Last week, India’s Parliament passed a bill that many feared would end access to the affordable generic medications that India sells throughout the developing world. But even though the bill makes substantial changes to India’s patent laws, it is not expected to have an immediate affect on access to the generic antiretrovirals (ARVs) already available.
Nonetheless, if India’s president signs the legislation in its current form, access to new generic life-saving medicines could be delayed, and the cost of medications introduced after 1995 (including, theoretically, some commonly used co-formulations) could increase significantly. Additionally, ambiguity in the language of the bill could lead to litigation that may discourage smaller generics companies from taking any risks to produce new drugs.
India’s process patents
After the colonial era, drugs in India cost essentially the same as in the West. India had inherited British patent law, and the average Indian citizen could not afford pharmaceutical medicines.
So in 1970, India passed the Patent Act, which allowed Indian companies to make cheaper copies of another company’s drug (or other inventions)— as long the manufacturing process was slightly different. Because several companies could patent different manufacturing processes for the same drug, competition drove prices down. These “process” patents dramatically extended life expectancy in India (and elsewhere).
Since then, India’s homegrown pharmaceutical industry has flourished; and India supplies relatively affordable medicines throughout much of the developing world.
Generic antiretrovirals
In fact, Indian production of generic antiretrovirals has made large scale ARV therapy (ART) possible in the poorest countries that have the greatest burden of HIV disease. Even in settings where the average person earns less than $100 per year, the Western pharmaceutical industry had continued to price ART above $10,000 per year.
But competition from Indian generics companies brought down the cost of some antiretroviral combinations by as much as 98%. Furthermore, Indian generics companies have introduced innovative formulations that combined three-drug ART into one pill taken twice-daily, making adherence easier for patients.
Today, Indian pharmaceutical companies supply approximately half of the antiretrovirals being taken in resource-limited settings. And even though some other countries have begun to produce generic antiretrovirals locally, Indian companies supply many of the basic ingredients for these drugs.
Globalisation and pharmaceutical industry lobbying to restrict treatment access
However, India’s “process’ patents have put the country at odds with Western business — and not merely the pharmaceutical industry. Many multinational companies have refused to invest in the country and Western countries blocked or placed high tariffs upon many Indian goods.
By 1995, India decided to seek membership in the World Trade Organization (WTO) because many felt its participation in “globalisation” would offer India greater economic opportunities. In order to gain admittance to the WTO, India agreed to abandon its process patent law and to institute pharmaceutical patents by January 1st, 2005.
But since 1995, patient advocates have introduced greater flexibility in the trade-related aspects of international patent law (TRIPS) to increase patient’s access to life-saving drugs. TRIPS flexibility granted countries the right to locally produce or import generic life-saving medications when the need is deemed to be great.
Subsequent efforts by Western pharmaceutical industry lobbyists at large international trade meetings have failed to restrict these rights.
So the pharmaceutical lobbyists has focused more on the local level, pressuring governments to not take advantage of the rights they have under TRIPS and to introduce more restrictive language into national law or regional trade pacts. Such lobbying can go unnoticed by patient advocates until it is too late — after access to treatment has gradually been whittled away.
And knowing that India’s WTO deadline was coming up, the Western pharmaceutical industry lobbied the Indian government aggressively. As a result, in December 2004, a temporary executive order was issued to meet the January 1st deadline that went far beyond WTO requirements. The provisions of the ordinance were broadly criticized and widely publicized.
The revised patent law
Then earlier this month, a bill based upon (and designed to replace) the ordinance was taken up by India’s bicameral Parliament. But because of the efforts of advocacy groups such as Medecins San Frontiers (MSF) and opposition factions in Parliament, several last minute amendments to the bill appear to have made it markedly less destructive — for example, one provision that could have bankrupted some generics companies (by making patents granted for applications filed after 1995 retroactive – see below) has been removed.
(The amendments are listed in a fact sheet released by the Government of India’s Press Information Bureau).
However patient advocates remain concerned that the bill could markedly delay access to new affordable treatments both in India and in other resource-limited settings as well as increase the cost of some medications introduced after 1995.
