Will the Modi government succumb to US and industry pressure to modify its pro-access pharmaceutical patent policy?

Abstract

The US has persistently pressured India to adopt US-style patent protections on pharmaceuticals for many years. That pressure has intensified recently because of Indian rules that have blocked patents on medicines widely patented elsewhere and because India has issued a compulsory license. Under the leadership of its new Prime Minister (PM), Narendra Modi, India has already made several overtures to appease US pressure. The two countries have established a bilateral intellectual property (IP) Working Group that will meet regularly as part of their Trade Policy Forum. This allows the US fox in India’s patent law chicken house. In addition, India has issued a Draft National IPR Policy that is highly pro-IP and that promises consensus-oriented negotiations with international partners. These signals have been reinforced by decisions to drop price controls on nonessential medicines, to appoint a pro-IP economic advisor, and to stall issuance of additional compulsory licenses. On the other hand, both PM Modi and the Draft IP Policy state the need for a balance in IP, including a balance that promotes public health and that avoids granting of secondary patents. The world will see other countries copying India’s pro-access rules at the same time that India continues to be pressured by the US.

Keywords:

• Indian patent law
• national IPR policy
• pro-access
• TRIPS agreement

1. The long history of US pressure against India’s patent law regime

The US government and its pharmaceutical industry have long expressed concern about India’s patent regime and its pro-access-to-medicines policies. India’s opposition to US-style patent rights resulted in amendments to its patent law in 1970 that eliminated patents on pharmaceutical products. As a result of this lawful exclusion, India’s generic industry made significant advances in reverse-engineering active pharmaceutical ingredients and innovating cost-saving efficiencies in manufacturing [1].

As a result of expanding trade in medicines, including to emerging economies, and following a period of rapid growth in innovation, the US pharmaceutical industry was in the forefront of convincing the US to seek harmonized global standards for patents in the 1986 – 1994 Uruguay Round of the General Agreement on Tariffs and Trade. Although India resisted this pressure, a combined US, European and Japanese effort, that included use of trade sanctions and threats, eventually succeeded in securing the adoption of an Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), which coincided with the establishment of the World Trade Organization (WTO) [2]. Although the TRIPS Agreement imposed uniform requirements for 20-year patents across all fields of technology, including pharmaceuticals, there were flexibilities that allowed stringent patentability criteria and broad limitations and exceptions, including compulsory licenses. Significantly for India, the TRIPS Agreement also allowed countries that did not grant pharmaceutical product patents a 10-year transition period to become TRIPS-compliant.

In 2005, India amended its patent law to cover pharmaceutical product patents, but it simultaneously adopted multiple flexibilities, including pre- and post-grant opposition proceedings; stringent standards of patentability, including a Section 3(d) of the Act that prevents patenting any new uses of existing medicines or new forms of known substances unless they exhibit enhanced therapeutic efficacy; and key limitations and exceptions, including compulsory and government use licenses [3].

Although the US Trade Representative (USTR) had placed India on the US Special 301 Watch List for many years on the grounds that India was dragging its heels in adopting US-style intellectual property (IP) protections, the stridency of governmental and industry opposition increased recently as India applied the Amended Act. Four features in particular irked US/industry policy makers: widespread use of opposition procedures; the application of Section 3(d) to deny a patent on Novartis’s blockbuster, imatinib; the grant of a compulsory license on Bayer’s cancer medicine, sorafenib; and India’s refusal to adopt data exclusivity.

In the wake of these developments, executives from Pfizer and the US Chamber of Commerce gave Congressional testimony calling for sanctions against India for its renegade patent policies that undermined Big Pharma’s economic goals. The White House sent successive waves of administration officials to India, including Secretary of State Kerry and Vice President Biden, to remonstrate against India’s ‘protectionist’ IP policies. Members of Congress wrote the USTR several times challenging India’s temerity and eventually launched two full-scale investigations of India’s industrial and IP policies before the US International Trade Commission. The USTR elevated India’s Special 301 Watch List status in 2013, pointedly targeting its patenting and compulsory licensing decisions; and in 2014 the USTR ordered an out-of-cycle review [4].

2. Growing signals of India’s accommodation?

It was into this IP maelstrom, that newly elected PM of India, Narendra Modi, began to unroll his business-friendly, pro-liberalization and Make-in-India policy reforms. In September, PM Modi visited the US and met with chief executives of major US companies [5], with the US–India Business Council [6], and later with President Obama. Following that meeting, the US and India announced the formation of a high-level Working Group on IP that would meet annually as part of their existing Trade Policy Forum. The Working Group would focus on ‘the need to foster innovation in a manner that promotes economic growth and job creation [7].’ After Trade Policy Forum meetings in November, the US and India issued a statement agreeing to ‘exchange best legal practices’ on IPRs as part of their effort to improve bilateral trade and investment. In that statement, India confirmed that it was working on a new IP rights (IPR) policy that would ‘stimulate innovation across sectors in the country,’ and the US agreed to support that work. Both countries recognized ‘the importance of providing a transparent and predictable policy environment for fostering innovation [8]’.

