For Quality, Essential, Generic Medicines
Chapter 4: Drug Marketing    
Patents, WTO and Essential Drugs1

What is the impact of globalisation, liberalisation and the free market policies on pharmaceuticals in India?

Firstly, as we have seen, the range of drugs under production and pricing controls is being decreased drastically. The market is increasingly expected to decide prices and quantities produced. This does not reflect the actual disease pattern of the country as the majority of patients of all diseases in India are poor and cannot afford to buy the medicines. This means their demand will not be reflected in the market. With less and less state intervention in pharmaceuticals, the state health budgets also do not reflect the real need of the major users of the public health systems; they are either underbudgeted or some diseases like AIDS tend to get more allocations than others. So the market for drugs will not be reflective of the incidence and prevalence of diseases in this country. This situation is only aggravated by the fact that there is no check on the proliferating irrational prescription practices of doctors nor on the profit-led production of irrational and unscientific formulations in India. Production will be guided by what gives maximum prices and returns. This will be increasingly guided by international demand and supply, even as India is being subject to pressures of globalisation. (Even in the USA, a 1993 OTA (Office of Technology Assessment) report clearly shows how given so- called free market conditions, prescription drugs have become unaffordable).

To add to these trends, India has become a member of WTO, the World Trade Organization. Becoming a member of WTO means, among other things, India is required to amend her Patents Act to protect intellectual property rights of patents anywhere in the world, which in practice means domination by the First World countries for much of new technology. Even disputes on intellectual property rights, apart from mere registration of the same, would be unaffordable for Third World companies, let alone ordinary innovators. If a particular drug is patented after 2005 (a ten-year grace period being allowed), it will be difficult to manufacture it in India without appropriate licenses and reverse flows in terms of royalties. If a particular patent holder, say a drug company in USA, refuses to manufacture its patent in India or any where for that matter, nothing can be done to force the patent holder to manufacture (no automatic provision for compulsory licensing except that the Government can grant compulsory licence to work the patent if it can be demonstrated that national interests are involved, a process involving political will of the ruling government, a case-by-case examination of the patent along with consultation with the patent holder.).

The 1970 Patents Act recognises process patents only and not product patents (that is a particular patented product can be manufactured if a different process is adopted by the manufacturer) in medicine, food products and agrochemicals. And where it did allow product patenting, there were provisions to ensure production in case the original patent holder did not go in for production. Thanks to these provisions which were more in the interests of the people of India, the time lag between introduction in India and in the world of new drugs like salbutamol, mebendazole, rifampicin, naproxen, bromhexine, ranitidine, norflaxacin, was between four to six years only. This gap will increase now or we will be forced to buy the newly introduced drugs at prices dictated by the patent holder or his/her licensee.

Some other differences between the current patent laws of India and the proposed amendments as per WTO/TRIPS (Trade Related Intellectual Property Rights) include:

* in the current laws of India, importation does not amount to working of a patent. In the proposed modifications, imported products are to be treated as equal to local manufacture of the patented product. The patent holder has no obligation towards the national government conferring the patent rights under the new patent system to manufacture within the country.

currently, for process patents in case of violation, burden of proof is on the person who complains. In the required modification as per TRIPS, the burden of proof will rest on the alleged infringer.

* currently the duration of patents is 14 years for all except for pharmaceuticals, food products and agrochemicals where it is seven years. In the proposed amendments, there will be a uniform duration of 20 years for product patent and then 20 more years for the patent of the related process of the product. There is also the possibility of patents being discovered on new uses of the same product.

It has been argued that India will not really be affected as 95 percent of all essential drugs are out of patent and the rest will be out of patent by 2005. While this may be true, the proposed policies will affect new drugs for diseases like TB, leprosy, malaria, AIDs, etc. all of which are major killers in India. Also, those who argue that most essential drugs would be out of patent by 2005 may be in for a rude shock if India is forced to follow the US system of allowing patents on usage form, dosage form and combinations, even if the product patent on the original drug had expired long back.

Coupled with a government that are only too willing to reduce the number of drugs under price control, prices of essential drugs, under patent and out of patent, will sky-rocket, not to speak of prices of inessential and irrational drugs which too will go out of control. This has been happening already in the drug formulations retail market in India especially during the post-liberalisation phase.