The scalpels are out ahead of ‘Special 301’ Report

For the past five years, a lone Indian pharmaceutical representation goes out to the Office of the US Trade Representative (USTR) every February to explain the lay of the land in respect of intellectual property rights (IPR).

The annual exercise precedes the release of the USTR’s ‘Special 301 Report’, which evaluates trading partners’ track record in implementing IPR. The IP report-card will be out late in April, but submissions to the USTR concluded last week.

The pharmaceutical industry’s submissions are always among the most combative as actions stemming from this report could have serious ramifications for public health across countries. Last year’s report put India on the ‘Priority Watch List’, irking Indian industry, but not quite the Government, which didn't see the need to be perturbed by another country’s assessment. Making its second submission to the USTR under the Trump administration, the Indian Pharmaceutical Alliance (IPA) has, again, called for India to be taken off the Priority Watch List.

“The administrative improvements in patent issue and enforcement demonstrated in 2015 and 2016 have been sustained and accelerated in 2017,” the IPA submitted. “Adequate examiners are now in place and the pace of examination of patents has noticeably improved. Trademark examination time has been drastically reduced to one month.”

There has not been “abusive” patent opposition proceedings or material disadvantage to US companies because of it, nor has there been denial of injunctions in 2016 and 2017 before the launch of a follow-on generic when a patent for the product is in force, it adds.

Big Pharma’s key worries include the sole compulsory license (CL) India issued, allowing Natco to make its less-expensive version of Bayer’s advanced kidney cancer drug Nexavar. The other concern is Section 3(d) of the amended Patents Act, which does not recognise incremental developments on a known drug unless it shows greater efficacy. This was the cornerstone of a benchmark case involving Novartis blood cancer drug Glivec.

IPA says that no CLs have been granted in five years nor have patents been revoked under Section 66. “Section 3(d) and Hatch-Waxman provisions are not dissimilar in terms of outcomes,” it says, adding that it should not be a concern.

Expanding the ‘Priority list’

But the Pharmaceutical Research and Manufacturers of America (PhRMA) has urged the USTR to take action to address “serious market access and intellectual property barriers in 19 overseas markets”.

Their submission calls to name Canada, Korea and Malaysia as ‘Priority Foreign Countries’ and to include Japan and 11 other countries on the ‘Priority Watch List’. “Discriminatory pricing policies in Canada, Korea and Japan and compulsory licensing in Malaysia are threatening American jobs and exports,” says PhRMA Senior Vice President for International Advocacy Brian Toohey.

Countries are “blatantly” disregarding trade rules to benefit their own domestic industries, undermining investment in new treatments, he says, adding, “Special 301 gives the Administration a critical tool to combat these damaging practices and to level the playing field for America’s innovative and creative industries that collectively support more than 45 million jobs across the country.”

The IP Index

Interestingly, India's score on the US Chamber of Commerce’s International IP Index increased by 5 percentage points over last year, the biggest jump for a country. But this report, also released in February, draws sharp exchanges.

The reality is that India was starting from a low mark, and the gains to date remain relatively modest, says Patrick Kilbride, Vice President, Global Innovation Policy Centre (GIPC).

“Despite some encouraging advances made through the National IPR Policy to benefit domestic entrepreneurs, India has yet to address shortcomings in its statutory intellectual property framework that unnecessarily restrict patent eligibility and increase the likelihood that patents will be invalidated or revoked in opposition proceedings... the US government will likely continue to prioritise reform of India’s intellectual property protection, including through the Special 301 Report.”

IPA retorts that the “GIPC IP Index is self-serving and is not comparable to the IMF or World Bank rankings in other spheres.”

As industry comes under pressure from governments struggling to keep healthcare costs down, these cross-country industry battles are set to continue.