Patently unjust: America is arm-twisting India

The United States Patent and Trademark Office (USPTO), the American government wing that is concerned with protecting “new ideas and investments in innovation and creativity,” has made it clear that it is very unhappy with certain aspects of the Indian Patent Act (IPA). As per USPTO, the IPA law is not helpful to American companies in “ease of doing business, and also is not aligned to international best practices”.

One IPA section in question requires patent-holders to disclose whether their companies are producing enough quantity of the patented medicine to meet the healthcare needs of the people of India.

Every drug company that has a patent on a medicine needs to file annually Form 27 under Section 146 of the IPA. Any violation of this act by the drug company invites both heavy penalty and imprisonment up to six months.

What is the importance of Form 27? It is on the basis of this information that the Indian government may grant Compulsory Licence (CL), in case the authorities find that the patented medicine has not been adequately manufactured to meet the demands of patients in its own country.

By granting CL, the government revokes the grant of patent on the medicine and gives the right to manufacture the drug to another company, which is often a generic drug-maker. The grant of a CL by the government (often for a public health emergency) to another generic company sets up competition among the manufacturers and thus reduces the price of the patented drug.

The USPTO has made it clear that they do not like Compulsory Licence and Form 27 under the IPA law as these hurt American pharma companies. American drug manufacturers have asked for either overhauling Form 27 or total removal of Section 146 of IPA law. The USPTO is, in particular, upset about the clauses that prescribe penalty and imprisonment in case of default in filing Form 27, and urges that the clauses be deleted so that American companies can run their business in India smoothly.

The issue came to light when academic Shamnad Basheer’s research found that around 35% of patentees had not filed Form 27 at all between 2009 and 2012. Many that were filed were incomplete or lacked clarity. It hadn’t been looked into seriously. This cosy arrangement suited both the regulators and the big drug companies, until Basheer sought a direction from the Delhi High Court to the Patent Office to comply with the law and act against those that did not play by the rule.

This raises a fundamental question. Can foreign drug companies dictate governments of other countries to change laws to suit their interest? The IP laws of our country have been debated in parliament and are there to protect the interests of the people of India. There is widespread misconception among trade lobbyists that trade obligations are subservient to sovereign rights.

Industry associations like the Pharmaceutical Research and Manufacturers of America, Biotechnology Innovation Organisation, International Federation of Pharmaceutical Manufacturers and Association, Japan Pharmaceutical Manufacturers Association and even the Organisation of Pharmaceutical Producers of India (OPPI) and Federation of Indian Chambers of Commerce and Industry (FICCI) and several others have joined the chorus against Form 27. But all this has not stopped the lone Indian Pharmaceutical Alliance from dismissing the claim that Form 27 is a burden.

The voices against Form 27 had also earlier raised a hue and cry when in 2012 India granted a Compulsory Licence for Sorafenib, an anti-cancer drug. This news attracted global media attention, including a debate before the US House of Representatives, when the German multinational drug company Bayer had a patent on the medicine and sold it under the name Nexavar.

NATCO, an Indian generic drug manufacturer, had been granted the CL by India on the ground that Bayer failed to demonstrate that it was manufacturing adequate quantity of the drug as mentioned in its Form 27. The granting of the CL to NATCO resulted in a drastic reduction in the price of Nexavar, from over Rs 3.7 lakh for a month-long course to Rs 11,500 — a staggering 3200% cut! It is this reduction in price that US drug companies say could cost them billions in profits and job losses.

Habits die hard

This is not the first time that the IPA has come under attack by America. It has been under constant assault for over a decade now. The same battering was repeated when Nexavar was granted CL.

Just this year, the capping of the prices of stents and prosthesis has come under severe scrutiny and criticism by USPTO, along with threats of retaliation in trade in different sectors, such as imposing restrictions on Indian textile and other exports to the US.

If the US carries out such a threat, the Indian textile exports industry will take a big hit — about a fifth, or 20%, of India’s Rs 7,000 textile exports annually go to the US.

The Indian Patent Act and its implementation have prompted America to keep a strict watch on India and has made it a potential candidate to face America’s so-called Super 301 provision, which may involve taking trade disputes to the World Trade Organisation or even unilateral US sanctions against India.

Trade wars against rival economies have come to replace war with guns and bombs.

(The writer is president, Drug Action Forum, Karnataka)