India’s patent policy: Big Pharma’s grouse?

In a congressional hearing last week, Roy Waldron, Chief Intellectual Property (IP) counsel of American Pharma giant, Pfizer raised concerns over India’s “protectionist” IP regime. The Capitol Hill testimony can be accessed here. 

Waldron alleged that since the advent of the product patent regime in 2005, India has continually defied trade rules and supported the domestic generic industry at the expense of innovators. On the other hand Indian generic industry has increased its US sales dramatically. To quote “Three of India’s major pharmaceutical companies, for instance, (Dr. Reddy’s Laboratories, Sun Pharma and Wockhardt) generated between 42 – 56 percent of their global generic sales in the United States.”

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Patentability standards 

Citing the recent revocation of Sunitinib patent, Pfizer in its testimony questioned India’s patentability standards stating that “The patent for Sunitinib, which is the active compound in Sutent, was granted in many countries around the world, including India. The Indian patent had been in effect for five years prior to its revocation. Its counterparts have never been revoked in any of the 90 countries where it currently enjoys protection, including the United States, Europe, and Japan.” 

TRIPS does not define substantive patent standards (novelty, inventive step and utility) and this has led member countries to define their own thresholds for patentability tailored to suit their specific needs. In fact obviousness is a subjective measure and even developed countries don’t concur with each other on this. For instance, Canadian federal circuit held that AstraZeneca’s extended release formulation patent on the popular anti-psychotic drug Seroquel XR is obvious to try, whereas in stark contrast the US federal circuit rejected claims of obviousness and upheld the validity of the same patent. So, I believe that patent standards prevalent in other countries are not reliable measures for evaluating India’s patent standards. 

Compulsory license 

Pfizer accused India of abusing the compulsory license system and stated that Indian generic industry sees a potential compulsory license in every innovative product. “Often, however, compulsory licenses may be used by competitors as a means to obtain authorization to use or transfer technology developed by others without having to pay the substantial costs associated with developing and testing the product. These copiers want to obtain a free ride or use the technology at a much‐reduced cost." 

US has a long history of issuing CL's as an antitrust remedy for patent abuses. In fact over 100 such licenses have been issued for patents owned by Kodak,IBM, GE, Du Pont and in some cases at zero percent royalty. In the United states, insufficient working of patent and un-affordability of technology are hardly viewed as detrimental to public interest for grant of CL's because an effective health insurance system ensures affordability and accessibility of medicines to the public. On the other hand in a country like India, where majority of  the population spends money out of its own pocket  to cover medicare expenses, affordability and access to essential medicines are important factors in issuance of compulsory licenses.

Pfizer chief also leveled criticism at India’s pre-grant opposition system, lack of patent linkage system and advocated Trans Pacific partnership kind of standards for patent protection. 

Trade benefits trump card: Déjà vu 

The threat of withdrawing trade benefits has been used before by key industry players like Pfizer to secure higher standards for patent protection and this resulted in precipitation of TRIPS agreement. So, given the recent spate of compulsory licenses and patent revocation it is hardly surprising that Pfizer has asked the US government “to review all available policy tools in light of India’s deteriorating intellectual property environment.” 

Removing GSP privileges: ramifications for India 

Trade benefits for India conferred by US, under the generalized system of preferences (GSP) expire in July this year. India is the largest beneficiary under GSP program and exports $3.7 billion worth goods to US. Given Pfizer’s testimony; US may consider removing India from the GSP program. 

As reported here, the veiled threat is unlikely to achieve its intended goal and elicit policy change in India because GSP beneficiaries are too small to make a substantial impact. Some excerpts from the article, “While the absolute size of India’s GSP exports to the US is large, it remains a relatively small share of India’s overall exports (roughly 3 percent). Where the potentially affected party is fairly small, the threat of removing GSP privileges is not a particularly powerful one.” 

Soul searching: Some unanswered questions 

Obviously, low costs is in the best interests of patients, but is innovation any less important? Isn’t it important for society to respect intellectual labor of the inventors? A liberal patent regime may tip the balance on the side of the generics and this may cause most multinationals to opt for minimal presence in India. Also they will have no incentive to conduct local clinical trials to evaluate safety and efficacy. The importance of conducting local clinical trials, to factor in the effect of ethnic and genetic differences cannot be emphasized enough. For more on importance of conducting local clinical trials please read here. Careful planning and policy making to achieve a balance between conflicting interests of patents and patients-Need of the hour!