Although the Indian government has said that it won’t succumb to American pressure on intellectual property rights over medicinal patents, rapid developments on this issue have set alarm bells ringing among health groups.
In 2001, a much younger Yusuf Hamied of India’s famed generic drugs manufacturer, Cipla made an announcement that shocked the global health community. At the time AIDS was ravaging Africa and although a highly effective triple combination antiretroviral therapy was available in the West, it was scarcely affordable by the millions who needed it in the developing world. The combined price charged by MNCs who held patents on the three AIDS drugs that made up the cocktail was $15,000 per person per year. The best discount they were willing to offer was $10,439. Hamied’s announcement that he could sell the combination at less than a-dollar-a-day changed the course of history and in India, set off a chain reaction of multiple generic companies jumping into the fray announcing their ability to also make and export AIDS treatment. A 2010 study of donor-funded HIV medicines found that as of the end of 2009, “among paediatric ARV and adult nucleoside and non-nucleoside reverse transcriptase inhibitor markets, Indian-produced generics accounted for 91% and 89% of 2008 global purchase volumes, respectively.” This year UNAIDS announced that the goal of having 15 million people living with HIV on treatment by 2015 has been met, identifying generic competition as a critical factor in helping achieve this goal.
Today, however, a world weary Hamied speaks of having to go to the big boys with a “begging bowl”.
The past decade has been tumultuous for India’s generic medicines experiment that dates back to the early 1960s, when India commenced production of medicines from the basic stage through public sector drug manufacturers. Following an agreement across the political spectrum that self-sufficiency in medicines production was vital in India, the intellectual property system we inherited from the British was overhauled and the Patents Act 1970 was put in place. The law identified food and pharmaceuticals as areas where exclusive rights would be limited. The Indian government also put in place industrial policy measures and established public sector research institutions to collaborate with local industry. Over the next few decades, India would nurture a generics industry that would eventually be called the pharmacy of the developing world. In 2005, when India had to amend its patent law to comply with the World Trade Organisation’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), Parliament paying heed to national and international concern, included pro-health safeguards (also known as TRIPS flexibilities) in the amendments as MPs across party lines raised concerns over the potential adverse impact that patents could have on access to medicines.
One particular safeguard, Section 3(d), was designed to restrict evergreening – the practice of pharmaceutical companies filing multiple, successive and overlapping patents for new forms and new uses of existing medicines.
Setting the Indian example
To explain, a study funded by the World Intellectual Property Organisation found 805 patent families related to just one drug, ritonavir (used as a booster with AIDS drugs). A study of over a 100 patents and patent applications by Abbott Laboratories on ritonavir and lopinavir/ritonavir found that the final patent covering lopinavir/ritonavir that was in force at the time of the study would expire in 2028, “twelve years after the expiration of the patents on the underlying base compounds.” In an inquiry into the pharmaceutical sector, the European Commission’s Competition DG found 1,300 patents and patent applications on one drug alone. The Indian law restricts this sort of patenting unless the new form significantly improves the therapeutic efficacy of the old medicine. Section 3(d) has been used successfully by people living with HIV, with hepatitis C and with cancer to oppose patent applications and patents on key medicines. In one such case, Swiss MNC Novartis’s fury at the rejection of its patent application for imatinib mesylate – a highly effective drug for the treatment of chronic myloid leukemia – under this provision resulted in an eight-year-long pitched battle that finally ended in April 2013 with the Supreme Court upholding the strict application of Section 3(d) and handing Novartis the final rejection of its patent application.
Despite the successful use of this provision, over 4,000 pharmaceutical patents have been granted in India, the overwhelming majority to foreign patent applicants. Patented drug prices in India are extremely high and in 2012, India issued its first compulsory license for sorefanib tosylate, a liver and kidney cancer treatment priced by Bayer, the patent holder at Rs.2,80,428 ($4200 approx) per month while Natco, the Indian company that applied for the license charged Rs.8,800 per month ($134 approx). Bayer’s CEO was quick to point out that they made the drug for western patients who could afford it and not for the Indian market.
