Most observers felt that the judgment gave discretionary powers to the Patent Office and patent-related appellate body to decide whether an invention qualified as a patent, or was it a mere discovery. Unless the pharma company could prove a huge increase in efficacy, the Patent Office could reject an application. This proved to be a booster for the generics firms.
Exclusive or compulsory licensing
As the members of the World Trade Organisation (WTO) discussed the language of TRIPS, the developing and poor nations voiced their concerns related to the exorbitant prices of patented life-saving medicines. To address these issues, says a document by Medecins Sans Frontieres (MSF; Doctors Without Borders), trips gave the members the right “to allow a third party to produce a generic version of the (patented) drug in question by granting a compulsory license; for example, if that drug is deemed unaffordable or unavailable by the ‘Patent Controller’ or the government.”
In 2012, India issued the first compulsory license for a cancer drug which brought down the price by 97 percent within no time. Subsequently, the judiciary ruled against the MNC, which complained against the license. In the well-known Bayer’s case, the MNC unsuccessfully challenged the compulsory license given to NATCO before the appellate board and Mumbai High Court. Last year, the apex court rejected Bayer’s special leave petition against the high court order.
In the BAYER-NATCO case, the price differential between the two versions of the drug was huge. While Bayer charged Rs 280,000 per patient per month, the domestic generic was priced at a mere Rs 8,000 per patient per year. In compulsory license, the third party does pay a royalty to the inventor; in this case it was six percent. When Bayer contested this in the Supreme Court, the former was asked to furnish unaudited accounts of the R&D expenses. Bayer’s excuse that 98 percent of the r&d costs “accrue from failed drugs” wasn’t accepted by the SC.
Post-judgment, MSF’s Leena Menghaney said, “We were fully confident that the compulsory license would be upheld by the Indian judiciary. This license is granted to increase access to a more affordable generic version of a medicine and we need many more such decisions in the future with new medicines being patented in India. We will continue to push for use of public health safeguards in the Indian patent law to promote an increased access for patented medicines which are being priced out of the reach of patients and treatment providers.”
Despite the apex court’s order, there are apprehensions within the civil society that the government has deliberately “gone slow” on the issuance of more compulsory licenses for other life-saving drugs. One critic alleges, “The new (Modi) government has delayed a decision to allow generic production of an exorbitantly-priced patented anti-cancer drug… in spite of a recommendation by a health ministry expert committee.” Another charges, “The health ministry has prepared a list of several medicines but there was no progress in giving out the compulsory licenses.”
Tripping over TRIPS
Finally, it boils down to being TRIPS compliant. Prior to 2005, the US and its pharma allies used this argument to push India to accept product patent. Even today, the reasoning remains the same. According to American and MNC lobbies, New Delhi could face sanctions if it doesn’t adhere to WTO and TRIPS obligations. In the past, before the 2005 patent amendments, India was censured twice by the WTO, after complaints were filed by the US and Europe.
Until recently, there was a consensus among domestic policymakers and legal experts that the 2005 changes made India trips-compliant. They argued that the “TRIPS agreement coupled with the Doha Declaration (2001) leaves it open to the member states to adjust their respective patent systems by regulating the grant of patents and to set up higher standards for patent protection for pharmaceuticals and agricultural chemical products,” said the apex court in the Novartis case.
The legal experts went a step further. The apex court pointed out that they insisted that despite being TRIPS-compliant, “the Indian laws must be judged and interpreted on its own terms, and not on the basis of standards of patentability in some countries of the western world.” Prior to the 2005 amendments, AIDS director of the World Health Organisation asked the then Indian health minister not to legally go overboard in the nation’s bid to adhere to trips.
“As India is the leader in the global supply of affordable antiretroviral drugs and other essential medicines, we hope that the Indian government will take the necessary steps to continue to account for the needs of the poorest nations that urgently need access to antiretrovirals, without adopting unnecessary restrictions that are not required under the trips Agreement and that would impede access to medicines.” Section 3(d) and compulsory license provided such safeguards.
Therefore, critics contend that India doesn’t have to change its laws by bowing down to the US pressure. She can easily convince the WTO and multilateral legal agencies that its laws are TRIPS-compatible in its existing form, especially after the 2005 amendments. Hence, the Modi government needs to be careful in the changes it proposes.
Post Script: There is a now a new twist to the tale. The BJP knows that it will be difficult to change the existing patent Act for three reasons. One is political; it doesn’t have the requisite numbers in Rajya Sabha to push them through. Two, as was evident in 2004 and 2005, there will be a huge opposition to any further amendments from the civil society and maybe Parliamentarians. Finally, some of the BJP politicians and members of Parliament may not support new clauses. So, the government plans to explore other options to achieve its objective.
According to a MSF’s note in January 2015, “India announced the development of a national intellectual property rights policy to ‘clarify’ existing IP laws, the drafting of which was tasked to a think tank with worrying potential conflicts of interest.” Other critics allege that the initial public draft of the policy, and a second one that was leaked, seem to have incorporated exactly the same changes as desired by the US and global pharma MNCs.
There is a growing fear that in a bid to get closer to the US for diplomatic, commercial and security reasons, NDA-2 may not stop at enacting a new intellectual property policy. If this is not passed by the parliament, it can resort to executive inaction or laxity on its part, as was the case with compulsory licenses for additional drugs, to allay the fears of the US. A few MNCs, like Pfizer did in South Africa, can use the judiciaries in other nations to get favourable orders. This can impact pharma exports from India and prove detrimental to the Indian firms.