A new obstacle for cheaper drugs
India’s decision to bring their patent laws into line with the TRIPS agreement may have a disastrous effect on populations in dire need of HIV treatment.
A haven for generics
Due to a change in the patent laws inherited from colonial British laws in 1970, India had become over the last decade one of the world’s largest producers of generic drugs.
The Patent Act allowed for the copying of other company’s inventions (including drugs) as long as there was some change in the original manufacturing process. The act was initially intended to help India’s poorer population by allowing affordable copies of the patented drugs to enter the market. At the same time with its trade agreements with several developing nations it has helped to provide vital treatments to groups which have had little access to therapy throughout the developing world. Currently India’s pharmaceutical industry provides approximately half of the antiretroviral drugs (which has lowered the costs of some of them by 98%) used in developing countries, while at the same time providing many of the basic ingredients used by generic manufactures in other countries.
These new legal measures however will slow or even halt this flow of cheap antiretrovirals to those who need them the most. Bringing India’s patent laws in-line with TRIPS (Trade-Related Aspects of Intellectual Property Rights) was part of India’s requirements for entering in the WTO ( World Trade Organization) when it asked for membership in 1995. As the deadline for this change in patent laws approached pharmaceutical lobbyists in India started to push for even stricter regulations that surpass the WTO requirements. This local lobbying has been a tactic used by the pharmaceutical industry in order to try to pressure governments not to take advantage of all their rights under TRIPS. The bill that has passed contains some of the conditions which the pharmaceutical lobbyists were pushing for but not as many as was first feared.
The ins and outs of the bill
Though thankfully through the lobbying of activist groups most of the more damaging amendments have been removed, one of which would have theoretically bankrupted many generic companies by making patents granted for applications filed after 1995 retroactive, yet there are still some significant changes. For all the drugs which were discovered before 1995 there should really be no change to the current situation, although it is possible for the innovator companies to patent a new formula of an old drug if it proves to be better than the original.
Those drugs discovered between 1995 and January 1st 2005 may be patented if the company filed for a patent before the new law went into effect. Many companies have filed for this, although it seems that this process will take considerable time, some two years in which time the generic companies may continue to sell their versions with no threat of penalization. Once the patent is granted companies will have a twenty year protection (starting from the day the application was filed) on their product. During this time companies producing generics will be able to continuing selling their products as long as they pay ”reasonable“ royalties to the innovator company. In the wording of the bill lies the problem, because ”reasonable“ is not defined therefore allowing for a huge area of debate between innovator and generic companies on what the amount should be. Most activist groups believe that it should be set at around 5% but whether pharmaceutical companies agree to this will have to be seen. In past cases some pharmaceutical companies have unsuccessfully tried to charge up to 40% (in spite of the international norm being around 3-4%) for royalties.
As for new drugs that are discovered they will be given a 20-year monopoly on the formula. Included in the bill is the possibility for local companies to contest patent applications and a strict ”compulsory licensing“ provisions, which will allow for the patent to be broken in case of a medical emergency. Unfortunately for AIDS drugs the Indian government does not consider AIDS to be a medical emergency, even though there are some 5 million HIV-positive Indians. Also there is some confusion on how long it will take to grant these compulsory licenses with the bill saying only 6 months, but some critics have expressed worries that in reality it may take up to 3 years.
A larger black cloud
The damaging consequences of this new bill are quite obvious although not as bad as first thought. Yet there is a still a larger danger which sprouts from these new laws. This is the opening of India’s pharmaceutical market to the Western companies. As news of the changing of patent laws spread, western pharmaceutical companies began to make contact with the generic industry in India. Many of the large pharmaceutical companies which left India years ago because of the patent laws now want to return. While some are setting up their own research centers in India, others are simply buying up the current Indian companies. Many agreements have already been made, some with the largest antiretroviral suppliers.
The battle for supplying affordable medicine to those who need them the most has yet again suffered a setback. This change by the Indian government in order to fit in with the developed world market may have dire effects on many who have been surviving on their generic industry. While the large multinational pharmaceutical companies have seemed to score another victory on keeping their monopoly on the lifesaving drugs needed by so many.
Charles D. McCarthy
EATN - European AIDS Treatment News, Volume 14, II – Autumn 2005
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