[Ip-health] Business Std: Choking India's generic exports

[Sangeeta]

Latha Jishnu: Choking India's generics exports
Latha Jishnu / New Delhi January 29, 2009, 0:54 IST

The EU and WHO are pursuing strategies that will have serious consequences
for developing countries, warns Latha Jishnu

In bits and pieces news has been trickling in of different shipments of
medicines and pharmaceutical from India being seized at ports of the
European Union (EU). None of these consignments was destined for Europe;
they were en route to Latin America. It was not till mid-January when news
broke of a shipment from Dr Reddy=B9s Laboratories bound for Brazil being
impounded in Amsterdam that all hell broke loose here.

Dr Reddy=B9s is India=B9s top pharmaceuticals exporter with annual sales in=
 the
region of $1.4 billion and the EU action fluttered the administrative
dovecots. An incensed Commerce Secretary Gopala Krishna Pillai described it
as =B3an act of piracy by the EU=B2. In an exceptionally strong statement, =
he
called it =B3a dangerous thing=B2 and =B3totally uncalled for=B2. Reflectin=
g what
industry lobbies and health activists have been claiming for long, Pillai
said: =B3It is part of the strategy by these countries to target generic dr=
ugs
from India.=B2

What the EU is doing is using Council Regulation (EC) No. 1383/2003 to
impound drugs that are suspected of violating patents registered in
member-countries even if these are simply in transit. The regulations permi=
t
customs to hold these goods for a minimum of 10 working days while informin=
g
the patent holder of the seizure. The patent holder then applies to a civil
court to initiate legal proceedings in order to prove that infringement has
taken place.

Dr Reddy=B9s told Business Standard that the impounded consignment consiste=
d
of 500 kg of Losartan potassium valued at $55,000 that was bound for Brazil=
.
=B3Apparently, Losartan is protected in the Netherlands by a product patent=
 of
Merck/DuPont which is valid until September 2009,=B2 says the spokesman for
the Hyderabad-based company who questions the validity of the seizure. =B3W=
e
are sceptical that it can be called an act of patent infringement when good=
s
are in trans-shipment and merely pass through the customs of an EU
member-state, especially when there is no possibility that these goods coul=
d
be sold on the market in these countries.=B2

This might seem like a singular attempt by the EU to show extreme zeal in
protecting the rights of pharmaceutical patent holders in the EU. But it ha=
s
to be viewed against the backdrop a of a host of moves initiated by the
developed world to ramp up intellectual property (IP) protection, far in
excess of what is required under the TRIPS regime of the World Trade
Organization (WTO), under the guise of public health concerns. These
initiatives to enforce ever higher standards of IP protection have roped in
global organisations with completely different mandates, such as the World
Health Organisation (WHO), the World Customs Organisation and Interpol amon=
g
others.

Leading the charge is the EU which apart from Regulation on trans-shipments
is also planning to amend another directive (2001/83/EC) that seeks to
prevent the entry of =B3medicinal products which are falsified in relation =
to
their identity, history or source=B2 into the legal supply chain through a
change in the definition of such products. Interestingly, the new definitio=
n
is based on the proposal accepted at a 2007 meeting of the controversial WH=
O
agency IMPACT or International Medical Products Anti-Counterfeiting
Taskforce which critics claim is a cover for protecting IP rights of MNCs.
The US and other Organisation for Economic Co-operation and Development
(OECD) countries are not far behind in ratcheting up IP enforcement through
a host of initiatives ranging from a secretive multilateral treaty called
ACTA, or the Anti-Counterfeit Trade Agreement, to a purely regional
arrangement like The Security and Prosperity Partnership of North America
that brings together North American Free Trade Agreement (NAFTA) signatorie=
s
(the US, Canada and Mexico). But more on these initiatives later.

For India, the immediate concern is the EU measures and the WHO-sponsored
agency IMPACT. However, there was some reprieve in Geneva last Monday
(January 26) when the WHO shelved a hotly-contested resolution to redefine
counterfeit medicines. This would have put at risk exports of even quality
generics from India because these could be termed counterfeit under the new
definitions that were proposed on =B3false representation of identity, hist=
ory
or source=B2.

Big Pharma is very clearly setting the agenda for these changes, according
to public health activists promoting access to medicines and domestic
industry associations. This charge has been affirmed by trade analysts and
academics who point out that recommendations made by Pharmaceutical Researc=
h
and Manufacturers of America (PhRMA), the powerful lobby of the world=B9s
biggest drug corporations, to the US Trade Representative on ACTA are
identical to the =8CPrinciples and elements for national legislation=B9 end=
orsed
by IMPACT. The latter is supported by the International Federation of
Pharmaceutical Associations (IFPMA) and there are reports that suggest 8 pe=
r
cent of the funding for the WHO agency is provided by industry.

Domestic industry is breathing a lot easier after Monday=B9s surprise decis=
ion
by WHO which came about thanks to solidarity of the G20 partners in the WTO
caucus. The seizure of Losartan (subsequently returned to Dr Reddy=B9s on
January 8 after an agreement it reached with the patent holders) had a lot
to do with the new solidarity in WHO. Diplomatic sources say that Brazil is
backing India in challenging the EU directive at WTO and news reports have
quoted Brazilian officials as saying they have decided to begin
consultations at the WTO as a prelude to approaching its Dispute Settlement
Panel. Commerce Secretary Pillai had indicated a fortnight ago that India
would be taking its complaint to the apex trade body.

But that is just one battle that is being fought by developing countries.
Dilip Shah, secretary-general of the Indian Pharmaceutical Alliance (IPA)
which groups together the top dozen pharmaceuticals companies, says that
India should seek the dismantling of IMPACT and help create a new agency
that would focus purely on protecting health concerns and not the IP rights
of MNCs. =B3We too have concerns about exports of counterfeit drugs from In=
dia
and would whole-heartedly support an initiative that furthers WHO=B9s manda=
te
on public health,=B2 declares Shah who has been in the frontlines of the
campaign to stop the EU and other trade blocs from erecting non-tariff
barriers to the export of quality generics from India.

Costs are another worry. The EU measure is clearly a blow to Indian
companies, most of whom use European ports to trans-ship pharmaceutical
products to markets where the patent is not recognised or is off patent. =
=B3By
forcing Indian companies to opt for a different route, it will have a
serious impact on their ability to remain competitive,=B2 points out Dr
Reddy=B9s. This is specially relevant in the case of bulk exports of API
(active pharmaceutical ingredient) because India is one of the largest
exporters.

The competitiveness of India=B9s generics manufacturers is but a small issu=
e
in the trade assault mounted by rich nations. The larger issue is of free
and fair trade.

See http://business-standard.com/india/storypage.php?autono=3D347369