The U.S.-India Business Council (USIBC) to the U.S. Trade Representative (USTR) recently revealed that India has given private assurances to the US that it will not grant licences allowing local firms to override patents and make cheap copies of drugs by big Western drug makers.
It should be noted here that the USTR has placed India on its “priority watch” list for two years in a row saying the country’s patent laws unfairly favour local drug makers. A bone of contention has been a legal provision that allows the overriding of patents on original drugs and granting of ‘compulsory licences’ to local firms to make cheaper copycat medicines.
What is Compulsory Licensing (CL)?
CL is the grant of permission by the government to entities to use, manufacture, import or sell a patented invention without the patent-owner’s consent. Such licenses permit a third party to make, use, or sell a patented invention without the patent owner’s consent.
Laws governing such licenses:
India can grant such licences under certain conditions, such as public health emergencies, to ensure access to affordable medicines.
- Under Indian Patent Act, 1970, the provision with regard to compulsory licensing is specifically given under Chapter XVI. The conditions which need to be fulfilled in order for a compulsory licence to be granted are also laid down under Sections 84 and 92 of the Act.
- Under Section 84 (1) of the Indian Patent Act, any person may request a compulsory license if, after three years from the date of the grant of a patent, the needs of the public to be covered by the invention have not been satisfied; the invention is not available to the public at an affordable price; or the patented invention is not “worked in,” or manufactured in the country, to the fullest extent possible.
- India’s National Manufacturing Policy (NMP) also supports the application of CL across different manufacturing sectors, more specifically to ensure access to the latest green technologies that are patented.
- The NMP provides the “option” to entities such as the Technology Acquisition and Development Fund “to approach the government for issue of a CL for the technology which is not being provided by the patent holder at reasonable rates or is not being ‘worked in India’ to meet the domestic demand in a satisfactory manner.”
- CL is also permitted under the WTO’s TRIPS (IPR) Agreement provided conditions such as ‘national emergencies, other circumstances of extreme urgency and anti-competitive practices’ are fulfilled.
Concerns over the recent assurance:
The disturbing word in the recent communication from the USIBC to the US Trade Representative is “privately”. This is related to Track II Diplomacy (Track II diplomacy refers to “non-governmental, informal and unofficial contacts and activities between private citizens or groups of individuals, sometimes called ‘non-state actors’. It contrasts with track I diplomacy, which can be defined as official, governmental diplomacy that occur inside official government channels).
- Track II flourishes in diplomacy, but the idea of Track II policy is problematic. Policy must always be created and operated transparently, or government runs the risk of losing credibility.
- Yet, the government appears to have offered a verbal, Track II-like reassurance on drug patents, which has found its way into the official record.
- Technically, private assurance suggests that India is willing to pay heed to multinational requests to respect intellectual property and to protect incomes accruing from it, even if it amounts to disrespecting the right of its citizens to life and health.
- Such an assurance also goes against the main spirit of Patents Act and the public health safeguards enshrined in it.
Based on section 84, Natco, an Indian generic manufacturer, applied for India’s first compulsory licence some years ago and convinced the patent office that Bayer’s patented drug for kidney cancer, Sorafenib Tosylate, was excessively priced and available to hardly 2% of patients.
- In sharp contrast to Bayer’s Rs 2.8 lakh per month price tag, Natco offered to sell its version of the drug at Rs 8,800 per month.
- The controller of patents granted a licence upon the payment of a 6% royalty rate to Bayer, ensuring this was not a zero-sum game but one that could potentially benefit the patent owner as well, given Natco’s knack of selling in markets beyond the ordinary purview of the high-priced patented drug.
- Upon appeal by Bayer, the patent office decision was validated, with some minor modifications in royalty rates.
Unfortunately, despite this excellent start to the invocation of an important public health safeguard, no other licence has been granted since.
The WTO’s fourth ministerial conference in Doha in 2001 had adopted a declaration which balanced the imperative of national health against the transnational rights to intellectual property.
- It established the primacy of the right of member nations to protect public health and promote access to medicines for all. It further clarified that each member has the sovereign right to decide the grounds for granting compulsory licences according to national interests, and implicitly did away with the need for an emergency or a situation of urgency, which are listed both in Trips and in the IPA.
- The Indian government is, therefore, under no compulsion to put multinational interest ahead of the imperative of public health. It only needs to be fair in its policy — and transparent.
What needs to be done now?
World over, compulsory licensing is largely a matter of government discretion to be invoked at the government’s pleasure. However, in India, Section 84 makes clear it’s a legal entitlement that cannot be pimped away through private assurances to foreign friends. Rather, the government is obliged to adjudicate each application on merit, donning its robe as a quasi-judicial authority. The patent office must, therefore, be equipped with personnel vested with a fair degree of adjudicatory competence and independence.
- If serious about its constitutional commitment to good health, the government must immediately formulate a legal framework to compel private parties to disclose drug and disease data.
- Also, it must ensure quasi-judicial authorities (the patent office) remain relatively independent and are infused with sufficient training to ensure a fair, impartial and competent dispensation of justice.