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India laws a dose of reality for Big Pharma

Big Pharma wants more profits from patents to fund R&D but India's laws seek to make innovative medicine accessible to the masses, not just the wealthy.

The Indian Parliament had inserted a new provision, known as Section 3(d), in the Patents Act to prevent "evergreening", which describes a practice by companies to slightly tweak an existing process or product to seek a new patent.

THE United States was on the verge of making a controversial amendment to the US patent law in June this year that would have modelled it on India's Patent Law which prohibits the patenting of new forms, new uses and new methods of administration of new medicines unless the patent applicant can show "a statistically significant increase in efficacy".

The bill - which would have "turned the US into India", according to American critics - was withdrawn at the last minute, but a similar measure may reappear in the future because many Americans are appalled at the prohibitive cost of prescription drugs. Introduced by Senator Lindsey Graham, the amendment blamed a plethora of new patents that resulted in jacking up drug prices.

While the amendment rightly aimed to address worries in the US over escalating drug prices which many people find unaffordable, it caused deep anxiety among the big pharmaceutical companies, known as Big Pharma, because they believe the amendment would have delivered a massive blow to medical innovation in the US.

Critics in the US find that the language in the Graham amendment was worryingly similar to the Indian patent law. They argue that the Graham amendment would turn the United States into India where the patent-granting rules are too restrictive. The Indian Patent Act requires a pharmaceutical invention developed from a known substance to demonstrate substantially high levels of therapeutic efficacy in order to be eligible for a patent.

This is where the controversial element comes in: Big Pharma believes that the Indian rules are inconsistent with India's international obligations.

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India has been under US scrutiny because it has only allowed "process patents" in the three-decade period from 1972-2003, which meant that even a patented product could be manufactured by anybody other than the patent-holder if they used a different method to produce it. Under pressure, India amended the law in 2005, retrospectively allowing for "product patents" so that the country would comply with the World Trade Organisation's (WTO's) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

But, India asserted its autonomy in a landmark judgment in April 2013, when India's Supreme Court dismissed Swiss drugmaker Novartis AG's attempt to win patent protection for its cancer drug Glivec. The judgment set a benchmark precedent for intellectual property cases in India where many patented drugs are unaffordable for most of the country's 1.2 billion people. But Big Pharma and its advocates argue that the decision hurt foreign firms doing business in India, such as Pfizer Inc and Roche Holding AG, among others.

The beneficiaries of the judgment were the Indian firms Cipla Ltd and Natco Pharma Ltd, which sell generic forms of Glivec in India at around one-tenth of the price of the branded drug.

The Indian court's decision was based on whether Glivec was a "new product" under the terms of the law. The drug failed the "novelty test" because the court adhered to an Indian patent office ruling in January 2006 that the drug was not substantially different from one for which patents had already been granted in the US and Europe.

The Indian Parliament had inserted a new provision, known as Section 3(d), in the Patents Act to prevent "evergreening", which describes a practice by companies to slightly tweak an existing process or product to seek a new patent after the original protection expires, enabling them to extend their monopoly rights.


Yet, the critics argue that the Indian law is ambiguous in its Section 3(d) because it demands an "enhanced efficacy" (or effectiveness, efficiency or usefulness) for known drugs, in addition to the requirements of demonstrating standard novelty, inventiveness, and industrial applicability.

American critics argue that the Graham amendment had proposed similar provisions, despite its condemnation in the US.

Prior to the Graham amendment, in late April, the United States Trade Representative put India on a "priority watch list", for "serious intellectual property rights deficiencies". Indian patent laws help keep prices of medicines low and allow Indian generic-drugs makers to profit, the USTR argues.

From the Indian perspective, India has already acceded to some US demands and it need not make any more compromises as it would hurt the interests of the Indian people and their right to cheap life-saving drugs.

Yet, India is bending to the dictates of the USTR. In January this year, India's ministry of chemicals and fertilisers amended the Drug Pricing Control Order, stating that patented medicines cannot be brought under price control for five years after the start of their commercial sales. The new rules would ensure profits for big pharmaceutical companies who would keep drug prices high, but they would hurt the large mass of Indian consumers as such expensive medicines would only be available to wealthy Indians.

There is a growing body of evidence showing the ways in which, under relentless US pressure, Indian patent laws and rules are starting to favour the big pharmaceutical companies. Legal and scientific research studies by Azim Premji University showed that 72 percent of pharmaceutical patents granted in India between 2009 and 2016 lacked merit.

These patents were violations of the existing Indian patent law, and could be considered as "evergreening", meaning that patents nearing their expiry date were extended through small or insignificant changes that did not improve their efficacy.

Indian consumer groups believe that the country must not buckle under USTR pressure because with ever-rising drug prices the country needs stronger, not weaker, price control.

It should be clearly understood that India is not alone in this matter. All developing countries face the same problem of rising drug prices, and it is only proper that these countries should resist US pressure to change the rules in the favour of Big Pharma.

The standard argument of Big Pharma is that it needs to keep prices high in order to fund research and development which is essential to find new cures. The argument does not cut much ice because the bulk of Big Pharma earnings come from the developed West, and it is trying to carve out new markets in the developing world.

Big Pharma needs to find some new earth-shaking medicines but its hunt for quick profits in the developing world should not hurt poor consumers. A dose of reality is needed: the sale of a few life-saving drugs is not going to enrich Big Pharma or fund its R&D effort.

  • The writer is the editor-in-chief of The Calcutta Journal of Global Affairs

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