India’s TRIPS Compliance Effort Could Be Test Case

In what could be seen as a “test case” for the balance between intellectual property protection and the promotion of public health, the Indian government today appeared to meet a World Trade Organisation obligation by passing a law on the protection of pharmaceutical and agricultural chemical patents.

But the Indian Parliament made a number of last minute concessions in order to obtain passage of the bill, leaving lawyers from both sides of the issue scurrying to examine it more carefully.

A key provision under examination allows India to export products produced under compulsory license (which allows the government to bypass patents for public health reasons) to other countries unable to manufacture the products themselves. The provision does not require the importing country to issue a compulsory license, just a notification of need for the drug.

India accepted the obligation to reintroduce product patents ten years ago upon completion of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), but was among a small number of developing countries given until 1 January 2005 to comply. India last issued drug patents in 1970. Least-developed WTO members must comply by 2016.

In December, the Indian president issued an ordinance establishing patent protection that was introduced as a bill in the Parliament in February. In order to get sufficient votes to pass the bill in India’s lower house, the Lok Sabha, yesterday proponents agreed to a number of last-minute amendments.

Today the Parliament’s upper house, or Rajya Sabha, passed the legislation unchanged, reportedly amidst a walkout by some legislators. Protests had accompanied earlier passage as well.

Under TRIPS, developing countries on the ten-year implementation track had to allow companies to file for patents during that transition period. India has received well over 7,000 patent applications in its “mailbox,” according to sources. The 20-year span of protection for patents in the mailbox will be counted from the day it was filed but effective when the patent is granted.

Jury Still Out On New Law

Some observers said the effect of compliance on India in the coming years would provide an example of whether TRIPS allows a balance between intellectual property protection and public health needs.

There were many ways in which India could have complied with its obligations and be sensitive to public health, said Rachel Cohen, U.S. director of MSF’s campaign for access to essential medicines. “In a way, we have been viewing this as a test case for whether TRIPS can be implemented in a pro-public health manner.”

The question sceptics of India’s law will be asking is, “Does TRIPS have enough flexibility to adequately protect intellectual property but not at the expense of public health?” Cohen said. “At this point, the jury is still out.”

Mark Grayson, deputy vice president of communications at the Pharmaceutical Research and Manufacturers of America (PhRMA), acknowledged that the effect of the bill would play out over the coming years. But he said the bill’s passage “shows that TRIPS is sufficiently flexible to help in many situations. [India’s law] doesn’t take away the right for India to make drugs for Africa or anyone else who needs them,” he said.

For PhRMA, the jury also is still out on the bill’s consistency with TRIPS. The group said it welcomed the bill’s passage, calling it “a milestone for the Government of India, re-establishing patent protection for pharmaceutical products in India.”

But it left the door open on whether India had fully complied with its obligations. “India has taken an important step toward complying with its obligations under [TRIPS],” the industry group said. “However, America’s research-based pharmaceutical industry does remain concerned about a number of late amendments to the bill that may bring India into conflict with its minimum international obligations.”

PhRMA President and Chief Executive Officer Billy Tauzin said in the statement that passing a bill is “good for India and good for Indian patients,” but he added, “We are now measuring the impact on the overall bill of several last-minute amendments.” The industry group also said that patent protection for pharmaceutical products will provide India’s scientists with “incentives to discover and develop new life-saving drugs.”

Mixed Reviews On Outcome

Non-profit health groups were relieved by at least two provisions in the law. One is the provision allowing export of products under compulsory license, which is being debated at the WTO as a permanent amendment to the TRIPS. Formally amending the TRIPS to reflect this is currently under debate at the WTO. In this respect, a ‘worse-case scenario’ was averted, MSF said in a Tuesday statement issued along with three Indian non-governmental organisations: The Affordable Medicines and Treatment Campaign, Lawyers Collective HIV/AIDS Unit, and Alternative Law Forum.

The other relative bright spot for the opponents was that generic drugs already on the market or in the mailbox in India can still be produced, the groups said. If patents are granted for any of these drugs, the generic producers will be required to pay licensing fees to the patent owner, though no set level of royalty was specified in the law.

Downsides to the law from the NGOs’ perspective include a delay of three years after the introduction of a patented drug before generic companies can apply for the right to produce it. In addition, while the law includes measures on “pre-grant opposition,” allowing opposition to a patent before it is granted, it permits the basic information on which to base the opposition to be withheld from the public, the group said.

The NGO groups predicted the complex procedures for compulsory licensing with no set royalty rate will “lead to endless litigation and delays.” Under a compulsory license, the government grants a patent but allows generic companies to make versions of it and pay royalties to the patent holder.

Grayson countered that there have not been delays in other countries that have passed provisions to allow exports of products under compulsory license. He would not comment on whether lawsuits would ensue now that India has a patent protection law, but said that Indian generics producers are among those trying to obtain patents in the mailbox, implying that this could lead to conflicts with the original producers.

MSF says that it treats 25,000 people living with HIV/AIDS worldwide, and that some 70 percent of its patients take Indian generic medicines because of the “low cost and user-friendliness of these WHO-recommended combination pills.” It fears access to such medicines will be greatly diminished by the new law.

“MSF will continue to work with those in India and elsewhere in order to minimize the negative consequences of this new law for our patients and millions of other poor people with HIV/AIDS and other illnesses,” said Cohen. “We will need to ensure that Indian authorities guard against the granting of dubious patents and, when legitimate patents are granted, facilitate quick compulsory licenses with fair royalties to ensure the affordability of generic medicines.”

Cohen said MSF also will closely monitor the impact of the law on drug prices. “This will be particularly critical for newer AIDS medicines that may be patented under the new law but are already desperately needed for patients who have developed resistance to first-line therapies,” she said. “But it will all be an uphill battle.”

Global industry groups participated actively in the process toward the Indian law. For example, when a group of U.S. biotechnology and pharmaceutical companies led by the U.S.-India Business Council travelled to India in February to meet with counterpart companies and others, intellectual property issues were high on the list. The group was assured the patent ordinance would pass, according to an industry source.

In those meetings, the focus turned more toward implementation of the law and capacity building to ensure that those granting patents, the Indian food and drug administration, and its judiciary are adequately trained to handle the new environment, the source said.

Had the Indian Parliament not acted before it adjourned on 24 March, the president’s ordinance would have expired. Under Indian law, the Parliament, which reconvened on 25 February, had six weeks to act on it, which would have been around 8 April. The Parliament is due to adjourn on Thursday (24 March) and not reconvene until 18 April, after the expiration.