INDIAN PARLIAMENT APPROVES CONTROVERSIAL PATENT BILL

The Indian parliament has approved a controversial patent bill that would make it illegal for domestic companies to make generic copies of patented drugs. Non-governmental organisations (NGOs) and health advocacy groups were especially critical of the legislation's provisions for the production of generic drugs, proclaiming the law to represent "the beginning of the end of affordable generics." Commerce Minister Kamal Nath denied allegations that the law would push up the price of drugs.

The lower house of parliament passed the bill on 22 March amidst heated debate and a walkout by the opposition; the upper house's approval made it law the following day.

India's changing pharmaceutical industry

In the decades following India's 1970 abolition of pharmaceutical product patents, which allowed Indian companies to legally produce generic versions of medicines that were under patent elsewhere, India developed a thriving generic drug industry. Indian generic drug manufacturers now produce low-cost AIDS drugs for 50 percent of the 700,000 HIV patients taking antiretroviral medicines in developing countries. These drugs cost about 5 percent of the price of similar drugs sold by US and EU pharmaceutical firms. Health activists around the world have warned that this supply of affordable, essential drugs could be threatened by the new legislation. There have been demonstrations against the Indian patent bill in several African countries.

Though historically a staunch opponent of international patent regimes, the Indian government has recently started to suggest that because of the country's strong pharmaceutical and biotechnology industries, it might stand to gain more than it would lose from strengthened patent protection (see BRIDGES Weekly, 19 January 2005).

The global drug industry -- which had lobbied hard for the amendment -- welcomed the new law, as did some Indian firms, both claiming that the stronger patent rules will help India become a global centre for pharmaceutical research. However, Yusuf Hamied, a senior executive at Cipla, an Indian company well known for making cheap AIDS drugs, mourned the passage of the bill as a "very sad day" for India.

Controversial law brings India into TRIPS compliance

The legislation, designed to bring India into compliance with the WTO's Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), only passed after the Congress Party-led government agreed to several last-minute amendments in order to secure the support of its leftist parliamentary allies, who were concerned that the new laws would lead to increased drug prices.

As a developing country that had not provided patent protection for pharmaceutical products, India's TRIPS obligations did not require it to do so until 1 January 2005. When parliamentary approval for a modified patent law system proved impossible in December 2004, the Indian government introduced an 'ordinance' -- a temporary executive decree not debated in parliament -- to ensure TRIPS compliance in time for the deadline (for more on the patent ordinance, see BRIDGES Weekly, 19 January 2005). The patent ordinance was excoriated by civil society groups and the parliamentary opposition for going beyond the demands of the TRIPS Agreement and failing to fully incorporate the public health-related flexibilities present in the Agreement as well as in the '30 August 2003 Decision,' which outlines the circumstances under which countries can export and import generic versions of drugs still under patent.

Amendments ease some fears, but fail to assuage others

The new law replaces the December 2004 ordinance. The eleventh-hour amendments to the bill softened the effect of some of the ordinance's most-criticised provisions. Most notably, they removed the ordinance's requirement for would-be importers of Indian generics to issue a 'compulsory licence' (permission to copy a patented product against the payment of a royalty to the patent holder) to Indian drug makers. This provision would have put Indian generics beyond the reach of most least-developed countries (LDCs): countries cannot issue compulsory licences for products to which they do not extend patent protection; LDCs are not required to provide patents for pharmaceutical products till 2016, and thus would have been unable to issue compulsory licences for importing them until they did so. Under the new rules, the importing country simply has to notify the Indian government of its requirements.

Another amendment reinstated the 'pre-grant opposition process' that the ordinance had severely curtailed, allowing members of the public to challenge a potentially frivolous and invalid patent application before it is granted. However, critics note that the law does not require the information on which such opposition can be based to be made public, thus weakening the process's effectiveness. Other changes tightened rules on the type of new substances eligible for patent protection, and ruled out extending the period of patent protection for a particular drug on the grounds that a new medical use had been found for it.

