PHA-Exchange> Indian Patent Act - Jeopardising the Lives of Millions - Part I by Amit Sen Gupta

[Claudio]

(An excellent two-part piece to add to our preparation for PHA II)

 History of Negotiations 

 

In 1986 a new round of negotiations was initiated under GATT (General Agreement on Tariffs and Trade). Popularly known as the Uruguay Round of negotiations, this new round was used by the developed countries to orient world trade to suit their interests. It was used to introduce a number of issues on the agenda, which were hitherto not considered as trade issues and hence not covered by GATT. Prominent among these were issues related to Patents, Investment, Environment and Labour standards. The ploy was clear - to use the threat of trade embargoes to force developing countries to follow the diktats of developed countries on a whole range of economic and industrial policies on one hand, and on the other to use these new issues to create barriers against developing countries wishing to access the domestic markets of developed countries. 

 

The basis for negotiations was the infamous Dunkel Draft (named after Arthur Dunkel - the key author of the negotiating text). The most contentious portion of the Dunkel Draft was that which related to Patents - termed as Trade Related Intellectual Property Rights (TRIPS) in the Dunkel Draft. Patent is a form of monopoly that is granted to an inventor for a limited period (20 years according to the final agreement), during which the inventor has the sole right to use the invention and benefit from its applications. Patents are granted as an incentive for innovation. At the same time Patent laws all over the world have safeguards to prevent the abuse of the monopoly granted to the Patent holder. 

 

India, since 1970, had a Patent law that was seen by many as a model for other developing countries. The Indian Law stressed on the obligations of the Patent holder and had strong provisions that prevented the abuse of the Patent holder's monopoly rights. Of particular importance was the fact that the Indian Patent law did not provide for monopoly rights in the area of drugs and agro-chemicals. The results were clear - the Indian drug industry developed to become the strongest and most self-reliant industry in the developing world. Today the campaign on access to drugs draws strength from Indian companies like Cipla who are offering anti-AIDS drugs at one tenth to one fortieth of the prices being charged by large pharmaceutical companies. This became possible because of India's liberal Patent law of 1970. 

 

It was, hence, natural that India (along with Brazil, Argentine, Thailand, etc.) opposed the inclusion of TRIPS in the negotiating agenda. They argued that the issue of Patents was a non-trade issue and that the history of Patent laws across the globe shows that all countries have evolved their domestic laws in consonance with the stage of economic development and development of scientific and technological capabilities. Laws that provide strong Patent protection limit the ability of developing countries to enhance their S&T capabilities and retard dissemination of knowledge. But in the negotiations giant pharmaceutical MNCs railroaded all opposition and forced the signing of the TRIPS accord. The draft which formed the basis of the accord was prepared by industry representatives from the US, Europe and Japan. Curiously, in 1988-89 India made a complete volte-face and agreed to the inclusion of TRIPS in the GATT negotiations. The capitulation by India punctured the opposition of other developing countries, and TRIPS entered the negotiations on world trade. The TRIPS agreement was signed in 1995 (as part of the WTO agreement) and countries like India were provided a transition period of ten years till 2005, to enact laws that were compliant with the provisions of TRIPS.

 

Global Opposition to TRIPS
 

Since 1995, however, public opinion against TRIPS has hardened across the globe. In large measure this is because of the outcry regarding the HIV-AIDS epidemic. Since the nineties almost the whole continent of Africa has come under the grip of this epidemic and in some countries an estimated third of the adult population is infected by AIDS. The tragedy was compounded when drugs to contain AIDS started being developed. These drugs allowed AIDS patients the opportunity to live normal lives even if they were infected. But there was a catch. Because of Patent protection these drugs were priced beyond the reach of patients in developing countries. The ridiculous effect of Patent protection was evident when one found that the cost of treating AIDS patients in some African countries was many times their total GNP! Even more ridiculous, and tragic, when we know that these drugs can be produced at one fortieth of prices being charged by MNCs. 

 

AIDS has become a rallying point for activists from all parts of the world and developing country governments alike. The coalition that was built around the AIDS issue then pressed for clarifications from the WTO that the TRIPS accord did not prevent country governments from legislating in favour of protection of public health. In this they were supported by almost the entire community of developing nations. The global drug MNCs fought to the last to prevent this. But the momentum of the global movement was able to force the adoption of a declaration at the WTO Ministerial Conference in Doha in November 2001 that clarified that countries could legislate to curb the monopoly powers provided by patent protection to drug MNCs, in order to safeguard public health. 

 

Amendments in the Indian Law
 

In order to comply with the TRIPS Agreement the Indian Patent Act has been amended twice in 1999 and 2002. A third Amendment is to be moved before January 2005. Unfortunately, the previous amendment and the proposed Third Amendment have failed even to use the flexibilities available in the TRIPS agreement. As we have seen earlier, the TRIPS agreement was bad for developing countries. The Indian Govt. is making it worse by not even using the possibilities available in the agreement and the clarification issued in the Doha Declaration of 2001. Two significant areas where the Indian Law seeks to go beyond what the TRIPS agreement requires it to, relate to the areas of compulsory licensing and pre-grant opposition.

 

The former (compulsory licensing) is an instrument that the TRIPS allows by which Governments can allow domestic manufacturers to manufacture patented products within 3 years of their introduction. In the Indian law this provision is still weak and cumbersome. Pre-grant opposition is an instrument by which Patent applications can be challenged - and a strong provision would help in limiting the numbers of Patents granted. The proposed amendment seeks to drastically dilute this provision. What is disturbing is that these provisions in the Indian law are unnecessary for us to comply with the obligations laid down by the TRIPS agreement. In other words, when asked to bend the Government is willing to kneel!

 

Implications of a New Law
 

What will be the implications of the new Act? Over a period of time Indian companies will lose the opportunity to develop processes for patent protected drugs in the country. India will become dependent on MNCs for technology to produce new drugs. Votaries of the new Patents Act argue that old drugs will not be affected by this Act. While this is true, it must be understood that the rate of obsolescence of old drugs is extremely fast today. Further, technological dependence on MNCs is the proverbial "thin edge" which will be used by the MNCs to establish their dominance over the Indian drug market once again (a position they had lost after the mid seventies). They will then again start charging exorbitant prices for drugs in the Indian market. Since the early eighties, the categories of drugs which show the maximum rise in sales are categories which include overwhelming majority of drugs still under Product Patent or whose Product patents have expired recently. In other words if we had a product patent regime today, the drugs showing fastest growth would have been priced way beyond the capacity of the average consumer. Not only that. Today Indian companies are the largest suppliers of low cost drugs to developing countries. For example, an estimated 60% of drugs to treat HIV-AIDS come from India. The new law will make this impossible, thereby threatening the lives of hundreds of thousands - not only in India, but across the globe.

 



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