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Drugs and Medicines in Contemporary Patent Regime

The idea of a better ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death. [i] - Indira Gandhi

All over the world patents provide the patent holder a legal right to prevent others from using, making copies, or selling new inventions for a stipulated period of time and these conditions are subject to a certain number of exceptions. The TRIPS Agreement stipulates that it must be possible for all inventions to be protected by a patent for 20 years, whether for a product (such as medicine) or a process (a method of producing an ingredient for a medicine).

TRIPS agreement (The Agreement on Trade Related Aspect of Intellectual Property Rights) performs the difficult task of striking a balance between the public and private rights. The current patent regime is shifting its focal point to the private rights. In practice, patents are place above the collective welfare of society. Patents on pharmaceutical products have adversely affected industrially developing and least developed countries, hampering their ability to formulate appropriate public health policies that would enable their ailing citizen to access medicines

The aim of this paper is to analyze the importance of generic drug industry in the developing and least developed nations. The author through this paper tries to shed some light upon the difficulties faced by the people in third world nations due to the rigorous patent regime.

Human Health V. Patent Law

Internationally, world trade organization (WTO) and Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement govern the patent protection. The primary aim behind the patent system is to stimulate innovation through a social policy.

Now, TRIPS agreement does not lay down the uniform international law but instead, it provides for guidelines for the member nations to follow. These guidelines are nothing but are minimum standards, which are to be adhered to by the member nations of the WTO. Developed countries have already implemented their policies on patents as per this regime but the timelines were fixed for developing and least-developed nations as 2005 and 2016 respectively. [ii]

In India, all drugs before 2005 were generics as there was product patents for medicines and pharmaceuticals. Now, India became fully TRIPS compliant in 2005 through the introduction of pharmaceutical patents, with legislation that included safeguards to protect public health.

A life free from diseases and good health is the foremost human right. Right to life, a fundamental right granted to every citizen by the constitution, can only be achieved in full sense if the citizens are leading a life, which is free from diseases. In this perspective, drugs and medicines play an important role. So, it becomes extremely important in this sense to examine the impact of TRIPS agreement on India with respect to the right to life guaranteed under Article 21 of Indian constitution read along with article 14. Hence, patent laws; national policies regarding drugs and public health laws are densely inter-related. [iii]

The then prime minister of India, Indira Gandhi explained the above mentioned issue in her own words at the world health assembly in Geneva on may 6, 1981. She said:
�Affluent societies are spending vast sums of money understandably on the search for new products and processes to alleviate suffering and to prolong life. In the process, the drug manufacture has become a powerful industry.�

On patent systems, she said that �'her idea of a better ordered world is one in which medical discoveries would be free of patents and there would be no profiteering from life or death.''[iv]

The main agenda and the resolution, which was taken up by several countries, was global strategy on health for all. It is clear from the technological advancements that science and tech have now tackled many areas involving health problems. However, despite this development the problem of providing paper healthcare is still yet to be achieved.

Why Generic Over Patented Drugs

The biggest question which arises in these times is that why diseases like AIDS are considered as unstoppable killers in places like sub-Saharan Africa but not in western countries. Why is it so? The answer to this is the non-availability of anti-retroviral medications (ARVs). These ARVs are not available in the poorer countries of the world.

The reason for the same is the exorbitant high cost of the drugs. However, the same drugs, which are easily available in the western countries, have been found to effectively curtail the disease and have prevented a number of deaths. So, in this case, generic drugs address to this problem by providing the masses of the poorer countries with the means of accessing essential medicines.

The problem with patents

Large multi national corporations such as Novartis, glaxo-smith kline etc are allowed to operate on the principle of profits over people. Now, this allowance comes from the currently over protective patent regime[v]. This patenting regime allows a select few companies to have the monopoly over life saving drugs for a period, which is not less than 20 years. By doing this companies are able to achieve high profits by controlling the price of the drug.

