India got a forewarning of the mood of the US business community when Kerry’s visit was preceded by a strong letter to President Obama from the National Association of Manufacturers (NAM), urging him to take strong action against what NAM calls ‘discriminatory’ trade practices, and an ‘erosion’ of IP rights in India.
NAM’s June 18 letter was followed by further posturing in the US. Senators representing committees like the Senate Finance Committee, the House Ways and Means Committee, and the Trade Subcommittee, put their weight behind the anti-India rhetoric by sending similar letters to the Obama administration.
The movement culminated with 15 industry associations coming together to form the Alliance for Fair Trade with India (AFTI) co-chaired by NAM and the US Chamber of Commerce’s Global Intellectual Property Center. On June 25, the last day of Kerry’s three-day India trip, Pharmaceutical Research and Manufacturers of America (PhRMA) and its counterpart in the biotechnology space, Biotechnology Industry Organization (BIO), together representing most research-driven lifesciences companies, joined the AFTI, a clear indication that the pressure on the pharma IP front will only mount in the coming days.
Given that a fair number of judgments have gone against MNC pharma in India, the pharma industry was closely watching the moves of the US Secretary of State for hints on how the situation was developing.
As the US tries to redefine its relevance in a changing world order, analysts say that it must step back and understand new realities. The reality is that the legal systems of not just India, but other countries like Thailand, are issuing judgments on pharma patents which put the interests of their populations first. Whether it’s the Supreme Court of India’s judgment on Novartis’ Glivec, or the Bayer-Natco case, this is the ‘new normal’. US-based or for that matter, MNC pharma companies, have termed these as unfair business practices, echoing the backlash to Indian IT companies in the US. In a bid to outsource less jobs, the US imposed more stringent visa rules and this too is a sore point between the two nations. If these IP and trade issues are not dealt with soon, they threaten to disturb the uneasy balance between the two nations.
In fact, pressure on the pharma IP front has been mounting from early March, when Roy Waldron, Pfizer’s Chief IP Counsel accused India of “routinely flouted trade rules” to benefit domestic companies, denying IP rights (citing India’s revocation of Pfizer’s patent for Sutent), abusing the compulsory license system and ignoring obligations to prevent unfair commercial use of data to grant generic marketing approval.
In May, the Indian Pharmaceutical Alliance (IPA) put out a statement objecting to Waldron’s testimony, clarifying that Indian patent law does not discriminate between the domestic and foreign companies. The letter goes on to state that India’s laws “distinguish only between innovation and discovery of new forms of known substances that do not result in the enhancement of efficacy”. Pfizer replied to the IPA’s letter defending its stance and with this backdrop, the pharma industry was not all surprised when the rhetoric started building up before Kerry’s visit.
Given that Waldron’s testimony was given days before the Supreme Court’s decision rejecting Novartis’ plea for a patent on Glivec, it is clear that this campaign is not a knee jerk reaction to one judgment, but a considered move to influence policy in the long term.
As we analyse the outcomes of the US Secretary of State John Kerry’s visit, both sides are no doubt preparing the grounds for the next level of talks scheduled for late July, during US Vice President Joe Biden’s visit.
Against this backdrop, the Indian government needs to take a firm stand and prepare for a long drawn out battle. In fact, in a clear warning, the June 18 NAM statement also urged the US government “to coordinate closely with the European Union and other like-minded economies,” a sign that the US will seek to isolate India on this front in the hopes that if it succeeds in restraining India, other nations will also fall in line.
The US is clearly cracking the whip. If US President Barrack Obama’s visit in 2010 included photo ops of the US First Lady interacting with school children, the focus of Kerry’s visit was strictly business. Biden’s impending visit will be not different in tone, unless both sides decide to explore a middle path.
If Pfizer’s IP chief makes a case for the US government by saying that India’s actions on the IP front “diminish our market share abroad, which hinders US exports, and ultimately harms US jobs”, then industry associations like the IPA need to work in a similar manner. If AFTI is all about ‘pursuing public policy options that help create a level playing field for US exporters and innovative companies operating in India’, can we counter this move with an alliance to protect the rights of patients in India, and the world, to affordable medicines?
Viveka Roychowdhury
Editor