As chief negotiators from India and EU meet in Brussels to fast track the Bilateral Trade and Investment Agreement (BTIA) that started in June 2007, the atmosphere is rife with speculations on what would this mean for India’s pharmaceutical sector. The agreement might have far reaching implications given the intellectual right provisions that it supposedly aims to ratify. The talks have been shrouded in secrecy ever since they began with vague responses from both sides.
Civil rights and public health activists are closely watching the events unfold amidst reports that EU aims to go aggressive on IPR, in the light of the fact that its first ever Free Trade Agreement (FTA) with an Asian country, South Korea, signed last year, had several TRIPS plus provisions. Over the past year, the Supreme Court in India has hardened its stance on protecting public interest when it comes to health by issuing the country’s first ever compulsory license in March 2012, not to mention revoking patents when necessary. While these moves have come under sharp criticism from pharma MNCs, analysts believe that India is well within its powers to protect the right to public health, even as much hue and cry is being raised. It remains to be seen if the country will be able to take a strong stand even as pressure mounts on it to comply with standards other than its own.
A TRIPS plus deal
FTA between two countries or amongst a group of countries aim to provide both parties economic benefits through the removal or reduction of barriers to trade. With the Doha round of negotiations still going on, bilateral and regional FTAs have become the norm to take trade liberalisation forward. All WTO Members are obliged to provide patent protection to pharma companies under the WTO Agreement on Trade-related Aspects of Intellectual Property Rights, known as the TRIPS Agreement, signed in 1994. However, TRIPS offers flexibility to determine the grounds for issuing compulsory licenses and ordering government use of the licensed products; allowing various forms of parallel imports and apply general exceptions, such as early working to facilitate generic entry of pharma and agro-chemical products upon expiry of a patented product or experimental use exceptions.
FTAs often include intellectual property protection stronger than that required by World Trade Organization (WTO), known as ‘TRIPS-plus’ protection. This includes measures such as broadening patentability, restricting patent opposition, extending patent duration, introducing test data exclusivity and last but not the least other IP enforcements as well.
Rai S Mittal Titus & Co, Advocates |
Explaining the implications of a TRIPS plus deal for India Rai S Mittal, Partner Titus and Co, Advocates, based in Delhi, says, “Several health safeguards included by the Indian Parliament in patent law would be at risk of being overturned or undermined if the demands of the EU are accepted. These include demand for a longer patent term extending the monopoly period enjoyed by the patent holder thus delaying the entry of generic medicines. Data exclusivity would require generic manufacturers to conduct their own clinical trials to get marketing approval or wait till a specified exclusivity period is over (five to 11 years) before a generic product is approved. This measure would create exclusivity over medicines separate from patents and applies even to medicines that are off-patent or where a compulsory license has been issued. Patent holders might also be empowered to get court orders to stop generic medicines from reaching the market before even having proven that their patents are being infringed.”
All these are areas of concern that could adversely impact India’s generic production capacity and, consequently, the ability of patients in India and across the developing world to access safe, effective and affordable generic medicines from India. While the EU has dropped its demand for patent term extension and data exclusivity, the pressure on India to harmonise its drug regulatory standards may ultimately squeeze generic companies out of production, since it is quite obvious that such standards are designed to be met by well-resourced companies. This might signal a setback to the country’s thriving generic industry.
Death knell for generics?
As per a brief by the UNAIDS on the impact of FTAs on public health issued last year, there is growing body of evidence that such TRIPS-plus provisions may adversely impact medicine prices and consequently, access to treatment. A study estimated that such provisions in the US-Colombia Trade Promotion Agreement would increase expenditure on medicines in Columbia by $ 919 million by 2020 or, alternatively, reduce medicine consumption drastically by as much as 40 per cent. India and Brazil are testament to the fact that a flexible IP law can facilitate a thriving generic pharma industry. Not only this, competition from Indian pharma is responsible for a dramatic reduction in the prices of WHO pre-qualified first-line antiretroviral medicines from over $ 10,000 per person per year to as little as $ 116 for in less than a decade. The price reductions further fuelled scaling up of the international response to HIV with more than 6.6 million on treatment by the end of 2010 from a meagre 300,000 in 2002. Apprehensions on removing barriers to trade, which would in turn create barriers to access to medicine, are growing.
Medicines Sans Frontiers (MSF) which has been closely monitoring the negotiations since their inception, in a letter to the Prime Minister of India dated March 14 has raised serious concerns on IP enforcement provisions which could further hamper production and dissemination of generic medicines. A mere claim of infringement by pharma MNCs could then lead to seizure or halting production of the competitors generic drug. The effects are far reaching beyond, the ambit of countries who sign the FTA and could even implicate third parties such as suppliers of APIs, retailers and stockists of generic drugs including treatment providers like MSF itself.
Leena Menghaney Manager for MSF’s Access Campaign in India |
Pitches in Leena Menghaney, Manager for MSF’s Access Campaign in India, “After the rejection of the ACTA by the European parliament, there is a renewed effort to stamp out generic manufacturers through intimidation, and FTA seems to be a move in that direction. The EU’s proposed enforcement measures include, but are not limited to, a stricter injunction system, third party liability regime and strong border measures.”
WTO TRIPS agreement has already reduced the freedom of operation for Indian generic manufacturers in the area of news medicines for HIV, cancer etc, she adds. MSF has to switch more and more people in Mumbai to new HIV drugs like raltegravir; but high prices ($1,775 per person) for just one patented drug in the cocktail of three that people need are a major deterrent.
The inclusion of investor state dispute mechanism in the broader definition of investment, could be the most detrimental, the letter states. Under this, “foreign corporations would have the power to sue companies if national laws, domestic policies or courts decisions or anything else threatens the enjoyment of their investment” even if the former measures are in public interest or in accordance with the law. In the light of India having taken a firm stand to protect public health by issuing compulsory licenses, free medicines, revamping its pricing policy and other such measures, it is strongly felt that it would be in our larger interests not to cave in to such demands. India is keen to wrap up negotiations by April this year and would need to keep this in mind. Amidst all the speculation, Mittal is positive that India might not sign such a deal.
“India is already facing a great challenge to strike the right balance between rewarding innovators and promoting public access from the standpoint of public health objectives, industrial development, food security and education. Promotion of public access will remain the crucial consideration in time to come. Commitments within such trade deals might also risk sanctions for non-compliance, which are usually not available under WIPO treaties, due to which India may not sign such as IPR regime till the time there is complete unanimity on the issue.” Menghaney offers a caveat informing that even after the deal, a sub committee on IP that would include representatives from both India and EU might continue to push for exclusivity, but not in public domain. However, given the closed door nature of the deals, we’ll have to wait and watch.