Critics: law open to misuse; compulsory licensing procedures slow, complicated

A joint press release issued on 22 March by the Affordable Medicines and Treatment Campaign (India), Médecins sans Frontières (MSF), the Lawyers Collective HIV/AIDS Unit, and the Alternative Law Forum said that as a result of the new law, India would start granting pharmaceutical product patents "without the necessary procedures in place to safeguard against wholesale hiking of medicine prices." MSF's Ellen 't Hoen said that the bill's language contained many ambiguities that could be misused by multinational companies.

MSF studies indicate that generic competition plays an important role in lowering the price of drugs. The four NGOs believe that effective compulsory licensing procedures are essential for ensuring that people have access to affordable medicines -- and that the procedures in the new Indian legislation are far from adequate.

The groups slammed the new law's requirement that, except during national emergencies, generic manufacturers must wait three years after a patent is granted to a particular medicine before they can apply for a compulsory licence to manufacture it. They also criticised it for failing to set a limit on the rate of royalties to be paid to patent holders, for setting up a process that allows drug makers to oppose the granting of a compulsory licence, and for not establishing a fixed time limit after which a compulsory licence must be issued to an applicant. Pharmaceutical companies could use these loopholes to delay the granting of a compulsory licence, as they have in the past in other countries.

"This is not good enough," said Priti Radhakrishnan, a Bangalore-based senior project officer with the Lawyers Collective HIV/AIDS Unit. "Fast and easy compulsory licensing procedures are what we are fighting for... if the procedure for compulsory licensing is not fast and easy enough, people in India and developing countries elsewhere in the world will die. We don't have three years. We don't have five years." Radhakrishnan's group is calling on the Indian government to abolish the opposition process and to ensure that generic manufacturers can apply for compulsory licences as soon as a patent is granted. "People in India and other developing countries," she continued, "have to have the right to licence lifesaving drugs in a fast and easy manner, without the permission of the multinational pharmaceutical companies."

Differing prognoses

Pfizer India's chief lobbyist lauded the bill for abandoning "the utopian concept that every invention should be as free as air or water... that assumes... every invention is as easy to make as air or water." An executive at the Indian subsidiary of Swiss pharmaceutical giant Novartis said that the law would encourage innovation and investment in research and development.

Cipla's Hamied, on the other hand, expressed the concern that India would follow in the footsteps of Italy, which, following its 1984 institution of drug patents, went from being a major drug producer and exporter to a net importer of medicines.

Commerce Minister Nath, for his part, maintained that anxieties about skyrocketing prices were unjustified since the vast majority of drugs on the Indian market were not eligible for patents. In any event, he said, "the government will have enormous powers to deal with any unusual price rise."

ICTSD reporting; "India nears turning point on drug patent rules," INTERNATIONAL HERALD TRIBUNE (Online), accessed 23 March 2005; "Parliament approves Patents Bill," PRESS TRUST OF INDIA, 23 March 2005; "Indian drug patent law clears its first hurdle," FINANCIAL TIMES, 23 March 2005; "Indian Legislature Adopts New Patent Law," 22 March 2005; "Communists push passage of India's patent bill," INDO-ASIAN NEWS SERVICE, 22 March 2005; "Will the lifeline of affordable medicines for poor countries be cut? Consequences of medicines patenting in India," MÉDECINS SANS FRONTIÈRES (Briefing Document), February 2005; "Cheap AIDS drugs under threat," GUARDIAN, 23 March 2005; "India backs cheap drug clampdown," BBC NEWS 22 March 2005; " The Beginning of the End of Affordable Generics," AFFORDABLE MEDICINES AND TREATMENT CAMPAIGN (INDIA), MÉDECINS SANS FRONTIÈRES, LAWYERS COLLECTIVE HIV/AIDS UNIT, ALTERNATIVE LAW FORUM (Press Release), 22 March 2005.