Unfortunately, it is disturbing to see that profits are favored over people. The profits over the high priced drugs are enjoyed by a select few companies whereas, such prices on life saving drugs on the other hand have devastating effects on the masses of the poorer nations who cannot afford to purchase these drugs. This all can accorded to the patent regime, which was devised in the western countries and somewhat imposed on the developing and the least developed nations.

What are generic drugs?

Basically, generic drugs are the identical or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use'[vi]. Hence, generic drugs are an identical chemical copy of a branded product and usually being sold after the patent gets expired on the original product[vii].

These generic drugs are much cheaper in price than the original branded drugs. According to a study, it has been found that the prices of generic drugs average to the 1-5 percent of the prices of patented products in the poorer nations of the world.[viii]

The benefits of generic drugs

Although, it is acknowledged that there are numerous factors that affect the availability of medicines in a nation but, for this paper the focus will be on how decisions taken in developed nations for example, the prevailing IP regime, greatly affects and hinders the access to generic medicines which are affordable in the poorer nations of the world.

Generic drugs make use of expired patent products; therefore, there is an obvious advantage of generic drugs over patented branded drugs. The advantage comes from the fact the fact that the prices of generic drugs are much lower than patented ones and this is because the generic drug manufacturers do not have to spend large sums of money in the research and development of that particular compound.

For example, in a report it was submitted that GSK spends $500 million in the research and development of major drugs over the period of 13 years. So, it is obvious that there is no pressure on the generic drug manufactures as compared to the branded manufactures such as GSK as the generic manufactures does not have to recoup with the financial costs incurred in the R&D of the particular drug. Hence, generic companies lower down the prices of life saving drugs and makes an affordable difference between life and death[ix]

To conclude, there are some obvious benefits of generic drugs over the patented ones. Firstly, generic drugs are much cheaper in price than the patented drugs as a result they are much more accessible to the masses of the developing and least-developed nations. Secondly, generic drugs help in breaking the monopolies which are created in the benefit of the patented drug manufacturers[x]. Thirdly, the generic drug benefits economy of a nation as they lower the national spending on drug prescription. Lastly, generic drugs serve as a benchmark for low prices by creating competition in the market and with the same amount of money spent almost twice the number of patients can be treated in that economy.[xi]

Arguments against generic drugs

The most frivolous contention that the MNCs make regarding generic drugs is that the generic drugs are not providing with the same standards of quality, which the companies are offering with the patented drugs. This is the most predominant argument made by the MNCs against the generic drug manufacturers. The MNCs have at various times tried to attach the stigma with generic drugs by calling these drugs as second-class medicines.[xii]

Another, argument which is purported by these MNCs id that these generic drugs are not identical or same to their drugs and therefore incorrect usage of them could a more resistant strain of disease. Hence, causing more harm than good. The idea behind this argument was that third world nations comprise of uneducated people who can not stick to the dosages of medicine on time as compared to people in first world nations. This is a completely frivolous argument and supposedly if it were true, then it would definitely mean that people in these third world nations couldn't also use patented medications as well.

In short, MNCs generally discourage generic medicines as these are seen as a threat to their profits. [xiii]

The Legislative Barriers

The WTO TRIPS Agreement
Several agreements were signed by the member nations when they joined WTO and agreed to amend their national laws in conformity with the international trade rules. Now, the implementation of these rules introduces a huge threat to accessibility of generic drugs in poor nations.

One reason for this can be found under article 27 which states:
27 (1) �Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application....'[xiv]

Following this article, article 28 (1) (a) states that a product patent confers on its owner the exclusive right to prevent third parties from making, using, offering for sale, selling or importing for these purposes the product. This means that as well as imposing twenty year patents on all new products, TRIPS effectively abolishes the right to manufacture generic medicines using the non-infringing patent process method. [xv]

The year 2005 marked the greatest impact of the TRIPS agreement on the developing nations. Now, the patents were to be given on products. This is an area of concern for various countries especially India. Countries like India will have to comply with the Guidelines of TRIPS agreement and this have a negative consequence. The consequence will be an obvious one and that is, the future of generic drug industry will be hampered across the globe and people who couldn't afford the high prices of patented medication will suffer the consequences[xvi]

It has also been remarked at various times that the guidelines in TRIPS agreement have less to do with free trade and more to do with the lobbying of the powerful European and American pharmaceutical industries.

