[Ip-health] Bridges: Indian TRIPS-Compliance Legislation Under Fire

[Mike Palmedo]

http://www.ictsd.org/weekly/05-01-19/story2.htm

INDIAN TRIPS-COMPLIANCE LEGISLATION UNDER FIRE

Bridges Weekly Trade News Digest
January 19, 2004.     Vol 9, no. 1

A decree issued by the Indian government to bring the country into
compliance with its obligations under the WTO Agreement on Trade-Related
Intellectual Property Rights (TRIPS) has raised concerns that it will
put access to life-saving drugs for diseases like AIDS out of the reach
of poor people both in India and elsewhere in the world. Critics of the
new law claim that it goes beyond the demands of the TRIPS Agreement and
fails to take full advantage of existing WTO provisions for the
protection of public health.

In order to meet the 1 January 2005 deadline to make its intellectual
property regime WTO-compliant, on 26 December 2004 the Indian government
issued an ordinance -- an executive decree not debated in Parliament --
that made several amendments to the country's patent regime. Although
previous bills for TRIPS compliance were passed into law, an earlier
version of the current set of amendments failed to be tabled in
Parliament in December 2004 because of disagreements within the
governing coalition. Under Indian law, the ordinance will lapse if it is
not approved by lawmakers within six months. Legislators will consider
the bill during the budget session of Parliament that begins in February.

Drug patenting strengthened, product patents introduced

The regime introduced by the ordinance extends full TRIPS coverage to
food, drugs and medicines. Most importantly, it requires patents to be
granted to products, while India's previous patent regime established by
the Indian Patents Act 1970 only required patents to be granted to the
chemical processes that resulted in the production of a particular drug.
This distinction between "process patents" and "product patents" -- in
line with international patent practice before the 1995 TRIPS Agreement
-- allowed for the development of a huge generic drug industry built on
reverse-engineering brand-name drugs through slightly modified processes.

As per the TRIPS obligations for all countries transitioning into full
implementation of TRIPS commitments, India had created a 'mailbox' for
filing patent applications for pharmaceutical and agricultural chemical
products invented after 1995. These applications were to start being
considered when India's transition period came to an end on 1 January
2005. Estimates of the current number of pending patent applications
range from 4,700 to 12,000. Even the most conservative estimates would
represent more than 15 times the total number of new drugs approved
since 1995. The ordinance specifies that patents granted to mailbox
applications will be effective only from the date of the grant of the
patent and will thus not penalise generic makers of the product who
produced it up to that date.

The ordinance also modifies the procedure through which patents can be
challenged before they are granted. It limits the grounds on which
objections to a patent application may be made. Furthermore, though
contestants can be heard and submit a written argument, they are
prohibited from participation in all of the patent proceedings, unlike
under the previous system.

The decree states that "mere new use" of existing drugs is unpatentable.
This provision is ambiguous about what kind of "new use" will indeed be
patentable -- and could potentially allow companies to receive new
patents for a drug that is already patented, simply by making minor
changes such as adding a new chemical reactant for a marginally
different purpose. This would allow companies to extend their monopoly
on a drug for much longer than the standard patent protection period.

The ordinance does not substantially change the procedures required to
obtain a compulsory licence from the Indian government to produce copies
of products that are under patent. However, it does require countries
interested in importing generic medicines produced exclusively for
export under a compulsory licence issued by the Indian government to
issue a separate compulsory licence for import.

Decree draws wide-ranging criticism

Critics lashed out at the non-democratic way in which the new rules were
issued and described many of its provisions as "TRIPS-plus," contending
that they go beyond the requirements of the TRIPS Agreement and are thus
unnecessarily constraining. They believe that the more stringent
intellectual property regime will lead to an increase in prices for
essential drugs and hurt India's pharmaceutical industry, which relies
largely on the production of generic drugs.

The Affordable Medicines and Treatment Campaign (AMTC), an Indian
advocacy group, argues that the ordinance's compulsory licence scheme
does not take full advantage of WTO provisions to allow countries with
little or no pharmaceutical capacity to import cheap generic versions of
drugs still under patent protection. The group says that the Indian
patent ordinance's compulsory licence requirement for importing
countries would prevent a least developed country (LDC) from requesting
the export from India of generic versions of a medicine that is not
under patent in the LDC in question (LDCs are not required to provide
product patents for pharmaceuticals until 2010).

The head of the Indian Drug Manufacturers Association raised concerns
about the impact of a sudden halt in the production of a generic
medicine as a result of the granting of a patent -- say, as the result
of the approval of an application in the 'mailbox' -- saying that some
generic production should be allowed to prevent decreased availability
or a rapid increase in drug prices.

Opponents of the new ordinance also suggested that the procedure for
challenging patents needed to be strengthened in order to prevent
trivial or "wrong" patents from being granted.

Government lays out its rationale for the new amendment

Commerce and Industry Minister Kamal Nath defended the new patent rules,
arguing that they struck an appropriate balance among the protection of
intellectual property rights, public health, and national security, and
would enhance India's stature as a credible participant in the WTO.

Nath suggested that India's pharmaceutical and biotechnology industries
might benefit from strengthened patent protection. He said that India's
involvement in the WTO over the past decade had encouraged its
pharmaceutical industry to greatly increase investment in research and
development -- to the point that some players in the industry are now
actively seeking patent protection.

Nath emphasised that India stands to gain from its adherence to the WTO
by "grabbing a lion's share" of the some 60 billion dollars worth of
drugs going off patent in the next few years. "Bona fide" membership of
the international trading community would also open up opportunities for
R&D based outsourcing in the biotechnology sector. Nath contended that
these gains, along with in other areas such as the textiles sector,
would more than offset the losses that India would sustain from
implementing its WTO obligations.

Background

India is the world's fourth-largest drug market in volume, and drugs
often cost seven to ten percent of what they do in the USA or Europe.
While India's many generic drugs producers, such as Cipla and Ranbaxy,
have thrived in an environment of limited patent protection on
pharmaceuticals and exported cheap essential drugs around the world,
some argue that the limited protections for intellectual property have
kept foreign companies from investing in India.

The ordinance can be accessed at http://lawmin.nic.in/Legis.htm

ICTSD Reporting; "India: Major Amendments In The Indian Patents Law,"
LEX ORBIS, 12 January 2005; "Farmers oppose patent ordinance," FINANCIAL
EXPRESS, 11 January 2005; "Patent ordinance weak on eligibility,
pre-grant rules," FINANCIAL EXPRESS, 1 January 2005; "Govt for holistic
law on data protection," SIFY FINANCE, 29 December 2004; "Concerns
Regarding Patent Amendment Ordinance promulgated on 26 December 2004, by
the UPA Government," AFFORDABLE MEDICINES AND TREATMENT CAMPAIGN (AMTC)
PRESS RELEASE, 28 December 2004; "India changes law to implement product
patents," REUTERS, 27 December 2004; "Facing Jan. 1 WTO Deadline, India
struggles with patent reform," ASSOCIATED PRESS, 24 December 2004;
"India's Choice," NEW YORK TIMES, January 18, 2005.