INDIAN TRIPS-COMPLIANCE LEGISLATION UNDER FIRE

A decree issued by the Indian government to bring the country into compliance with its obligations under the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS) has raised concerns that it will put access to life-saving drugs for diseases like AIDS out of the reach of poor people both in India and elsewhere in the world. Critics of the new law claim that it goes beyond the demands of the TRIPS Agreement and fails to take full advantage of existing WTO provisions for the protection of public health.

In order to meet the 1 January 2005 deadline to make its intellectual property regime WTO-compliant, on 26 December 2004 the Indian government issued an ordinance -- an executive decree not debated in Parliament -- that made several amendments to the country's patent regime. Although previous bills for TRIPS compliance were passed into law, an earlier version of the current set of amendments failed to be tabled in Parliament in December 2004 because of disagreements within the governing coalition. Under Indian law, the ordinance will lapse if it is not approved by lawmakers within six months. Legislators will consider the bill during the budget session of Parliament that begins in February.

Drug patenting strengthened, product patents introduced

The regime introduced by the ordinance extends full TRIPS coverage to food, drugs and medicines. Most importantly, it requires patents to be granted to products, while India's previous patent regime established by the Indian Patents Act 1970 only required patents to be granted to the chemical processes that resulted in the production of a particular drug. This distinction between "process patents" and "product patents" -- in line with international patent practice before the 1995 TRIPS Agreement -- allowed for the development of a huge generic drug industry built on reverse-engineering brand-name drugs through slightly modified processes.

As per the TRIPS obligations for all countries transitioning into full implementation of TRIPS commitments, India had created a 'mailbox' for filing patent applications for pharmaceutical and agricultural chemical products invented after 1995. These applications were to start being considered when India's transition period came to an end on 1 January 2005. Estimates of the current number of pending patent applications range from 4,700 to 12,000. Even the most conservative estimates would represent more than 15 times the total number of new drugs approved since 1995. The ordinance specifies that patents granted to mailbox applications will be effective only from the date of the grant of the patent and will thus not penalise generic makers of the product who produced it up to that date.

The ordinance also modifies the procedure through which patents can be challenged before they are granted. It limits the grounds on which objections to a patent application may be made. Furthermore, though contestants can be heard and submit a written argument, they are prohibited from participation in all of the patent proceedings, unlike under the previous system.

The decree states that "mere new use" of existing drugs is unpatentable. This provision is ambiguous about what kind of "new use" will indeed be patentable -- and could potentially allow companies to receive new patents for a drug that is already patented, simply by making minor changes such as adding a new chemical reactant for a marginally different purpose. This would allow companies to extend their monopoly on a drug for much longer than the standard patent protection period.

The ordinance does not substantially change the procedures required to obtain a compulsory licence from the Indian government to produce copies of products that are under patent. However, it does require countries interested in importing generic medicines produced exclusively for export under a compulsory licence issued by the Indian government to issue a separate compulsory licence for import.

Decree draws wide-ranging criticism

Critics lashed out at the non-democratic way in which the new rules were issued and described many of its provisions as "TRIPS-plus," contending that they go beyond the requirements of the TRIPS Agreement and are thus unnecessarily constraining. They believe that the more stringent intellectual property regime will lead to an increase in prices for essential drugs and hurt India's pharmaceutical industry, which relies largely on the production of generic drugs.

The Affordable Medicines and Treatment Campaign (AMTC), an Indian advocacy group, argues that the ordinance's compulsory licence scheme does not take full advantage of WTO provisions to allow countries with little or no pharmaceutical capacity to import cheap generic versions of drugs still under patent protection. The group says that the Indian patent ordinance's compulsory licence requirement for importing countries would prevent a least developed country (LDC) from requesting the export from India of generic versions of a medicine that is not under patent in the LDC in question (LDCs are not required to provide product patents for pharmaceuticals until 2010).

The head of the Indian Drug Manufacturers Association raised concerns about the impact of a sudden halt in the production of a generic medicine as a result of the granting of a patent -- say, as the result of the approval of an application in the 'mailbox' -- saying that some generic production should be allowed to prevent decreased availability or a rapid increase in drug prices.

Opponents of the new ordinance also suggested that the procedure for challenging patents needed to be strengthened in order to prevent trivial or "wrong" patents from being granted.

Government lays out its rationale for the new amendment

Commerce and Industry Minister Kamal Nath defended the new patent rules, arguing that they struck an appropriate balance among the protection of intellectual property rights, public health, and national security, and would enhance India's stature as a credible participant in the WTO.

Nath suggested that India's pharmaceutical and biotechnology industries might benefit from strengthened patent protection. He said that India's involvement in the WTO over the past decade had encouraged its pharmaceutical industry to greatly increase investment in research and development -- to the point that some players in the industry are now actively seeking patent protection.

Nath emphasised that India stands to gain from its adherence to the WTO by "grabbing a lion's share" of the some 60 billion dollars worth of drugs going off patent in the next few years. "Bona fide" membership of the international trading community would also open up opportunities for R&D based outsourcing in the biotechnology sector. Nath contended that these gains, along with in other areas such as the textiles sector, would more than offset the losses that India would sustain from implementing its WTO obligations.

Background

India is the world's fourth-largest drug market in volume, and drugs often cost seven to ten percent of what they do in the USA or Europe. While India's many generic drugs producers, such as Cipla and Ranbaxy, have thrived in an environment of limited patent protection on pharmaceuticals and exported cheap essential drugs around the world, some argue that the limited protections for intellectual property have kept foreign companies from investing in India.

The ordinance can be accessed at http://lawmin.nic.in/Legis.htm

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