It doesn't take an expert to see that MNCs fear the competition offered by generic drug manufacturers as the generic drugs outmatch the price of patented drugs. However, from the current patent regime it can be seen that it is not the welfare of the people that is being maximized but in turn the fulcrum is shifting towards the profits of the MNCs.

Compulsory licensing as a tool to combat product patents

The legal basis for compulsory licensing is found under Article 31 TRIPS, which allows for WTO member states to: �use the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government'[xvii]

This article plays as an escape hatch to the strict patent regime. Under this article, governments can grant compulsory licenses to a manufacture to manufacture a certain drug with the patent holders consent. However, there are certain barriers to the same. The most primary hindrance being the politicizing or lobbying of MNCs against the generic drug industry. So, the developed nations bully the third world nations in not granting these licenses.

Regulatory Framework In India

Before TRIPS Agreement
Since the adaptation of commitments under the agreement on Trade Related Aspects of Intellectual property Rights, The focal point of intellectual property regime adopted by India has been on the ability of the nation to provide medical access to its citizens at affordable prices. The position of India and it's pharmaceutical industry has been unique amongst the other developing nations.

The reason for this uniqueness is the existence of the huge generic pharmaceutical industry, which has been able to cater the needs of the people at prices, which were found to be lowest in the world. The credit for this development is owed to Patents Act of India which was enacted in 1970[xviii].

There are two main provisions of this act that facilitated the process. Firstly, the introduction of a process patent regime for chemicals and secondly, the shortening of the life of patents granted for pharmaceuticals. [xix]

The objective of the Patents Act 1970 was to accelerate the development of an indigenous Pharmaceutical industry which could make sure that the public of India was sufficiently catered with drugs at low cost.

During the British colonial rule, India used to recognize the western style of product patent protection for medicines and drugs. However, the Patents Act of 1970 replaced this regime of product patenting. Now, product-patents were disregarded and this act paved way for process patenting. This process patenting allowed the Indian pharma companies to copy foreign patents or say to produce drugs which were reverse engineered without paying a license fee.

The impact of the same was that now there was enough competence in the domestic markets to produce identical generic drugs at low prices legally within India. The Act protected process patents for 7 years instead of the usual 15 years needed to develop and test new drugs.

Indian Patent (Amendment) Act, 2005

(In consensus with TRIPS Agreement)
On March 23, 2005, the Indian Parliament passed the Patent (Amendment) Bill 2005. This was the third amendment to the Patent Act of 1970. This 2005 act was in alignment with the requirements and guidelines set forth by the WTO and TRIPS Agreement. Since the inception of this new act there have been serious concerns regarding the impact of the act on the domestic generic pharmaceutical industry. The concerns were whether the industry will be able to continue its work of providing generic medicines at affordable prices.

In order to meet its TRIPs obligations, India amended its patent law on March 22, 2005, reintroduced Western style �product� patents for pharmaceuticals and abolished its �process� patents law. This ended the protection that companies enjoyed in India and directed the companies that they must pay reasonable royalty for the selling of copycat drugs to the foreign patent holders within a stipulated period of time. The amendment made reverse engineering or copying of patented drugs illegal after January 1, 1995.

Now, the act only provides for two types of generic drugs in the Indian market. First are the off-patent generic drugs and second are the generic drugs, which were patented before 1995.

