Unhealthy Obsession

In late April, the United States Trade Representative—the agency responsible for recommending trade policy to the US president—released its annual report, called “Special 301.” The report analyses trade policies of countries across the world, especially their intellectual-property laws, and categorises them. India has been put on what the report calls a “priority watch list,” which includes countries judged by the USTR as having “serious intellectual property rights deficiencies” that require the agency’s increased attention. India has been put on the list for a record twenty-seventh time, and is accompanied by ten other countries, including Russia and China. The agency warns: “For such countries that fail to address U.S. concerns, USTR will take appropriate actions … pursuant to World Trade Organization or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices and to ensure that trading partners follow through with their international commitments.”

The reason for India’s seemingly permanent position on the list is its patent system, which the agency deems too lax. According to the report, the main challenges in India for US companies are the country’s patent laws and “counterfeit” medicines. However, these patent laws also help keep prices of medicines low, which has allowed the Indian generic-drugs industry to flourish, ensuring greater access to medicines for not just India, but other developing countries as well. The USTR report is clearly giving voice to the US’s big pharmaceutical companies, which continuously complain about losing revenue in India due to the presence of the generic-drugs industry. Unfortunately, India has already succumbed to US pressure on this issue to a great degree, and further compromise is likely to be against the interests of the Indian masses.

The foundation of India’s patent law is the Patents Act, 1970. The act only allowed “process patents,” which meant that only the process of making a medicine, and not a compound itself, could be patented. This gave space to India’s local manufacturers to use alternative processes to develop medicines and sell them at lower rates. During the early 2000s, this law allowed India’s generic-medicines industry to produce low-cost AIDS medicines, which, many argue, prevented a worldwide catastrophe.

However, in 2005, the patent law was amended to allow for “product patents,” However, in 2005, the patent law was amended to allow for “product patents,” which means that manufacturers can now hold exclusive rights to the production of particular products. India was forced to adopt product patents due to obligations under international trade rules, determined by the World Trade Organisation. Thus, medicines began getting patented, leaving no scope for manoeuvre in the process of making them.

However, owing to strong public pressure, the Indian government introduced a provision, Section 3(d), which laid down stringent norms for claiming patents. For instance, a new medicine has to show substantial improvement in efficacy of treatment to merit a patent. A mere change in form—say, from tablet to syrup—is not patentable in India. This rule has come under repeated attack by US pharmaceutical companies.

A recent change in India’s legislation seems to be in sync with what the USTR wants. In January this year, India’s ministry of chemicals and fertilisers made a damaging amendment to the Drug Pricing Control Order, which stipulated that patented medicines cannot be brought under price control for five years after the commencement of their commercial marketing. Earlier, only those patented drugs for which research and development was carried out indigenously had this exemption, a measure meant to encourage innovation within the country. However, since January, the exemption is applicable to all drugs. This would ensure profits for big pharmaceutical companies, many of which are US-based.

The amendment seems to have been directly influenced by the Special 301. In 2018, the report said about India, “Innovative industries also face pressure to localize the development and manufacture of their products, including under provisions of the Drug Price Control Order.” Within roughly eight months of the release of the report, the DPCO amendment was issued.

The DPCO amendment does not find a mention in the 2019 report. However, the Pharmaceutical Research and Manufacturers of America, or PhRMA, a lobby group of pharmaceutical companies such as Johnson & Johnson and Pfizer, appreciated the amendment in its latest report. “We appreciate the Department of Pharmaceuticals (DoP) January 2019 amendments to Paragraph 32 of The Drug Price Control Order (DPCO) 2013,” it said. “Specifically, the government rescinded a discriminatory provision against foreign companies which had previously exempted only patented medicines developed in India from price controls for five years from the commencement of marketing in India. The amendments also exempt patented medicines developed outside of India.”

In the 2019 report, the USTR made sure to applaud those efforts of the Indian government that it approves of. “India’s Cell for Intellectual Property Rights Promotion and Management (CIPAM) organizes and spearheads the government’s efforts to simplify and streamline IP processes”—that is, intellectual-property processes—“increase IP awareness, promote commercialization, and enhance enforcement,” it said. “The United States encourages other trading partners to consider adopting cooperative IP arrangements ... India’s CIPAM has reportedly undertaken 19 IP awareness roadshows in 18 Indian states and maintains an active social media presence.”

