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A looming public health crisis?

By Prabhash Ranjan

With effect from January 1, 2005, India has had to amend its patent law and introduce product patenting in pharmaceuticals. This is likely to reduce access to affordable medicines, especially for the poor. But why has India failed to exploit the existing flexibilities in the TRIPS Agreement that could have protected the public interest?

When one thinks about an agreement on Intellectual Property Rights (IPR) in a trade organisation such as the World Trade Organisation (WTO), the first impression is that of a mismatch. Is a global and multilateral trade organisation the right place to negotiate and implement IPR provisions? The answer would appear to be ‘no’. IPR, at best, has an indirect link to trade in goods and services and hence should be beyond the jurisdiction and mandate of any trade organisation. If this is the case, then the obvious question is: Why does the WTO contain an agreement on IPR in the first place?

The answer is that the rich and powerful wanted an agreement on IPR in the WTO because it suited their economic interests. This is borne out in the Uruguay Round of negotiations that took place from 1986-1994,  which ultimately led to the formation of the WTO in 1995. In these negotiations, developing countries, led by India and Brazil, were firmly against the inclusion of IPR within the ambit of multilateral trade negotiations. On the other hand, the United States was very keen to have an agreement on IPR in the yet-to-be-formed WTO. The US was keen to expand its IPR agenda, essentially on patents, in order to strengthen the prospects of large multinational pharmaceutical companies. Since a majority of patents were held in the US, it perhaps made economic sense for the US to augment the existing IPR agenda.

Why did the US choose the WTO for its ambitious agenda? There are two reasons. First, the US was frustrated with the pace of things at the World Intellectual Property Organisation (WIPO), the specialist United Nations (UN) agency dealing with IPR, where it tried to expand the IPR agenda but did not succeed. Second, the WIPO lacked a strong enforcement mechanism and hence could not police the rights of the IPR-holder, whereas the yet-to-be-formed WTO was to have a strong dispute settlement mechanism that would do the required policing of implementation of the rights of IPR-holders.      

So the US used all kinds of methodologies, including coercive techniques, at the Uruguay Round of negotiations to counter opposition from developing countries. It used Section 301 of the US Trade Act (Section 301 of the US Trade Act enables the US president to take suo moto action, including the removal of tariff preferences or the imposition of sanctions against countries that do not provide adequate protection to the IPR rights of US citizens) as a coercive tool to threaten countries that were opposing the TRIPS negotiations at the Uruguay Round. Using this tool, the US was able to overcome the resilient Brazilians.(1) India, which was representing the developing world, also buckled under US pressure and accepted the TRIPS Agreement. (2)

Apart from pressure by the US, the TRIPS Agreement was also seen as part of the overall WTO package, where concessions had to be made in order to get certain benefits. For developing countries, the alleged benefit was a dismantling of the quota regime on textiles and clothing by developed countries, through the enactment of the Agreement on Textiles and Clothing (ATC).

Ever since the TRIPS Agreement was reluctantly accepted as part of the grand bargain to get the dismantling of textile and clothing quotas it continues to remain controversial and contentious.

Once TRIPS became part of the WTO it meant that all WTO member countries, including India, were bound to change their IPR laws in accordance with the provisions of the TRIPS negotiations. These changes were needed, since countries like India had weak IPR, particularly a weak patent regime. The key difference was that India’s patent law (Indian Patent Act, 1970) did not recognise product patenting of pharmaceuticals, unlike the TRIPS Agreement. Indian patent law gave patent protection to the process that was used to invent a medicine. In other words, it was only the process of invention that was protected, not the product (medicine) itself. This allowed generic manufacturers to produce all kinds of medicines and drugs through reverse engineering. The presence of generic manufacturers in the pharmaceuticals market ensured that there was a lot of competition and abundant supply, which kept the price of medicines down. This, in turn, ensured accessibility of medicines even to disadvantaged sections of society.

