The Dangers of the Indian Government’s Flirtation with U.S. Pharma and the Risks for India’s Coherent, Pro-Public Health IP Policy
by Professor Brook K. Baker*
Senior Policy Analyst Health GAP (Global Access Project)
October 5, 2014
India’s new Prime Minister, Narendra Modi and his delegation, who have been visiting the U.S. for the first time, have spent considerable time and energy in courting U.S. business interests. On Monday, September 29, the Indian PM met with 17 chief executives of major U.S. companies in joint and individual meetings1 and on September 30 he met with the U.S.-India Business Council comprising over 300 top U.S. companies.2 Prime Minister Modi is promising to open India to more direct foreign investment and to further liberalize the Indian economy to make it easier for multinational corporations to operate there. To the dismay of health activists worldwide, the US administration appears to have successfully used the Indian PM’s visit to maneuver the Indian government into committing to a joint mechanism on intellectual property. The benign sounding “High Level Intellectual Property (IP) Working Group” is designed to pressure India into changing its interpretation and application of health safeguards in India’s intellectual property policy, ultimately undermining India’s role as the pharmacy for the poor.
Even before the PM’s visit, alarm bells have been ringing within the global health community over statements made by India’s Minister of Commerce and Industry, Nirmala Sitharaman. The relentless public and private pressure from both the U.S. government and Big Pharma,3 appear to have prompted the Commerce Minister to announce a review of India’s IP policy with the aim of boosting innovation, improving administrative procedures, and potentially strengthening the country’s patent regime. In announcing the creation of a think tank to make the patent system “more robust,” Minister Sitharaman specifically mentioned that “developed nations are picking holes in India’s IPR laws.”4
The pressure from the US government on India has been relentless for the better part of the past year. The United States Trade Representative, which designated India as a priority watch list country on its 2014 Special 301 Watch List,5 Members of Congress, who have now demanded a second investigation of India’s alleged IP protectionism at the U.S. International Trade Commission,6 and various pharmaceutical industry representatives have continued a broadside attack on India’s IP rules, especially as they relate to bio-pharmaceuticals.7 When India amended its patent law to conform to international requirements in 2005, it adopted measures to restrict patents on unworthy, minor modifications or new uses of existing medicines and allowed competitors and advocates to challenge patents before and shortly after they are granted. India also has adopted procedures, fully compliant with the WTO TRIPS Agreement, to allow compulsory licenses when patents are abused or when public health needs so require.
As a consequence of these pro-health measures, India has turned down some weak secondary patents on previously known medicines, but it has also issued thousands of patents for Big Pharma companies. Indeed, India should improve its administrative procedures not to become speedier and more lax in granting patents but rather to follow its recently promulgated standards reviewing pharmaceutical products,8 which should reduce its record of granting unworthy patents.9 The U.S. and the E.U. have complained about India’s strictness in not granting patents that they have granted to their own domestic pharmaceutical giants, but other voices on both continents are crying for tighter patent standards to reverse the flood of secondary patents that extend drug company monopolies and price medicines beyond all reasonable bounds.
Although at least two pro-Pharma news stories in the past few week have complained about India having issued compulsory licenses and building its industry on stolen patents,10 the truth of the matter is that India has issued only one compulsory license on a grossly overpriced Bayer cancer medicine, Nexavar®. As always, PhRMA’s pundits claim that the right to issue compulsory licenses is severely limited and only applies to emergencies, when in fact compulsory licenses can be granted on any declared public interest grounds at the full discretion of each government.
Unfortunately, the joint communiqué issued at the end of PM Modi’s US visit shows deference by the US and Indian governments to Big Pharma’s pressure.11 Buried in that statement is an ominous collaboration:
The leaders committed to work through the Trade Policy Forum to promote a business environment attractive for companies to invest and manufacture in India and in the United States. Agreeing on the need to foster innovation in a manner that promotes economic growth and job creation, the leaders committed to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making and technical-level meetings as part of the Trade Policy Forum.