The success of India’s experiment lies not only in self-sufficiency in medicine production and export but also in how developing countries are increasingly emulating the Indian example. The Philippines introduced a provision similar to Section 3(d) through their Cheaper Medicines Law of 2008. In 2012 Argentina introduced guidelines for the examination of chemical-pharmaceutical patent applications identifying grounds for the rejection of patent applications for new forms and new uses of existing medicines. Patent law reform proposals in South Africa and Brazil are looking to India’s patent law for inspiration. South Africa’s draft IP policy of 2013, noted, “a country like India resorted to pre- and post-grant opposition to facilitate a possibility of opposing weaker patents… This procedure has been a success to challenge “weaker” patents…”
But the 2012 compulsory license and the 2013 Supreme Court ruling in the Novartis case also set off a relentless and ruthless campaign by US multinational pharmaceutical companies to lobby their government into pressuring India to weaken its pro-health patent law. This included a letter by the US Senate Committee on Finance to the US Secretary of State asking him to raise concerns over these developments on his visit to India and a letter by 170 members of the US Congress to the US President criticising India’s IP climate and asking the President to “send a strong signal to the Indian government that these actions are inconsistent with India’s international obligations…”
Defending the pro-health attitude
The lobbying has certainly had the desired effect. In 2013 and 2014, the US International Trade Commission announced two sets of investigations into India’s trade policies including on IP. In 2014, the US used the Special 301 processes to escalate pressure on the Indian government by announcing an out-of-cycle review of India’s engagement on IPR issues. Vice-President Joe Biden identified intellectual property as a “tough challenge“ for trade between India and the US when he visited the Bombay Stock Exchange in July 2013. President Obama reportedly brought up the matter directly with the Prime Minister at their joint meeting with CEOs in India in early 2015.
Even as the government has said that there is no question of succumbing to this pressure, rapid developments on this issue have set alarm bells ringing among health groups.
The Indo-US joint statement of October 2014 agreed to the establishment of an annual high level working group on IP. A month before that, the Commerce Minister had announced that India did not have an IPR policy, a bit of a surprise given India’s detailed and lengthy laws on IPR. As the first draft of the policy was opened for public comments, the Indian government made a special point of publicly inviting comments from the US government. After months of silence on the fate of the IPR Policy, news reports suggest that the final version may be released shortly, in time for the PM’s bilateral meeting with the US President next week.
The new IPR policy apart, the real worry lies in whether the government will continue the strict implementation of the pro-health provisions of the patent law. Since 2012, there have been two additional requests for compulsory licenses in India. Both have been rejected. For the US industry the signals are clear with the US Chamber of Commerce commenting (with some satisfaction) that, “…the previous bias toward the use of compulsory licenses as a commercial tool appears to have diminished.” The proof, at least according to the US industry, is clearly in the pudding.
Threats to the Indian pharmacy
Perhaps, reading the same writing on the wall, not one of India’s major generic companies has applied for a compulsory license – settling instead for restrictive voluntary licenses (VLs) that prevent them from exporting generics to major developing countries. Cipla, the last holdout among the major generic companies in taking such deals is also now party to these restrictive licenses. For people living with Hepatitis-C across the developing world, the case of US MNC Gilead’s licenses on a critical new treatment – sofosbuvir – has been the hardest to bear. While the big Indian generics took the restrictive VLs offered by Gilead even before it has a patent on the drug in India, a mid-level company like Natco chose instead to challenge the patent application on sofosbuvir. After a successful initial challenge, Natco too signed Gilead’s restrictive VL and withdrew its patent challenge. The patent battle on this critical hepatitis C drug now rests heavy on the shoulders of health groups like the Asia-Pacific Network of People living with HIV/AIDS which has, along with the Sankalp Rehabilitation Trust and the Hepatitis Coalition of Nagaland, challenged Gilead’s patent application on the grounds that it does not meet the strict patentability criteria of the Indian law.
The US pressure on India has not gone unnoticed by those who rely on India for their medicines. As the South African Health Minister recently said, “my message to India is that we really rely on them and if they reverse their position now they will end up killing a lot of people in Africa, no question about it.” Ironically, the increased pressure on India comes at a time when the headlines in the US are dominated by news of the dramatic 5,000% price increase of a 60 year old drug. Biotech stocks in the US have tanked with both potential democratic contenders for the 2016 US Presidential elections announcing measures to deal with price gouging in pharmaceuticals. Joseph Stiglitz and his colleagues have noted, “if the Obama administration succeeds in forcing India to strengthen its patent laws, the change would harm not only India and other developing countries; it would also enshrine a grossly corrupt and inefficient patent system in the US, in which companies increase their profits by driving out the competition – both at home and abroad.”
In the build-up to the PM’s visit to the US, Vice-President Joe Biden announced this week that, “our goal is to be India’s best friend. The real price of this “friendship” will be borne by millions of patients in India and the developing world who are hoping that Prime Minister Modi will defend the pharmacy of the developing world.
Shiba Phurailatpam is the Regional Coordinator of the Asia-Pacific Network of People Living with HIV/AIDS; Kajal Bhardwaj is a Delhi-based legal researcher working on HIV, health and human rights.