The U.S. pharmaceutical industry and its Big Brother Chamber of Commerce have launched an all-out disinformation campaign against the India Patent Act and decisions rendered thereunder. They have enlisted allies in the U.S. government, including Members of Congress, the United States International Trade Commission, Secretary of State Kerry, and even President Obama, to carry their claims to the highest levels of the Indian government. They have threatened to insist that the U.S. file a WTO trade complaints against India in 2014 and that India no longer be permitted to export duty-free products to the U.S. under the Generalized System of Preferences.
As evidence for their campaign, the representatives of Big Pharma have claimed that India is violating US-based global norms for protecting patent rights, that it is adopting new patenting criteria not authorized by international law and allowing generic competition when it is not permissible, and that it is discriminating against U.S. pharmaceutical companies in favor protectionist policies that shield Indian generic companies and steal U.S. jobs. Each and every one of these claims is false – and false in multiple ways.
The U.S. cannot unilaterally impose global IP norms binding India
In challenging each of the “dirty dozen” patent cases that U.S. and European pharmaceutical companies have lost in India in the past few years, the U.S. industry makes a background claim that the drugs at issue had been patented in the U.S. and in many other countries and therefore that India’s actions are illegal.
Apparently, Big Pharma wishes that the U.S. could impose its pro-monopoly IP laws on every other country in the world, but in fact international norms are set by the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The U.S. and Big Pharma got much of what they wanted in TRIPS in 1994 but not everything. In particular, TRIPS preserved significant general interpretative flexibilities for Member States in Article 1.1 and explicit flexibilities concerning patentable subject matter, applicant disclosure requirements, and standards of patentability in Article 27. It allows countries to seek a balance between the interests of IP owners and users, allows countries to prioritize public, and promises technology transfer, Article 7 and 8. TRIPS expressly allows limitations and exceptions to IP rights, Article 30; compulsory and government use licenses on any ground whatsoever, Article 31; and use parallel importation of the same goods from other countries where they are sold cheaper, Article 6. TRIPS allows opposition procedures and payments of royalties in lieu of injunctions.
It is simply irrelevant legally whether a particular U.S. pharmaceutical company has received a patent in another country. Countries have flexibilities to enact much more stringent standards for patents than does the U.S. or Europe and that is exactly what India has done. In particular, it has decided to draw a line in the sand against granting secondary, evergreening patents on minor modification of existing medicines or medical ingredients, on new uses of existing medicines, and on combinations of previously existing substances. India can legally justify this choice either by resort to its definition of patentable subject matter or by its test for inventive step. In fact, India has gone further towards liberalization than it needs to because it provides patent protection for incremental changes when they have a significant therapeutic benefit.
India’s patent rejections and its single compulsory license are fully lawful domestically and internationally
So, Novartis and Pfizer and Congressman Lee Terry can claim that India pulled a fast one when its Supreme Court rejected Novartis’ 1997 patent application on a compound that had been reveal four years earlier in a 1993 foreign application, but that claim is legally preposterous. India didn’t have to grant patents on pharmaceuticals innovated before TRIPS’s effective date in 1995, and it certainly doesn’t have to grant secondary patents relating to the same compound thereafter. The Glivec patent was properly rejected.
The U.S. pharmaceutical industry complains that other patent decisions have gone against it. Guess what – Pharma losses patent cases in the U.S. and Europe too. In fact, 70+% of generic company challenges against innovators are successful. Nearly 40% of pharmaceutical patent applications in the U.S. are rejected. Too bad – if a company wastes its time on me-too drugs and extending their existing monopolies, they’re going to strike out – a lot – and even more so in a country that is rigorous in examining pharmaceutical patent applications.
Just as it is entitled to weed out weak patents, India was fully justified in issuing a compulsory license in 2012 on Bayer’s Nexavar, a $60,000 a year cancer medicines which was not only grossly overpriced – a generic version goes for less than $2000 a year – but was also being made available to only a tiny fraction of Indian patients who needed it. Compulsory licenses have been lawful in virtually every country in the world since the 19th century. They are directly authorized by TRIPS and they are widely used in the U.S. and elsewhere when it suits the government’s purpose.
Big Pharma tries to claim that compulsory licenses aren’t available for cancer drugs – a lie; or that they are only available for national emergencies – another lie; or that India is establishing a general exception to patents for pharmaceuticals – an even bigger lie. Sovereigns retain the right under TRIPS to issue compulsory licenses or to allow public, non-commercial use of patented products or processes. As long as the correct procedures are followed and adequate remuneration is paid, the patent holder has nothing legitimate to complain about – unless, of course, it is a U.S. multinational who doesn’t want an emerging country like India to get in its way.
