IPR in the Indo-US pharma trade relationship

India has retained her place on the Priority Watch List of the US TR’s Super 301 report. With the Cabinet approving the National Intellectual Property Rights Policy on May 12, Professor Sankar Sundaram, Professor of Pharmaceutical Sciences, JSS University analyses the status of America’s own pharmaceutical IPR policy. As a patent agent in India’s Intellectual Property Office (Registration Number IN/PA 666), he comments on the practice of using IPRs as a key governing policy interplay in the Indo-US pharma trade relationship

Our National IPR Policy, unveiled recently, is a bold step in eschewing protectionism, fostering creativity from the farming sector to the cyber security sector, containing the appeasement of the overseas market, re-establishing our creative identity, stimulating progress of an academic-friendly industry, preventing exploitation of our traditional knowledge and above all, aligning the Indian mindset in tune with the globalised international economic paradigm. While being Trade-Related Aspects of Intellectual Property Rights (TRIPS) compliant, it aspires to curb the unfair brick batting currently faced by the providers of Indian goods and services in the global market. Thus, the aim of the National IPR Policy is to ‘integrate IP as a policy and strategic tool in national developmental plans.’

As per National IPR Policy, all forms of Intellectual Property (IP) have been brought under the aegis of the Department of Industrial Policy and Promotion (DIPP). The policy comprises significant provisions for the pharma sector which claim to:

i) Encourage public funded R&D institutes and industry to develop affordable drugs relating to neglected diseases
ii) Encourage R&D including open source based research such as Open Source Drug Discovery (OSDD) by the Council of Scientific and Industrial Research (CSIR) for new inventions for prevention, diagnosis and treatment of diseases, especially those that are life threatening and those which have high incidence in India
iii) Ensure enhanced access to affordable medicines and other healthcare solutions
iv) Streamline regulatory processes to ensure timely approval for manufacturing and marketing of drugs while maintaining safety and efficacy standards
v) Make efforts to reduce dependency on active pharmaceutical ingredients (APIs) imports including incentivising manufacturing of APIs in India and revitalising public sector undertakings in the healthcare sector
vi) Take strong measures against attempts to treat generic drugs as spurious or counterfeit
vii) Undertake stringent measures to curb manufacture and sale of misbranded, adulterated and spurious drugs and
viii) Remain committed to the Doha Declaration on TRIPS Agreement and Public Health

The US’ perception of India’s IPR practices

The Big Pharma of the US perceives India’s independent patent examination system and India’s Section 3(d) of the Patent Act, 1970 as an unfair playground favouring our domestic drug industry. This had prompted the US Trade Representative (USTR) to place India in its ‘Priority Watch List’ and to subject India to an Out of Cycle Review in 2014 at its annual Super 301 report. Big Pharma fears that many countries would follow India’s practice of utilising the flexibilities in the TRIPS agreement and hence places demands such as refraining from compulsory licensing, demanding fast-track examination of patent applications by India etc.

Hopefully now, the enforcement of IP rights is deleted from the Big Pharma’s agenda. Also, the Big Pharma should be happy after the Indian patent issued for the drug Sofosbuvir — applied by Gilead Sciences — granted by the Indian patent office on May 9, 2016.

The US trade bodies have been giving veiled threats that should India not fall-in-line with the US’ wish list of its IP protection, then India needs to be restrained from exporting her duty-free products to the US under the Generalized System of Preferences. Big Pharma appears to feign ignorance about India’s export of her pharma products to the US (and so the practising of the USPTO norms) vis-a-vis India’s domestic IP-protection benchmark (which is governed by India’s IP Office norms).

Unlike consumer goods, healthcare is a social and human good, worldwide. Save for a handful of Indian elite, nobody in India can afford the patented/ non-patented medicines of the US. Big Pharma needs to understand that India has 1.3 billion mouths to be fed. While Big Pharma is clearly erroneous in gauging the affordability of health-related expenses by the majority of the Indian citizens, let us take a look at the US’ own domestic pharma front.

Domestic pharma front in the US

Thrice within the last two decades, the US has been contemplating the imposition of march-in rights over the high price of patented drugs dictated by the free-market economy in the US. The first two were the case of the drugs Ritonavir and Latanoprost in 2004 where the National Institutes of Health (NIH) of the US had held a hearing to consider a march-in request or government-use licensing from the stakeholders. The third was the repeat case of the drug Ritonavir in 2013. And now for the fourth time, there is a request being placed to the Obama administration to hold a public hearing to determine if the NIH should intervene in the affordability for a prostate cancer drug Enzalutamide.

The march-in right, under the purview of the US Bayh-Dole Act, allows any US government agency, which had funded private research – to require the drug maker to license its patent to another party in order to “alleviate health and safety needs which are not being reasonably satisfied,” or when the benefits of a drug are not available on ‘reasonable terms.’ Additionally, there also exists the government’s use/ confirmatory licensing clause flexibility for exercising control on government-funded research outcomes. The government-use license provides the federal funding agency the provision of a “non-exclusive license to practice or have practised for or on behalf of the US any subject invention throughout the world.”

And to add insult to injury, if the price of patented-drugs soared in the US, the price of monopolistic non-patented drugs also touched new hitherto unattained heights. Important among them are the price increase of the drug Colchicine in the year 2009, the drug 17-alpha-hydroxyprogesterone caproate in the year 2011 and the drug Daraprim’s price-increase last year. To tackle this type of behaviour, the US is contemplating the process of creating a priority-review pathway for off-patent drugs and the institution of a voucher-system as an additional tool. Further, it has been recently (April 3rd issue) reported in the Forbes that as compared to the prevalent inflation rate in the US, the drug patents have resulted in an eight fold drug price increase. The US is averse to applying price-controls, fearing its impediment to new drug development.

The US government should demand clinical – information disclosure from Big Pharma for all the screened substances the Big Pharma have pharmacodynamic information on, for which the Big Pharma had been granted the investigational regulatory permission from the US Food and Drug Agency (FDA) and make it public. This would be an ethical gesture from the US to the world’s humanity. It is actually the asymmetric government-interferences such as the ‘closed-distribution’ that the US regulators make, which cause issues of accessibility, and consequently, affordability of medicines, within the US. And the healthcare system in the US is corporate-funded. Thus, the US’ own regulatory and exclusivity raaj is still evolving!

The way forward for India’s pharma goods/ services

It is said that ‘When in Rome do as the Romans do.’ And the Indian pharma industry does TRIPS compliant service. Even so, within India, the impact on the affordability of many pharma products are becoming dearer. For instance, the anti tuberculosis drug Bedaquiline, India has become dependent on a single-source manufacturer. When the access for more and more drugs used in the treatment of tropical diseases become scarcer, where would the patients go in case of an outbreak?  Indian population is still financially dependent on their own pockets for meeting their healthcare needs (unlike the US where, mostly, health insurance companies handles the medical expenses). India has no option but to choose the re-establishment of its own government manufacturing units and also encourage the apothecary way of compounding non-patented drugs. At the same time, it also needs to establish a strong drug-discovery platform – especially for tropical diseases affecting India. The rupee is not equal to the dollar. Both countries need to keep in mind that artificial restraints on the market to be meaningful, should be administered only when it is absolutely necessary.