There are further signs that India’s patent landscape is changing in favour of big pharmaceutical companies, evidently on behest of the United States. A study by the legal and scientific researchers Feroz Ali, Sudarsan Rajal, Venkata S Raman and Roshan John, published by Azim Premji University, showed that 72 percent of pharmaceutical patents granted between 2009 and 2016 were unmerited. According to the scholars, these patents were in contravention of Indian patent laws, and constituted “evergreening”—the extention of patents that are about to expire through often minuscule changes that effect no improvement in efficacy.

The 2019 report also complained about India’s lack of action against counterfeit goods, especially medicines. According to the USTR, India is one of the biggest sources of counterfeit medicines being exported to countries across the globe, including the United States. However, there is controversy over the usage of the term “counterfeit.” In the context of intellectual-property legislation, the term is often used to describe legitimate generic low-cost medicines. Recognising this, the World Health Organisation recently began using the term “falsified and sub-standard” medicines to refer to medicines of compromised quality. Continuing to pressurise countries by using the word “counterfeit” shows the USTR’s unwillingness to accept this distinction. The Indian government has called the report “vague,” and demanded concrete evidence of the allegation.

Experts have questioned the legality of the bilateral pressure exerted through reports like this one by the USTR. “International trade rules are governed by the WTO, so any bilateral trade action to undertake measures that goes beyond Trade Related Aspects of Intellectual Property Agreement of the World Trade Organisation (TRIPS Agreement) is not legally valid. It does not allow any bilateral trade measures in violation of WTO obligations,” KM Gopakumar of the advocacy organisation Third World Network, who follows developments in intellectual-property law closely, told me.

The USTR report also criticises the issuance of compulsory licences for medicines by some countries. The compulsory licence is a mechanism that allows countries to revoke the patent of a company over a particular drug in case of a health emergency, thus permitting the local production of life-saving medicines to promote public health. CLs have been allowed under Article 31 of the TRIPS agreement, and also reaffirmed by the WTO’s Doha Declaration of 2001. Malaysia recently issued a CL for the Hepatitis C medicine sofosbuvir, patented by the US pharmaceutical company Gilead, to help patients in the country to access the drug. Creating pressure on countries to not use CLs goes against the spirit of the allowances made under international treaties.

The need of the hour in India is to resist these attempts from the US agency at any cost. With rocketing prices of medicines, India needs more, not less, price control. For example, the maximum retail price of the breast cancer medicine trastuzumab is between Rs 58,000 and Rs 63,000 per 440-milligram vial. Depending on the treatment, anywhere between ten and seventeen of such vials are needed per patient. Similarly, Pfizer’s Prevnar 13 vaccine costs Rs 3,800 for a single dose. Prevnar 13 helps prevent pneumococcal disease, which can cause meningitis, blood infections, and ear infections, and infants and toddlers are to be given four doses. Going by the high rates of deaths among children due to pneumonia in the country, it is an essential vaccine. Measures such as price controls can keep such prices under check. This year’s DPCO amendment, thus, is particularly problematic, as it would encourage multinational pharmaceutical corporations to use their monopolies on patented medicines to keep prices extremely high and available to only the rich in India.

According to the health ministry’s data, an overwhelming seventy percent of expenses on medicines in India are met by out-of-pocket expenditure, due to which medical costs push seven percent of the population below the poverty line every year. Expensive patented medicines, which are not available through government schemes, remain out of reach for most people. Such abuse by pharmaceutical corporations of their dominant position makes price controls absolutely critical.

The USTR is clearly working hand in hand with big US pharmaceutical corporations at the cost of the health of poor patients across developing countries. It is fitting for these nations to question such pressure. However, despite India calling out the United States in the media, evidence shows that the Indian government is succumbing to US pressure and changing policies to suit the interests of big pharma. In the interest of its patients, the Indian government should follow its own laws and not let the power to reduce medicine prices be compromised.