The U.S. consistently advances higher intellectual property protections through its trade working groups and trade partnership groups. It is significant that this sentence is embedded in the section on economic growth, as US IP industries and the USTR promote heightened intellectual property rights and strengthened enforcement mechanisms as being key to investor confidence and ultimately to innovation itself. Direct foreign investment and innovation are also always rhetorically tied to strong IPRs despite inclusive evidence that typically shows that most low- and middle-income countries do not benefit economically from IP maximization since they are net importers of IP goods and since the path to technological development is ordinarily through copying and incremental innovation-development tools that are severely undermined by IP monopoly rights and their related restrictive licensing agreements.12
More specifically, this working group will give the US a dedicated forum to continue to pressure India to adopt TRIPS-plus IP measures, including repeal of section 3(d) of the India Patents Act, adoption of data exclusivity/monopolies, patent term extensions, and restrictions on the use of compulsory licenses. There will also be efforts to strengthen enforcement measures and investor rights including investor/state dispute resolution. The US, in particular, will work to eliminate local working requirements that India is seeking to use to promote its own technological development. This is antithetical to PM Modi’s recently launched “Make in India” initiative. The fact that this working group will have “decision-making” powers is particularly problematic as it places the US fox in the Indian chicken coop.
Nothing stops the Indian government and Prime Minister Modi from rejecting the US proposal for the working group on IP. The Indian government must recognize that the US trade agenda is deadly to poor people throughout the developing world who depend on India’s generic companies for affordable access to medicines of assured quality. Nearly 90% of the 13 million people currently receiving HIV medicines in low- and middle-income countries get their antiretrovirals from India. While Big Pharma wants to charge a $1000 a pill for new hepatitis C medicines in the U.S.,13 Indian companies can make those same medicines for a little more than $1 a pill.14 One positive signal of IP resistance from PM Modi during the trip was his statement to pharmaceutical CEOs Kenneth Frazier and Michael Ball:
I understand that you want to be compensated for your investments in R&D. At the same time, India needs medicines that are affordable for its population. … Mankind needs continuous research and development of new drugs for a higher quality of life. … You need to be able to devote the right energy to that, not just by changing the formulation of a drug to sustain a patent, but by inventing things that make a difference to mankind.15
U.S. business interests and government officials are trying to sell the idea that heightened intellectual property protections in India are essential to foreign investment, innovation, and achievement of public health goals.16 Instead, heightened IPRs will make India consumers captive to Big Pharma’s extortionate pricing. India’s vibrant generics industry will be relegated to the backwaters as it waits impatiently for the expiration of ever-greened patents and new regulatory data monopolies. India is still in the stage of industrial development where imitation and incremental innovation are stronger engines of progress than being shackled by foreign IP monopolies. When Indian firms do innovate, they can patent their true inventions in India and their incremental innovations in rich country markets. Just as dozens of distinguished scientists, academics, and health organizations protested the proposed IP policy review in India,17 health activists and others must reject any efforts to fill India’s alleged gaps in IP policy with pro-Pharma fixes that serve only to line the pockets of some of the world’s richest transnational corporations.
1 Vikas Dhoot, PM’s US Visit: Narendra Modi’s CEO diplomacy to soon set the cash register ringing, The Economic Times (Oct. 1, 2014), http://articles.economictimes.indiatimes.com/2014-10-01/news/54516935_1_ajay-banga-ceos-global-investment-radar.
2 Arun Kumar, After wowing Indian-Americans and the ‘Big Apple’, PM Modi off to win over Barack Obama administration, The Economic Times (September 29, 2014) http://articles.economictimes.indiatimes.com/2014-09-29/news/54437114_1_prime-minister-narendra-modi-pm-modi-us-india-business-council.
3 USIBC concludes successful pharmaceutical mission to India, The Pharma Letter (Sept. 28, 2014), http://www.thepharmaletter.com/article/usibc-concludes-successful-pharmaceutical-mission-to-india.
4 Govt to come out with IPR policy: Sitharaman, Business Standard (Sept. 8, 2014) http://www.business-standard.com/article/pti-stories/govt-to-come-out-with-ipr-policy-sitharaman-114090800852_1.html; Govt signals IPR recast ahead of Modi’s US visit, The Indian Express (Sept. 9, 2014) http://indianexpress.com/article/business/economy/govt-signals-ipr-recast-ahead-of-modis-us-visit/2/.
5 USTR, 2014 Special 301 Report, pp. 37-43, http://www.ustr.gov/sites/default/files/USTR%202014%20Special%20301%20Report%20to%20Congress%20FINAL.pdf.