Last but not least, with respect to its claims of patent-related illegality, Big Pharma claims that India is violating the law by registering generic equivalents and allowing them to be sold. Guess what – so does the E.U. It is only the U.S. and a handful of other countries that have a weird provision requiring drug regulatory authorities to act as patent police and deny marketing approval for generic medicines. If a drug company thinks its patents are being violated, it has a simple solution – it can go to court and see if a judge agrees. But, Big Pharma doesn’t want to have to spend its money and go to court and risk having its patent declared invalid. It want to spend taxpayers’ resources instead and have the government enforce its private rights. TRIPS doesn’t require this arcane patent-registration linkage system and India certainly doesn’t have to have one just because Pharma wants it (though Bayer has sued the Government of India twice trying to get it).
The “You’re picking on us” discrimination/protectionism claim is preposterous
The U.S. pharmaceutical industry claims that it is being picked on. But the numbers just don’t add up. Since 2005, India has granted 161 patents to Pfizer, 333 to Sanofi SA, 243 to F. Hoffman La Roche, 200 to Novartis AG, and hundreds to other foreign drug companies as well. I guess those patents don’t count. The only ones that count to Pfizer’s Intellectual Property Chief, Roy Waldron, are the ones they wanted that they didn’t get. During this same time period, Abbott’s market share in India increased from 2.3% to 7%, Pfizer’s rose from 2.5% to 3.2%, and Merck Sharp & Dohme’s increased from .42% to 1.1%. Once again, it’s not the monopoly profits you’ve gained that matter, but the monopoly expectations that you lost.
Foreign pharmaceutical companies have lost the bulk of patent cases in India, through opposition procedures or otherwise, because they own and file over nearly 90% of such patent applications. This isn’t some big protectionist conspiracy. This is a government patent office and a judiciary shielded from government interference that is applying the law to the patent cases before it. Most of the favorable decisions go to Big Pharma and most of the negative ones do too – what’s the great mystery?
It’s true that India wants to develop its pharmaceutical industry and its knowledge economy more broadly. It’s true that it thinks that foreign companies should site their facilities in India, hire Indian workers, and incorporate India components. And so does the United States. That’s why the U.S. shoehorned intellectual property protections into a free trade, low-tariff GATT system in the first place – it wanted to protect U.S. big business interests – to extend their monopoly rights to all corners of the globe.
What’s really going on?
U.S. IP industries, including Big Pharma, are salivating to exploit middle- and upper-income consumers and patients in India and in other so-called pharmemerging countries. These are Big Pharma’s regions of expected sales expansion and their new profit centers. U.S. drug companies want to beat back generic competition and secure an uneven playing field where the big boys always win – where the golden goose of innovation always lays huge gleaming eggs for them. To ensure this outcome, the U.S. pharmaceutical industry and its agents will always try to corral and hamstring the Indian generic industry or turn it into its junior partners. If Pharma can’t win fair and square, it will malign generics, usually about quality, and seek to change the law through any means possible.
However, Big Pharma also wants to forestall the emerging trend of other countries copying India-style strict standards of patentability. It’s no surprise that the timing of the Big Pharma disinformation offensive is right around the time that Brazil and South Africa are launching their own patent law reforms, following in the footsteps of India. If Big Pharma and the U.S. can bully India into changing its patent law and making it consistent with U.S. law, then other countries will think thrice before crossing the U.S. Any doubts about the U.S. and Europe’s long term objectives to secure monopoly rights for their IP industries should be resolved by looking at the EU’s proposals in the EU-India FTA negotiations or the U.S.’s IP on steroids demands in the Trans-Pacific Partnership Agreement negotiations.
So far, India has stood firm. It has countered Pharma propaganda with facts and it has done so politely. But sometimes it’s appropriate to call a lie a lie, instead of merely trying to cure it with information. Pharma hopes if it repeats its myths and misrepresentations often enough, a gullible public will believe it. But India must stand firm and protect its high-standard patent regime. It must protect its status are the pharmacy of the developing world – millions of lives are at stake.
A shorter version of this piece was published as an op-ed in the Hindu Business Line, and is available at http://www.thehindubusinessline.com/opinion/what-the-doctor-ordered/article5225817.ece