India: Robin Hood of the pharma world

Gilead’s Sovaldi is a wonder drug sold at a shocker price. It is the most effective cure for Hepatitis C, and is in high demand. But the drug has caused an outrage in the US where patients, healthcare providers and insurers have questioned its exorbitant price tag. For a a 12-week course, Sovaldi costs $84,000 (₹50,00,000).

Sovaldi was also in the news for an entirely different set of reasons. Earlier this month, an Indian generic firm, Natco, filed a ‘pre-grant opposition’ to Gilead’s patent covering Sovaldi. The move could result in the Indian Patent Office rejecting Gilead’s patent, bringing down the price to a fraction of its current price.

This is not a one-off incident. India has tackled the issue of unaffordable prices of drugs protected by patents by incorporating a remarkable array of provisions into its intellectual property (IP) law.

These provisions qualify as ‘legitimate flexibilities’ allowed under the WTO’s Trade Related aspects of Intellectual Property Rights (TRIPS) Agreement.

And they fall under three heads: provisions for curbing the grant of patents for new forms of known substances (known as ‘evergreening’); allowing third-party competitors to question a patent application before its grant; and introducing provisions for compulsory licensing, including the grant of compulsory licence for not working the patent locally.

On the one hand, incorporating these flexibilities have resulted in the revocation of patents covering drugs of leading pharmaceutical companies, such as Merck, Pfizer, Eli Lilly, GlaxoSmithKline, Novartis and Roche. This has allowed Indian generic companies to produce those drugs, leading to allegations of IP ‘theft’.

On the other, Indian generics makers were able to provide generic versions of these drugs to other markets at a fraction of their cost, earning India the title of ‘pharmacy of the developing world’.

If there is an idea that captures the outcome of the last six decades of patent law reform in India, it is the legend of the heroic outlaw, Robin Hood. India is the Robin Hood country.

Often accused of tolerating and even promoting roguish behaviour — of robbing the intellectual property of the rich and giving it to the poor — the accusations against India reached an all-time high recently. The US Chamber of Commerce made strong requests to the US Trade Representative (USTR) to categorise India as a “Priority Foreign Country”, a status reserved for the worst offenders of intellectual property rights.

In its formative years, Indian IP law did not grant patents for pharmaceutical products; this contributed to the creation of a vibrant generics industry supplying cheaper drugs both nationally and internationally.

In its post-TRIPS form, the law now requires a higher standard of patentability for improvement patents covering existing drugs.

India, therefore, maintains two positions in tandem: as a safe haven for ‘patent busters’ by providing a legal framework that has exceptionally denied the maximum number of patents on medicines in the last decade; and as the pharmacy of the developing world.

Intellectual property debates often revolve around the metaphor of property. The law ascribes property status to intangible things, such as ideas. One of the advantages of using the language of property is to ensure that, like real property, IP too can be stolen.

An entire array of terms has been used to define what is legally an act of IP infringement: stealing, copying, counterfeiting, theft, etc., and the persons who participate in these activities have been called ‘thieves’ or ‘pirates’. There is little tolerance for roguish behaviour under IP law. Not only persons, even countries are sometimes classified as ‘rogues’ if they fail to offer proper protection for IP.

The USTR meticulously publishes the IP compliance data sheet of all the countries that matter and takes care to classify nations on the level of protection offered for IP.

The roguishness of states can be understood by the tag ascribed to them: ‘Watch List’ or the ‘Priority Watch List’ refers to countries with particular problems when it comes to IP protection and enforcement; ‘Priority Foreign Country’ refers to countries with the worst IP policies and practices. The US has put India on the Watch List ever since it became a member of the WTO.

But now, with severe pressure from the US Chamber of Commerce, India could be designated “Priority Foreign Country”.

India introduced pre-grant opposition of patents as a means of checking the validity of patents before their grant, a provision that has resulted in the rejection of many drug patents for minor improvements including Novartis’ controversial anti-cancer drug Glivec.

India’s grant of compulsory licence to Bayer’s Nexavar is yet another instance of tweaking the law to suit public interest.

This is the first non-essential compulsory license issued in the absence of a medical emergency at the instance of a generic manufacturer.

India’s patent law also requires proof of enhanced efficacy for patents on new forms of known substances, another provision that has resulted in a heightened standard of patentability that patentees have not been able to meet in this market.

Being Robin Hood comes at a cost. Persecution and emulation are the two inevitable consequences. On the one hand, India’s efforts to redefine and redesign patent laws met with strict opposition from the US and the European Union.

On the other hand, countries such as Brazil, the Philippines, Brazil and South Africa have either emulated or strongly favoured following India’s path. India’s patent reforms have a remarkable extraterritorial impact.

The strict opposition to India’s patent laws comes from the fact that it provides an alternative model of compliance with the TRIPS Agreement vis-à-vis the dominant model propagated by the US.

Understandably, India’s alternative model of law has seen stiff resistance in the form of counter-provisions in Free Trade Agreements (FTAs) entered by the US and other countries.

As in most cases involving the clash of ideologies, both the law and its applications are areas of contention.

The writer is a practising advocate, and holds the Ministry of Human Resource Development Chair on IPRs at IIT Madras