Last week, the Office of the United States Trade Representative (USTR) released the “2015 Special 301 Report”, which is its annual review of the global state of Intellectual Property Rights (IPR) protection and enforcement.
While looking through the Kaleidoscope of business interests of the United States, variegated changing patterns of a wide variety of country-specific observations can be noted in this report.
It is widely believed that the report ‘pontificates’ about the adequacy and effectiveness of IPR protection and enforcement of its trading partners against USTR’s own yardstick, hinting unhesitantly at the possible consequences, if found lacking.
USTR reviewed seventy-two (72) trading partners for this year’s Special 301 Report, and placed thirty-seven (37) of them on the ‘Priority Watch List’ or ‘Watch List’. Thirteen (13) countries – Algeria, Argentina, Chile, China, Ecuador, India, Indonesia, Kuwait, Pakistan, Russia, Thailand, Ukraine, and Venezuela, are on the ‘Priority Watch List’. These countries will be the subjects of particularly intense bilateral engagement during the coming year.
India specific significant elements of the 2015 Special 301 Report include the following:
- Increased bilateral engagement in 2015 between the United States and India on IPR concerns, following the 2014 Out-of-Cycle Review (OCR) of India on this issue.
- India will remain on the ‘Priority Watch List’ in 2015, but with the full expectation of US about substantive and measurable improvements in India’s IPR regime for the benefit of a broad range of innovative and creative industries.
- The US offered to work with India to achieve these goals.
- No OCR at this time for India, but US will monitor progress in India over the coming months, and is prepared to take further action, if necessary.
The 2015 report also highlights:
“While it is impossible to determine an exact figure, studies have suggested that up to20% of drugs sold in the Indian market are counterfeit and could represent a serious threat to patient health and safety.”
According to media report, a senior Commerce & Industry Ministry official has commented, “India is disappointed at being featured yet again in the US ‘Priority Watch List’ of weak IPR countries. But it is not worried.”
Recent Action by India:
In October 2014, almost immediately after Prime Minister Modi’s return to India from the US, the Government formed a six-member ‘Think Tank’ to draft ‘National IPR Policy’ and suggest ways and legal means to handle undue pressure exerted by other countries in IPR related areas.
The notification mandated the ‘Think Tank’ to examine the current issues raised in such reports and give suggestions to the ministry of Commerce & Industry as appropriate.
However, the domestic pharma industry, many international and national experts together with the local stakeholders, continue to strongly argue against any fundamental changes in the prevailing robust patent regime of India.
In the same month, the Department of Industrial Policy and Promotion (DIPP) constituted a six-member ‘Think Tank’ chaired by Justice (Retd.) Prabha Sridevan to draft the ‘National IPR Policy’ of India. Taking quick strides, on December 19, 2014, the Think Tank’ released its first draft of 29 pages seeking stakeholders’ comments and suggestions on or before January 30, 2015. A meeting with the stakeholders was also scheduled on February 5, 2015 to take it forward.
Possible reasons of US concern on the draft ‘National IPR Policy’:
As I discussed in my blog post of January 19, 2015 titled, “New “National IPR Policy” of India – A Pharma Perspective”, I reckon, there are three possible key areas of concern of American pharma industry against Indian patent regime. However, in the draft National IPR Policy India seems to have stood its ground in all those areas.
The draft IPR policy responded to those concerns as follows:
Concern 1: “India’s patentability requirements are in violations of ‘Trade Related Aspects of Intellectual Property Rights (TRIPS)’ Agreement.” (Though it has not yet been challenged at the WTO forum)
Draft IPR Policy states: “India recognizes that effective protection of IP rights is essential for making optimal use of the innovative and creative capabilities of its people. India has a long history of IP laws, which have evolved taking into consideration national needs and international commitments. The existing laws were either enacted or revised after the TRIPS Agreement and are fully compliant with it. These laws along with various judicial pronouncements provide a stable and effective legal framework for protection and promotion of IP.”
A recent vindication: On January 15, 2015, Indian Patent Office’s (IPO’s) rejection of a key patent claim on Hepatitis C drug Sovaldi (sofosbuvir) of Gilead Sciences further reinforces that India’s patent regime is robust and on course.
Gilead’s patent application was opposed by Hyderabad based Natco Pharma. According to the ruling of the IPO, a new “molecule with minor changes, in addition to the novelty, must show significantly enhanced therapeutic efficacy” when compared with a prior compound. This is essential to be in conformity with the Indian Patents Act 2005. Gilead’s patent application failed to comply with this legal requirement.
Although Sovaldi ((sofosbuvir) carries an international price tag of US$84,000 for just one treatment course, Gilead, probably evaluating the robustness of Sovaldi patent against Indian Patents Act, had already planned to sell this drug in India at a rice of US$ 900 for the same 12 weeks of therapy.
It is envisaged that this new development at the IPO would prompt entry of a good number of generic equivalents of Sovaldi. As a result, the price of sofosbuvir (Sovaldi) formulations would further come down.
