PhRMA Submission to USTR on India for the 2004 Special 301 Report

PhRMA Submission to USTR on India for the 2004 Special 301 Report

INDIA

PhRMA member IP priorities in India remain the passage of TRIPS-compliant product patent protection for pharmaceuticals; implementation of effective protection for commercially valuable, undisclosed data provided to regulatory authorities as a condition of providing marketing approval; and reform of the other remaining lacunae in the Indian Patent Act of 1970 through enactment of the Third Patent Amendments. Although PhRMA members recognize positive steps in recent months, including issuance of the first exclusive marketing rights (EMR) certificates for pharmaceutical products, we request that India remain on the “Special 301” Priority Watch List pending passage of the third patent amendments and implementation of data exclusivity.

Lack of Intellectual Property Protection

Data Exclusivity

India should provide an effective period of exclusivity for clinical dossiers that is independent of patent protection, for duration of at least five years from the date of marketing approval for the benefit of both Indian and American innovative pharmaceutical and biotech companies. This policy, which could be adopted administratively, would act as a confidence building step for both sides, and, with appropriate safeguards, could be supported by the mainstream of Indian firms and the international research-based industry. Although PhRMA members recognize positive steps, passage of the Third Patent Amendment legislation and implementation of data exclusivity under the Drugs and Cosmetics Rules (1945) remain critical issues.

Third Patent Amendment

By January 1, 2005, India should come into full compliance with all TRIPS obligations relating to patents, including as follows:

Elimination of exclusions from patentability for foods, biotechnology products, chemicals and medicines (Section 5, of Chapter II of the Patent Act of 1970, as amended);

Reform of standards for patentability to bring India into the mainstream of patent practices (allowing so-called “Second Use” patents, and elimination of hurdles beyond novelty, commercial applicability, and non-obviousness as in China and other countries at a similar stage of development); and

Dealing comprehensively with a broad range of issues relating to compulsory licensing for pharmaceutical products that fall short of TRIPS obligations and unnecessarily erode the rights of the patent holder.

Also, in the area of compulsory licensing, PhRMA members have been given to understand that the Third Patent Amendments initially would not include compulsory licensing provisions at all, but now have been told instead that the bill will include implementation of the WTO August 30 Menon/Motta Decision on the Doha Declaration Paragraph 6 issue. In this context, the Third Patent Amendments should deal comprehensively with compulsory licensing issues raised by a broad range of Indian industry groups. These include:

Clarification that importation would amount to working of a patent (as required by TRIPS Article 27.1);

Either eliminating mention of price as trigger to CL or clarifying what is meant by 'reasonably affordable price'; and

Removing the numerous triggers that provide a low hurdle to seeking a CL and failing to provide due process to right holders as required under Article 31 of TRIPS.

India, as a key player in development and adoption of the August 30th Menon/Motta compromise, has an obligation to take care in crafting its Paragraph 6 legislation, to ensure that it complies with both elements of Menon/Motta and existing TRIPS Article 31 provisions, such as:

Application for a compulsory license for export only for humanitarian, noncommercial use;
Limitation of scope to products to those specifically requested through notification to WTO by eligible Least Developing Countries (LDCs) and developing WTO Members facing public health threats;
Inclusion of anti-diversion provisions to ensure that products reach the most vulnerable, poorest patients for whom they are intended;
Compensation to the Right-holder on a case-by-case and based on the economic value of the compulsory license;
Explicit inclusion of eligible and non-eligible countries of import to again ensure that the purposes of the August 30th compromise are not frustrated, and the solution is used appropriately; and
Full due-process as provided in TRIPS Article 31.

PhRMA members believe that the high-level Indo-U.S. dialogue on intellectual property issues has helped to improve the climate for innovation in India. In particular, PhRMA members would like to commend Under Secretary of Commerce Kenneth Juster and the Indo-U.S. High Technology Cooperation Group (HTCG), as well as the efforts of Assistant U.S.T.R. Ashley Wills and the U.S. Embassy in New Delhi. We appreciate continuing efforts to ensure that Indian law is fully compliant with TRIPS obligations by January 1, 2005. We also believe that the U.S. should expand international assistance opportunities for the training of patent examiners among other urgently needed technical cooperation to prepare India to meet its obligations, consistent with the U.S. Government designation in late 2002 of India as a high priority country for technical cooperation.

In addition, we commend the Government of India for its early introduction of the Third Patent Amendment Bill into the lower house of Parliament in December of 2003. However, with the dissolution of the Parliament, we are advised that the Bill will lapse and will require fresh reintroduction once the parliament reconvenes after the general election mid - 2004. We hope that this is done on a priority basis as India is obligated to pass the law before January 2005.

Exclusive Marketing Rights (EMR)

PhRMA members take not e of the positive development in 2003 of the issuance of EMR certificates for pharmaceutical products. Further, Novartis, which received the first EMR for its cancer therapy Glivec™ has already obtained preliminary judicial relief needed to enforce its exclusive rights.

Market Access Barriers

In the area of Drug Pricing, India’s previously announced Drug Policy 2002, which tried to reduce the rigors of price control based on competition and monopoly criteria, has been blocked from implementation in its current form due to judicial challenge in the Supreme Court. At this point, PhRMA members expect little or no relief from the current system of onerous price controls, which further detract from the value of innovative medicines in India.

This pricing regime, combined with the lack of any meaningful patent or other intellectual property protection, makes India less viable for research-based companies from a commercial standpoint, particularly if those companies were to consider placing the latest and best innovative drugs on the Indian market. This is because of structural and logical flaws in the criteria and bases for price-fixing that are and have been inherent in all past and present Drug Pricing Control Orders (DPCO’s). Our industry would urge any new government in India to liberalize DPCO’s to allow market forces to come into play. The DPCO is neither in the interest of the Indian economy nor of the Indian pharmaceutical industry, nor, and most importantly, in the interests of the Indian healthcare consumer. Despite the lowest prices in the world, 70% of the population still has no access to modern medicine. PhRMA members note improved tariff and customs duties which have improved the commercial climate.

Damage Estimate

PhRMA members conservatively estimate losses in India due to the absence of intellectual property protection at more than $1.7 billion dollars annually.

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