India May Be Nearing Dispute Settlement With EU Over Generic Drug Seizures

Ongoing concerns in India that their legitimate generic drug shipments are being delayed as potential counterfeits while in transit through Europe may reach the dispute settlement body at the World Trade Organization, according to sources.

India appears to be moving closer to filing a World Trade Organization dispute settlement complaint against the European Union. A source within the Indian government in Delhi told Intellectual Property Watch they are “definitely going to file a case,” though was unable to specify when that might be. Officials in Geneva, however, were not as clear that the decision has been made.

The first stage of a dispute is consultations between the parties, which, if they do not lead to resolution, could lead to the formation of a dispute panel, and ultimately sanctions.

If India decides to bring a case before the WTO Dispute Settlement Body, which handles complaints of possible WTO rules violations, then there are procedures that it must follow.

According to the WTO website, the first stage after filing a complaint (which must be done in writing, and list the specific areas at issue in the dispute) is consultations – in which the two countries see if they are able to settle the differences without the help of the WTO secretariat. If, after a minimum of 60 days, this does not work, the complaining government can request a panel. This is requested at meetings of the DSB. The accused party can block a request for a panel once, but not twice.

Planned meetings of the DSB in the near future are 31 August, 25 September and 24 October.

A panel, once formed, has 6 months to issue a final report on the case to the parties. It can be appealed by either side, but countries which are found in violation are expected to begin implementing corrections immediately upon issuance of that conclusion.

Concerns over the confusion between counterfeit, a term of art at the WTO covering trademark violations, and generic medication have been ongoing in several international agencies, perhaps most strongly at the World Health Organization (IPW, WHO, 27 January 2009).

Those fears seemed confirmed when it was discovered that in December 2008 a shipment of 500 kilos of a hypertension drug had been seized en route from Indian generic manufacturer Dr. Reddy’s to its destination in Brazil. The drug was patented in neither its country of origin nor country of destination, but was held for 36 days in a Dutch port before being released and taken back to India (IPW, Public Health, 3 February, 2009).

This prompted outcry from Brazil and India as well as a collection of public health civil society groups seeking to stop those “acting with impunity to thwart lawful generic competition,” according to one advocate, Brook Baker of Health GAP (IPW, Public Health, 21 February 2009).

Alarm escalated with a second delay of generics, this time antiretrovirals in transit from India to Nigeria (IPW, Public Health, 6 March 2009).

At a March meeting of the WTO Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS), Brazilian Ambassador Roberto Azevêdo said the possibility of a dispute settlement case was “not ruled out” (IPW, WTO/TRIPS, 5 March).

Then a freedom of information act request submitted to Dutch authorities by Sophie Bloemen of Health Action International revealed that there had in fact been 17 shipments detained in 2008. The Dutch response to the request, available here [pdf], said that 16 of the delayed shipments had come from India (and one from China).

The information from the Netherlands and one more case of delay in 2009 in Frankfurt – a shipment of generic antibiotic Amoxicillin, also from India – prompted an intervention from the country at the TRIPS Council meeting on 8 June.

The seizures, said India, have “adverse systemic impact on legitimate trade of generic medicines, South-South commerce, national public health policies and the principle of universal access to medicines” and indicates that the EU regulation allowing for such action (EC 1383/2003, which provides rules and regulations over the authority of customs officers to control goods infringing IP rights) is “problematic and can be misused, and has been misused, to create barriers to legitimate trade” (IPW, WTO/TRIPS, 9 June 2009).

Particular concerns expressed by India were that the delay violated “principles set out” in Articles 7 and 8 of the TRIPS agreement, according to their June statement. Article 7 says that IP protection should contribute to transfer and dissemination of technology, and Article 8 allows members to take measures to protect public health and also to take additional measures which “unreasonable restrain trade or adversely affect the international transfer of technology.” Brazil added that a “decision to impede the transit of cargos of generic medicines violates the freedom of transit” in a statement issued at the same meeting.

The European Union countered, telling Intellectual Property Watch in June that the seizures were only “temporary detention for customs inspections” as they were not permanently prevented from getting to their destination.

EU Regulation 1383/2003 “contains strict time-limits within which court proceedings – if any – must be initiated,” said an EU statement from June. Moreover, the process “is fully in accordance with the relevant TRIPS provisions, in particular Article 55, which sets out the time-limit… for suspending the release of the goods” and also allows for compensation if shipments are delayed “on the basis of an unsubstantiated complaint” the statement added.

Also, such cases were the side effects of careful EU regulation of drugs necessary for public health, an EU delegate said earlier. The EU had caught millions of counterfeit pills in 2007, said Luc Devigne, who led the EU delegation to the March TRIPS Council. Countries, he added, should be “grateful to the EU for saving lives” as not everyone has the capacity to search for dangerous drugs (IPW, WTO/TRIPS, 5 March 2009).