However, reacting to this development Gilead has said, “The main patent applications covering sofosbuvir are still pending before the Indian Patent Office…This rejection relates to the patent application covering the metabolites of sofosbuvir. We (Gilead) are pleased that the Patent Office found in favor of the novelty and inventiveness of our claims, but believe their Section 3(d) decision to be improper. Gilead strongly defends its intellectual property. The company will be appealing the decision as well as exploring additional procedural options.”
For more on this subject, please read my blog post of September 22, 2014 titled, “Gilead: Caught Between A Rock And A Hard Place In India”
Concern 2: “Future negotiations in international forums and with other countries.”
Draft IPR Policy states: “In future negotiations in international forums and with other countries, India shall continue to give precedence to its national development priorities whilst adhering to its international commitments and avoiding TRIPS plusprovisions.”
Concern 3: “Data Exclusivity or Regulatory Data Protection.”
Draft IPR Policy states: “Protection of undisclosed information not extending to data exclusivity.”
I discussed a similar subject in my blog post of October 20, 2014 titled, “Unilateral American Action on Agreed Bilateral Issues: Would India Remain Unfazed?”
Confusion with the Prime Minister’s recent statement:
It is worth noting that in end April 2015, Prime Minister Narendra Modi reportedly remarked to align India’s patent laws with “international standards”.
What the Prime Minister really meant by patent laws with “international standards” could be of anybody’s guess. This is because, even the World Trade Organization (WTO) considers Indian Patents Act compliant to TRIPS Agreement, which has been globally accepted as the ‘Gold Standard’ in the realm of IPR…unless, of course, Prime Minister Modi intends to accept ‘TRIPS Plus’ provisions for India, under US pressure and at the cost of health interest of majority of Indian patients.
It is noteworthy though, his own Ministry of Commerce & Industry has categorically emphasized and re-emphasized several times in the past that India’s patent regime is fully TRIPS compliant.
To add greater credence to this argument, the noted free market economist and Professor of Economics at Columbia University – Arvind Panagariya, who has recently been appointed to run Prime Minister Narendra Modi’s new NITI Aayog, has also endorsed it in his published articles, unambiguously.
As usual, leaving nothing to chance, immediately after the above remark of the Indian PM to align India’s patent laws with “international standards”, the USTR urged India to ‘expeditiously undertake’ initiatives stated by PM Modi, flashing across a long list of changes that the US wants to get incorporated in the Indian IP Acts and policies.
Pressure for amendment of Indian Patent Law:
From the intensity of pressure that the US Pharma industry is generating on the US Government, it is clear that American pharma industry will not be satisfied till Modi Government brings in changes in the Indian Patents Act 2005, as dictated by its constituents.
At the top of much publicized US wish list on IPR, features abolition of Section 3(d) of the Indian patent law. This provision of the Act denies patents to frivolous and incremental innovations without offering any significant value to the patients in terms of improved clinical efficacy of the drug. Many would term such innovation as attempts towards evergreening of patents through minor molecular manipulation or similar other means. This kind of innovation gives already a very high priced blockbuster drug another full term of patent monopoly, often with even higher price, at the cost of patients.
Pressure for a relook at the National IPR Policy:
In fact, the USTR 2015 report, also asks India to have yet another round of consultations with stakeholders before finalizing its IPR policy. This is widely construed as an attempt on the part of the US Government and industry to conclude their unfinished IPR agenda for India.
Whether Modi Government would be bullied by the American Pharma industry to succumb to its pressure at the cost of the Indian patients and going against the national and international experts’ opinion, only time would tell.
Benefits of Innovation and India:
India has amply demonstrated time and again that it does understand the value and benefits of innovation in different facets of life and business. The country endeavors to protect it too, according to the law of the land. However, there are still some procedural loose knots existing in the IPR environment of the country.
As stated above, for effective remedial measures in those areas, a ‘Think Tank’ has already been constituted by Modi Government to formulate a robust and comprehensive National IPR Policy.
In this context, a media report quoted a senior official from the Union Ministry of Commerce & Industry saying, “We hope this year we can convince the US that our laws are drafted in a way so as to protect both our consumer and industry’s interest. The new IPR policy that we are coming out with will take care of any anomalies or vagueness in our existing regime and make it tight and also fast-track clearances of patent applications.”
Would there be a ‘Ghost Writer’ for Indian IPR Policy?
The first draft of the policy has already been circulated in January 2015 and discussed in the following month with the stakeholders. However, American Pharma industry does not seem to be satisfied with its overall content, leave aside the nitty-gritty.
Going by this development some apprehends that a powerful lobby group probably wants to be the ‘Ghost Writer’ for the IPR Policy of India. Coincidentally enough, we also see the USTR blowing hot and cold on this critical issue…blowing hot through its ‘Special 301 Report’ and cold by praising Prime Minister Modi’s remark to align India’s patent laws with “international standards”.
India should play a catalytic role in changing the drug innovation model:
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