Under the current bill: Drugs discovered before 1995
Generic formulations of drugs discovered before 1995, comprising almost all the antiretrovirals currently produced in India, should not be directly affected; however:
- Innovator companies can patent new formulations of old drugs (including coformulations of more than one drug). But to get a new patent (or a patent extension), the formulation must be demonstrably superior to the old drug and not merely the result of a minor chemical or manufacturing process variation.
Drugs (including formulations or co-formulations) discovered after 1995 and before January 1st, 2005
These products, such as tenofovir, emtricitabine and atazanavir, could become patented if the originator company filed an application with the Indian government before the new law went into effect. According to India’s Financial Express, over 7,500 (out of about 8,900) patent applications have been filed by non-Indian firms.
- The process of issuing the first of these patents will take a while — at least two years according to India’s trade minister.
- Until the patent is granted, generics companies can continue to sell already marketed generic formulations of these drugs. These companies will not be considered guilty of patent infringement or required to pay “back” royalties.
- Once the patent is issued, the generics company may continue to market their formulation if they pay a “reasonable” royalty to the patent-holder. The law does not define what a “reasonable” royalty might be. Patient advocates believe the norm is 5% or less, but innovator companies are likely to think otherwise. What’s ‘reasonable’ may be subject to lengthy litigation.
- Patent protection for these products will last twenty years from the date that the application for the patent was filed — rather than the day the patent is granted.
New drugs
Any new drug discovered will be offered 20-year monopoly patent protection, with some caveats:
- The patent application for any product or innovation must first be filed before the discovery is described in any publication or used anywhere in world. This effectively protects existing three-drug ART regimens such as Triomune that were first considered and formulated in India (but ironically might not protect a combination such as AZT/3TC or Kaletra that were first proposed by the originator companies)
- Local companies have a right to contest patent applications for a variety of reasons before a patent is granted. However, it remains to be seen how well this mechanism will work.
- The bill contains strict "compulsory licensing" provisions, in which the government could allow patents to be broken if generic drugs were required for a health emergency. However, many AIDS advocate fear that India may not grant compulsory licenses for AIDS drugs because AIDS is not considered a national health emergency even though an estimated 5.1 million Indians are HIV-infected. Some articles in the press have suggested that it will take three years for a generics company to receive a compulsory license, however, language in the bill’s amendments suggest that the period should not be longer than six months
- Government officials suggest that the bill’s language is broad enough that compulsory licenses might also be granted if the government decides that a drug’s prices are excessive — though its not clear how that would be determined.
Dangers of litigation and pressure from multinationals
How this bill will actually work in practice remains to be seen. The bill grants the government wide discretionary powers — but this may not be so reassuring when considering the slant of the temporary ordinance and bill originally backed by the government. Also many of the terms in the bill that remain unclear or undefined will probably be decided in the courts — where multinationals could have the upper hand because they can afford to fund endless litigation.
One example of how wrong things could go is when the Indian government caved into pressure from Swiss pharmaceutical giant Novartis in November 2003 to remove generic competitors to its anti-cancer drug Glivec from the Indian market. The generic drugs sold for $2,700 per year, but Novartis now markets the drug at $27,000 per year. Recently, however, India’s National Pharmaceutical Pricing Authority (NPPA) has proposed to impose price controls on the drug.
Co-option of the Indian pharmaceutical industry
But the greatest threat to the developing world’s access to affordable Indian generic medicine may not be the new patent law — it could be the opening up of the Western world’s markets to the Indian pharmaceutical industry.
Indian companies have highly skilled chemists and the ability to manufacture high quality formulations at low costs. And now that India is no longer a “pirate” country, pharmaceuticals jobs and research will now be increasingly outsourced to India in much the same way as many information technology jobs have been.
According to the Financial Express, “With nearly $45 billion of drugs [in the West] expected to go off-patent over the next four years, the Indian generic drug manufacturers are expected to gain in a big way.”
It is reported that multinational pharmaceutical companies have been making deals left, right and centre. Hundreds of meetings have been held this month between Indian generics companies and the multinationals, and over 30 agreements already signed, included large deals for Cipla and Ranbaxy (the two largest antiretroviral generics manufacturers). See http://www.financialexpress.com/fe_full_story.php?content_id=85194 and
http://www.financialexpress.com/fe_full_story.php?content_id=86189.
In the end, the West may simply “buy up” India’s generics manufacturing capacity.