However, with effect from January 1, 2005, this scenario has changed. India has had to amend its patent law and introduce product patenting in pharmaceuticals in order to fulfil its obligations under the TRIPS Agreement. Before we understand the ramifications of this change it is important to remember that this change, made to introduce product patenting in pharmaceuticals, was the third change in a series of amendments made to the Indian patent law from 1995 (post the formation of the WTO) to make it TRIPS-compliant. The first and second changes were made in 1999 and 2002, respectively. The change in 1999 introduced the mailbox system and Exclusive Marketing Rights (EMR). The second change, in 2002, was made to agree on the duration of patent protection.

The biggest apprehension regarding the introduction of product patenting in pharmaceuticals is that once patented medicines start coming into the market, their accessibility will be restricted to those who can afford them. Poorer sections of society will find it difficult to access them. This could lead to a major public health crisis in the country.

To face such a scenario, where product patenting could lead to a monopoly and hence extremely high medicine prices, the TRIPS Agreement provides certain mechanisms. One is the use of Compulsory Licensing (CL). CL is a mechanism whereby a competent national authority grants a licence in order to permit either the national authority or any third party to manufacture a patented product without the authorisation of the patent-holder. The significance of CL in pharmaceuticals (medical patents) is that it allows the production of generic medicines that can be sold at cheaper prices. The TRIPS Agreement offers wide discretion to countries to use CL as a flexibility option. For instance, it does not limit the grounds under which CL can be issued, although it does list certain conditions in Article 31, such as paying adequate remuneration to the patent-holder.

However, the Indian patent law, as amended by the third amendment, provides that CL can be issued only after three years of granting a product patent. This condition is not in the TRIPS Agreement and is, therefore, a unilateral measure adopted by India. Its provision in the Indian patent law is unnecessary, as it sends out a signal that the state is not serious about public interest issues. The third amendment to the Indian Patent Act also dilutes the scope of patentability (criteria adopted to patent a product), by allowing patent-holders to claim patents with the most trivial of improvements. This could lead to continued monopoly by the patent-holder (known as ‘ever-greening’ of a patent). (3)   

We see, therefore, how India has not made full use of existing flexibilities in the TRIPS Agreement, and has instead opted for a much tighter patent law. This may, in the long run, undermine public interest by affecting accessibility to medicines, especially by disadvantaged sections of society.     

Another important change in the Indian IPR regime after the emergence of TRIPS has been the enactment of a  plant variety legislation, with the twin aims of protecting the rights of farmers in the development of new plant varieties, and protecting the rights of breeders to stimulate investment in the production of new plant varieties. (4) One of the reasons for adopting this legislation was that the TRIPS Agreement requires countries to provide protection to newly-developed plant varieties, either through an internationally recognised patent protection system or through a sui generis (indigenously developed) system.

These are some of the basic changes that have been made in the Indian patent regime after the WTO came into existence. On the issue of medical patents, the Indian policy space appears to have shrunk. However, instead of complaining about the TRIPS Agreement, India must also blame itself, for it has adopted a number of measures in its new legislation that it did not have to take. India should have exploited the existing flexibilities in the TRIPS Agreement in order to develop a regime that can mitigate the harmful effects of product patents in pharmaceuticals. It needs to change its patent law and incorporate provisions to ensure cheaper and better access to drugs by all its people.

(Prabhash Ranjan, a trade policy analyst, is visiting faculty to the Indian Law Institute, New Delhi. He was formerly with the Centre for Trade and Development, New Delhi)

Endnotes

  1.  For more on this see Jayashree Watal, ‘Intellectual Property Rights in the WTO and Developing Countries’ (Oxford University Press: New Delhi, 2001) at 11-48
  2. For more on this see ‘Intellectual Property Rights: Government Buckles under US Pressure’, Economic and Political Weekly, May 13, 1989
  3. For more on this see K M Gopakumar and Tahir Amin, ‘Patents (Amendment) Bill 2005: A Critique’, April 9, 2005, Economic and Political Weekly
  4. For more on this, see Philippe Cullet, ‘Intellectual Property Protection and Sustainable Development (Lexis Nexis: New Delhi, 2005)

InfoChange News & Features, February 2007