related issues, including stringent enforcement of product patents.

This agreement was primarily designed to form a new forum, outside the existing ones, like for example United Nations (UN), World Trade Organization (WTO) or the World Intellectual Property Organization (WIPO) and was signed by Australia, Canada, European Union, Japan, Morocco, New Zealand, Singapore, South Korea, and the United States. However, the agreement has not been formally approved by any of them, as yet.

According to European Commission, “ACTA is an international trade agreement that will help countries work together to tackle more effectively large-scale IPR violations. Citizens will benefit from ACTA because it will help protect Europe’s raw material – innovations and ideas.”

Two aspects of ACTA definition:

As per ACTA definition, there are two aspects for a medicine being termed as ‘Counterfeit’, which are as follows:

  1. ‘Health and safety’ issues, arising out of therapeutically harmful medicines
  2. Violation of IP rights like, patents, trademark and design

It raises more questions than answers:

ACTA definition, as mentioned above, has led to confusion mainly because, if a patent infringing product is termed ‘counterfeit or fake’ in one country, what will then the same product be called in another country where the molecule has gone off-patent? 

Moreover, countries which consider such types of drugs ‘fake’ or ‘counterfeit’, will have the full right to destroy even the in-transit consignments containing such products, not only causing economic loss to the exporter, but also jeopardizing public health interest at the destination countries. Just to site an example, in not too distant past, consignments of generic medicines exported from India to Brazil were seized at the European ports

Thus, many experts feel that ACTA poses a potential risk for global access to generic medicines endangering public health interest, as it could restrict free passage of such drugs through many ports of the world on IP grounds, as happened more than once in the past.

‘Generic medicines’ to be left unharmed:

In this context, Ellen‘t Hoen, former Policy Advocacy Director of MSF’s Campaign for ‘Access to Essential Medicines’ wrote in April 2009 as follows:

“People often seem to confuse counterfeit, substandard and generic medicines – using the terms interchangeably. But they are very separate issues and clearly defining their differences is critical to any discussion”.

Ongoing WHO debate: 

‘Intellectual Property Watch’ in May 20, 2010 reported that:

“Brazil and India claimed that WHO’s work against counterfeit and substandard medicines is being influenced by brand-name drug producers with an interest in undermining legitimate generic competition. The Brazilian ambassador told ‘Intellectual Property Watch’ there is a ‘hidden agenda’ against generics for countries like Brazil.”

“India and Brazil filed requests for consultations with the European Union and the Netherlands over the seizure of generic medicines in transit through Europe. This is the first step towards a dispute settlement case, and if issues cannot be resolved via consultations then formation of a dispute settlement panel could be requested in the coming months”.

However, as reported by ‘The International Center for Trade and Sustainable Development (ICTSD)’, after the Government of India had taken it up strongly with the EU, the issue of confiscation of in-transit consignments of generic drugs has since been resolved.

Three emerging views:

Arising out of all these, there are following three different clearly emerging views on the global issue of counterfeit drugs:

1. The innovator companies feel that the generic pharmaceutical industry and the drug regulators of the developing countries are not really very keen to effectively address and resolve the global issue of ‘Counterfeit Drugs’.
2. The generic companies and the drug regulators of the developing countries feel that the problem is not as acute as it is being projected to be and the innovator global pharmaceutical companies through their intense advocacy campaigns are trying to exploit the sentiment against spurious and harmful drugs to fight against generic medicines and cheaper parallel imports.
3. Some other important stakeholders, including a section of NGOs claim that an intense ‘Public Health and Safety’ related sentiment is being leveraged by the R&D based global pharmaceutical companies to extend IPR issues to “patients’ safety” related concerns, for vested interest.

The role of WHO:

The leadership role of the WHO is extremely important to effectively eliminate the global menace of ‘Counterfeit Drugs’ for ‘Public Health and Safety’. Across the world, patients need protection from the growing threat of ‘Counterfeit Medicines’. As a premier global organization to address such critical issues effectively, especially for the developing world, the WHO needs to play a more proactive and stellar role in future.

A Rational Approach:

The groups opposing ACTA recommend the following approaches to address the menace of ‘Counterfeit or Fake or Spurious or Harmful Medicines’:

  1. Address the issue of ‘Public Health and Safety’ by strengthening regulatory systems, related laws of the country and the stakeholder awareness program. In case of India, recently amended Drugs and Cosmetics Act needs to be properly implemented in letter and spirit.
  2. The issue of violation of IP should be dealt with through effective enforcement of IP laws of the country.
  3. There should not be any mix-up between ‘Public Health and Safety’ and ‘IP related issues’, in any way or form.

Countries already approached WHO:

Earlier, along with countries like Indonesia and Thailand, India could make the WHO realize that mixing up the above two issues could pose serious impediment for the supply of cheaper generic medicines to the marginalized sections of the society, globally. 

Weak regulatory enforcement lead to more ‘Counterfeit/Fake’ drugs:

The menace of counterfeit medicines is not restricted to the developing countries like, India alone. It is seen in the developed countries, as well, but at a much smaller scale. Thus, it is generally believed that the issue of ‘counterfeit drugs’ is more common in those countries, where the regulatory enforcement mechanism is rather weak.

A study done by IMPACT in 2006 indicates that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1%. On the other hand, ‘in the developing nations like parts of Asia, Latin America and Africa more than 30% of the medicines are counterfeits’.

Conclusion:

In the meeting of the TRIPS Council of the World Trade Organization (WTO) held in June, 2012, developed countries continued to reiterate that ‘Counterfeiting of Drugs’ being a critical issue should be deliberated upon by the council, expeditiously.

However, emerging countries like, Brazil, India and China strongly opposed this view by reemphasizing that in the name of ‘Counterfeit Drugs’ issues of IPR violations should not be clubbed with ‘Public Health and Safety’. They argued that IPR violation should in no way be confused with sub-standard drugs or therapeutically harmful medicines and any attempt to discuss the menace of harmful or substandard medicines at the WTO platform will be improper.

Developing nations, in general, have already alleged in various global forums that being unsuccessful in their efforts to use ACTA in making the IP environment even more stringent, the developed countries are now trying to use the WTO to achieve the same objective.

The debate continues and the moot question still lingers: Why should the issue of ‘Public Health and Safety’ get mixed-up with ‘Intellectual Property (IP)’ related problems?

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.