During 2009-2011, the EU customs authorities confiscated several Indian off-patent generic drug consignments going to Brazil via European ports and airports on grounds of alleged infringement of EU intellectual property rights [IPRs]. India together with Brazil filed a case against the EU in the World Trade Organization [WTO] protesting the action.
India argued that the seizures were in violation of the multilateral Trade Related Intellectual Property Rights [TRIPS] agreement of the WTO, as the medicines were off-patent both in India as well as the country [read Brazil] to which these were being exported. In 2011, EU reached an understanding with India under which it would desist from such action [seizure of Indian drug consignments in transit to other countries] for alleged IPR violation.
Yet, that ghost has come to haunt Indian medicine exports again though under a new incarnation. EU has recently changed its trade mark legislation which has provisions that could potentially result in confiscation of shipments of Indian medicines to other destinations via European ports and airports. Though, EU authorities have ruled out such an eventuality, the threat perception remains as the rules are very much there on the statue.
In yet another glaring instance of thwarting Indian exports of drugs, last year, EU banned over 700 generic formulations where the equivalence with the original drug [this is a requirement for approval by the national regulator] was established on the basis of tests conducted at GVK Biosciences laboratory. This was based on some minor discrepancies in the lab test even as there was no major issue with regard to quality or complaints from consumers.
Such ‘unilateral’ and ‘arbitrary’ action even led India to suspend India-EU free trade agreement [FTA] negotiations. Even this did not work as despite continuous prodding by commerce ministry officials, EU authorities continue to stick to their intransigent stance. Modi – government has now decided to engage with EU for satisfactory conclusion of the FTA leaving the issue of ban behind.
The above is not just one isolated incident. In the last couple of years, there have been umpteen instances of the US Food and Drug Administration [FDA] issuing warnings and import alert leading even to ban on export of medicines [read generic] from India on grounds of deviation from quality testing guidelines and prescribed procedures at the manufacturing plants in India in some cases, even at sites located in USA.
In short, we see brazen and indiscriminate attempts by regulators/authorities in developed countries to take recourse to non-tariff barriers [NTBs] to some how restrict exports from India. What could be more bizarre than confiscation of shipments which are merely transiting through their ports and there is not even an iota of possibility that the drugs would be used in their territory so as to attract charge of patent infringement?
EU and US governments are acting at the behest of multinational companies [MNCs] who are desperate to protect their market share from cheaper/generic medicines from India entering their domestic market or going to developing countries in Latin America or Africa where the former have interest in selling their patented medicines. The worries of MNCs are increasing by the day as they face expiry of patents worth billions of dollars in next couple of years leading to even greater threat from generics.
The government should exercise its legitimate right at the WTO to prevent US/EU authorities from taking recourse to such untenable actions. At the same time, it should also not be oblivious of genuine concerns of the latter in regard to effective enforcement of IPR within India. In this regard, three key areas need special attention (i) grant of patent for incremental innovations; (ii) protection of test data submitted by MNCs for seeking market approval and (iii) the concept of ‘patent linkage’ [these have been flagged by USTR in Special-301 report] .
On (i), the section 3(d) in Patent (Amendment) Act, 2005 juxtaposed with judgement of the Supreme Court [SC] in Glivec case [2013] has effectively blocked grant of patent in this crucial area. Considering that new discoveries in medicines are rare and far in between involving billions of dollars investment in R&D, the main focus is naturally on incremental innovation. If, these too do not get patent protection, that will be a strong dis-incentive.
In regard to (ii), there does not even exist a law for protection of registration data. The innovator has to spend millions of dollars in generating data to demonstrate the ‘safety’ and ‘efficacy’ of the product for which registration is sought [this is distinct from data generated during the process of innovation]. It is a form of intellectual property [IP] independent of patent and Article 39.3 of TRIPs agreement separately provides for its protection.
Following recommendations of an inter-ministerial committee [IMC] under secretary, chemicals & petrochemicals in 2007, a Pesticide Management Bill [2008] to provide for protection of regulatory data for agrochemical is pending in Rajya Sabha for nearly 8 years now. There are no indications of this being taken up any time soon. In case of pharmaceuticals, there is not even a proposal as the IMC did not give any such recommendation.
The concern under (iii) is no less crucial as both in pharmaceutical and agrochemical, no new product can make its way to Indian market without the prior approval of the respective national regulator viz., Drug Controller General of India [DCGI] and Central Insecticides Board & Registration Committee [CIB&RC] and they need not take cognizance of patent held by innovator while granting such approval. Indeed, there is no law to provide for patent linkage. Adding salt to the injury is frequent use of compulsory license [CL] which seriously undermines the patent protection.
When cornered from all sides and unable to optimally utilize their IP that embodies huge investment in both time and money, it is but natural that MNCs look for avenues that can countenance the potential loss. Proliferation of NTBs by EU/US could be a manifestation of such attempts to make up although there is no guarantee that these won’t exist in case India addresses their concerns on protection of IPR.
India will need to improve its IPR environment by addressing the concerns raised by EU/US. This will not only be a step towards better compliance with TRIPs agreement under WTO but also good tactics. Relieved MNCs will exert that much less pressure on their respective governments in US/EU thereby moderating or perhaps, eliminating use of NTBs. The resulting scenario will be a win-win for both India and MNCs.
In the long-term, such strategy will be in India’s own interest as with enhanced IP protection, Indian companies will be compelled to focus more on research leading to more innovations/medicines suiting our requirements and reduced vulnerabilities to drugs coming from the stable of MNCs.
Is Modi ready to embrace this paradigm shift in dealing with challenges facing pharmaceutical industry?