At present, nearly 97 percent of all drugs manufactured in India are off patent and therefore will not be affected by this Act. New provisions such as compulsory licensing are introduced. According to the amendment, new patent holders are granted a 20-year monopoly starting on the date the patent was filed and, without a compulsory license, no generic copies can be sold during the duration of the patent.[xx]

Problem of Data Exclusivity in Access to Medicine in India

In order to obtain the market approval for a new developed drug, pharmaceutical companies have to submit test records and clinical data to the national health authorities. This data, which is submitted to the national health authorities, is kept confidential. The innovator data is kept confidential for a certain period of time to protect it against its unfair commercial use. Thus, such confidentiality of data bars the generic manufacturers from such innovator data for a stipulated period of time.[xxi]

The data exclusivity provided by US and EU Nations is for five and eleven years respectively. Companies usually seek this data exclusivity in order exploit their monopoly in a country. Such companies exploit their monopoly even though they don't have any patents on that particular product in the country. Hence, such data exclusions have considerable implications for countries like India and other developing nations. Till now, there are no provisions regarding data exclusivity in India[xxii]

However, if the country adapts to this system of data exclusivity, then the most affected strata would be the companies producing generic drugs. Henceforth, such generic companies will have to do their own safety and efficacy tests. It is obvious that such tests involve high monetary expenditures and as a result generic companies will be barred from manufacturing the generic versions of the drug for period that would easily extend beyond the period of twenty years. Also, this will also lead to the ineffective use of compulsory licenses given to the manufacturer of generic drugs. [xxiii]

Judicial Opinion

Supreme Court on: Access to Medicines (Novartis Case)

In the Novartis case, the Indian Supreme Court refused to allow one of the worlds biggest pharmaceutical industries to patent a drug. The drug was a new version of a cancer drug. The drug in question was a slight improvement over the drug Glivec. It was held that such improvements did not amount to innovation.

This decision paved way for Indian generic drug companies to sell cheap copies of the high priced patented drugs. This decision was held to be a major step forward and this decision gave more importance to the human health than patenting of drugs. [xxiv]

F. Hoffman-La Roche Ltd., v. Cipla Ltd. (Delhi High Court)

A similar stance was taken in this case. The court rejected the application of injunction against the drug manufacturer Cipla for selling the generic versions of the drug Erlotinib.

The court observed that when there are two competing claims where one being of private interest and the other being of public welfare, then the fulcrum of the judicial opinion should be in the favor of public interest. The damage of injury done in the case of patents can be restituted in monetary terms whereas, damage done to the public at large can not be equated in terms of anything.

It is just sheer cruelty and in humane behavior. Such damage in non-compensable and irreparable. Hence, human health should be given more importance than patent law[xxv]

The current patent regime facilitates the monopolization of life drugs by MNCs and as a result hinders the access to the same by making them unaffordable to poorer or third world nations of the world. The viable solution to these high priced patented drugs was the low costing generic drugs, which were produced in countries like India. They offered an viable alternative to the expensive patented medication. Hence, curtailing the deaths of millions of people.

However, after 2005, the situation changed. Developing nations like India had to amend their laws in consonance to the rules mentioned in TRIPS Agreement. There has been creation of certain artificial barriers by the current IP regime. Though provisions like compulsory licensing exist but these artificial barriers have rendered such provision to be futile. The reason for the same is the lobbying of MNCs against the generic medications.

It should be recognized that there should exist a balance between public health and innovation. But, it can be seen that the fulcrum is shifting towards innovation and the larger public interest is being overlooked. If the fulcrum is shifting towards innovation then it should be kept in mind that innovation and scientific advancement are done to benefit the human life, and hindering the accessibility of generic drugs in also hindering the right to life of people.

  1. Indira Gandhi at the World Health Assembly in 1982.
  3. Justice V R Krishna Iyer, Human health and patent law, Frontline, Volume 17 � Issue 21, Oct. 14 � 27, 2000.
  4. Justice V R Krishna Iyer, Human health and patent law, Frontline, Volume 17 � Issue 21, Oct. 14 � 27, 2000.
  5. Article � �Profits over People' AIDS India's National Magazine -
  6. The US Food and Drug Administration Centre for drug evaluation and research � Office of generic drugs -
  7. For example, Paracetamol is the generic form of Panadol� or Tylenol� -
  8. Generic Drugs: The Solution or the Problem?' William Haddad.
  12. Generic Medicines: The Solution or the Problem? By William Haddad page 9
  13. See article �How increased competition from generic drugs has affected prices and returns in the pharmaceutical industry' at
  18. Tina Rosenberg - The New York Times Magazine 28th January 2001

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