With respect to a national IPR policy, the Indian Department of Industrial Policy and Promotion (DIPP) has charted a winding and confusing path. It initially formed a three-member group of renowned academics in July 2014, which submitted a confidential draft report on October 21. That report has not been publicly released, though its nuanced and balanced analysis has been summarized in the Indian press [9]. While this report was being prepared, the Minister of Commerce and Industry announced that DIPP would convene a separate Think Tank to draft a National IPR Policy and to advise the government more broadly on IP issues. At the time, the Minister emphasized devising a policy that would address issues raised by developed nations and ‘give direction in terms of protecting IPR in India [10].’ This Think Tank, established with a very broad mandate [11], was initially criticized for pro-business bias and conflicts-of-interest, and multiple advocates recommended that India not compromise it pro-access patent law [12].

The Think Tank’s Draft National IPR Policy has since been released and is ominously pro-IP [13]. Instead of a more balanced discussion of alternative innovation policies and IP limitations and exceptions that might better serve India’s developmental needs and human rights obligations, the Draft Policy oversells the benefits of IP: ‘An all-encompassing IP Policy will promote a holistic and conducive ecosystem to catalyze the full potential of intellectual property for India’s economic growth and socio-cultural development. … The Policy will guide and enable all creators and inventors to realize their potential for generating, protecting and utilizing IP, which would contribute to wealth creation, employment opportunities and business development. Government shall take a proactive role in leveraging the strengths of the IPR regime for effective development and transfer of technology, promoting creative industries, stimulating the small innovations, empowering local communities in securing benefits from their knowledge base including traditional knowledge, encouraging institutions which focus on IPRs like plant breeding and farming, and protecting our biodiversity from inequitable bio-prospecting.’ With respect to international issues, the Draft Policy promised accommodation, ‘India will strengthen its negotiating profile and engage constructively and proactively in international negotiations with a view to evolving fair and balanced consensus based solutions.’

In addition to establishing the US–India IP Working Group and launching a Draft National IPR Policy that extols IP, the Modi government has instigated several other actions and policies that raise concerns that it is capitulating to US pressure. First, the government announced that it was revoking guidelines that allowed price controls on nonessential medicines [14]. Second, PM Modi appointed a chief economic advisor despite, Arvind Subramanian, who had previously advised the US to initiate WTO trade disputes against India because of its continued reliance on Section 3(d) and further recommended that India stop issuing compulsory licenses [15]. Third, the Indian government has delayed acting on Department of Health recommendations to issue government use licenses on several cancer medicines, most notably dasatinib [16], and has instead announced a policy of only issuing licenses that can indubitably survive judicial review [17].

3. Conclusion

As a consequence of long-lasting and intensifying pressure from the US that India modify its patent regime to more closely mimic US-style protections, India is beginning to show troubling signs that it might accede to US demands. It has given the US a seat at the table in regular discussions about internal IP policies in India, and it has issued a Draft National IPR Policy that expounds the virtues of IP while promising to seek consensus in negotiations with partners. Advocates of access to medicine wait anxiously to see if India is charting a path away from being the pharmacy for the developing world.

4. Expert opinion – India can stand strong on its stringent patent regime

Despite growing signs of Indian accommodation to US and industry pressure, there are positive signals as well that India intends to protect the basic features of its pro-access patent law regime. During his visit to the US, PM Modi told business executives ‘I understand that you want to be compensated for your investments in R&D. At the same time, India needs medicines that are affordable for its population. … Mankind needs continuous research and development of new drugs for a higher quality of life. … You need to be able to devote the right energy to that, not just by changing the formulation of a drug to sustain a patent, but by inventing things that make a difference to mankind [18].’ Likewise, at the edges of the Draft National IPR Policy there were commitments to maintaining a balance, ‘[India] has protected the national interest and balanced the rights of IP owners with their obligations to society. 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 plus provisions. … India has adopted a balanced approach towards patent law. It is committed to protect innovation while promoting the larger goal of welfare of its citizens, which includes protecting public health, food security and environment, among other areas of socio-economic importance.’

Although India is likely to ring-fence section 3(d) and avoid TRIPS-plus reforms, it will likely streamline patent procedures and intensify IP enforcement. More ominously, India is likely to forbear issuing compulsory licenses. We will see a world in which other countries, including Brazil, South Africa and Indonesia continue to explore adopting India-style pro-access rules at the same time that India continues to be pressured to adopt US-style patent and data protections.

Declaration of interest

The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.