6 Press Release, Ways & Means, Senate Finance Leaders Request ITC Investigation into India’s Unfair Trade Practices (Sept. 25, 2014) http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=394536.
7 C.H. Unnikrishnan, India’s draft rules on patenting drugs draw mixed response, Live Mint (Sept. 29, 2014) http://www.livemint.com/Industry/J9t072PXGxIEzMmOBusSKJ/Indias-draft-rules-on-patenting-drugs-draw-mixed-response.html.
8 Office of Controller General of Patents, Designs and Trademarks, Revised Draft Guidelines for Examination of Patent Applications in the Field of Pharmaceuticals (Aug. 12, 2014) http://www.ipindia.nic.in/iponew/draft_Pharma_Guidelines_12August2014.pdf.
9 Sudip Chaudhuri, Chan Park & K. M. Gopakumar, Five Years into the Product Patent Regime: India’s Response (2010) http://apps.who.int/medicinedocs/documents/s17761en/s17761en.pdf; Bhaven N. Sampat & Tahir Amin, How Do Public Health Safeguards in Indian Patent Law Affect Pharmaceutical Patenting in Practice, 38:4 J. Health Politics, Policy & Law 735-55 (2013) http://jhppl.dukejournals.org/content/38/4/735.long.
10 Tom Giovanetti, India’s Modi can boost foreign investment by protecting IP, The Hill (Sept. 25, 2014) http://thehill.com/blogs/congress-blog/foreign-policy/218810-indias-modi-can-boost-foreign-investment-by-protecting-ip; Rod Hunter, The PM must walk the talk on FDI, Hindustan Times (Sept. 19, 2014) http://www.hindustantimes.com/StoryPage/Print/1265781.aspx.
11 White House, U.S.-India Joint Statement (Sept. 30, 2014) http://www.whitehouse.gov/the-press-office/2014/09/30/us-india-joint-statement.
12 Brook K. Baker, Debunking IP-for-Development: Africa Needs IP Space Not IP Shackles in International Economic Law and African Development (Laurence Boulle, Emmanuel Laryea & Franziska Sucker eds. 2014).
13 John Tozzi, Gilead Sales Double on $1,000 Hepatis C Pills, Bloomberg Business Week (April 22, 2014), http://www.businessweek.com/articles/2014-04-22/gilead-sales-double-on-1-000-hepatitis-c-pills.
14 Andrew Hill et al., Minimum costs for producing Hepatitis C Direct Acting Antivirals for use in large-scale treatment access programs in developing countries, 58:7 Clin. Infect. Dis. 928-36 (2014) http://cid.oxfordjournals.org/content/58/7/928.full.pdf+html.
15 Vikas Dhoot, PM’s US Visit: Narendra Modi’s CEO diplomacy to soon set the cash register ringing, The Economic Times (Oct. 1, 2014), http://articles.economictimes.indiatimes.com/2014-10-01/news/54516935_1_ajay-banga-ceos-global-investment-radar.
16 Joe Matthew, ‘India Needs To Show It Values Innovation’: PhRMA, a US drug companies’ lobby, looks to Modi’s US visit to iron out access issues, Business World (Oct. 1, 2014) http://www.businessworld.in/news/opinion/interviews/‘india-needs-to-show-it-values-innovation’/1555371/page-1.html#.
17 Rupali Samuel, Academics, diplomats, scientists, lawyers, public health orgs issue open letter to PM on proposed IP Policy review, Spicy IP (Sept. 23, 2014), http://spicyip.com/2014/09/academics-diplomats-scientists-lawyers-public-health-orgs-issue-open-letter-to-pm-on-proposed-ip-law-review.html; CSOs concerned over timing of IP policy review in India, SUNS #7881 (Sept. 25, 2014) http://www.twnside.org.sg/title2/wto.info/2014/ti140911.htm.
*Brook K. Baker is a law professor at Northeastern University School of Law (US) and an affiliate of its Program on Human Rights and the Global Economy. He is also an honorary research fellow at the University of KwaZulu Natal, Faculty of Law, South Africa. He is a policy analyst for Health GAP (Global Access Project) and writes frequently on IP, trade, and access to medicines issues.
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