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The PMO Dances to theTunes of Pharma MNCs

September 05, 2010

Amit Sen Gupta

SEVERAL recent reports in the press indicate that the prime minister’s office had sought the opinion of some ministries regarding issues related to the Indian patents act. In itself, this would pass as a routine innocuous act. What makes the PMO’s queries interesting is that they were in the form of a paper that was submitted to it by the Organisation of Pharmaceutical Producers of India (OPPI). OPPI is one of several industry associations representing different interests in the pharmaceutical sector. What sets OPPI apart from other associations in the pharmaceutical industry is that it is the key representative of foreign MNCs that operate in India. The present president of OPPI is also the managing director of Novartis. The same Novartis that has dragged the Indian government to court by challenging sections of the Indian patents act. The same Novartis that battled for years in court to maintain its monopoly over a vital anti cancer drug (Imatinib – sold by the company as Gleevec) and thereby prevent Indian companies from selling the drug at a cost of Rs 8,000 per month, as against Rs 120,000 per month that the company charges! The OPPI has been an unabashed critique of the Indian patents act because the Indian parliament chose to be sensitive to the needs of Indian patients and sought to curb the monopoly power of MNCs when the Indian patent act was amended in 2005. In other words, OPPI has impeccable credentials as far as the PMO is concerned, for it represents the very forces in the Indian economy that the neoliberal economic reforms in the country seek to promote.

It is thus no mystery why the OPPI should have direct access to the PMO, while the same PMO exhibits scant regard for the burden on ordinary citizens placed by rising prices of food and essential commodities like medicines. For after all, the OPPI speaks for “shining India” and not for the millions of working people in the country. So what does the PMO do when the OPPI scampers to it with its wish list of complaints against the Indian patents act? The PMO passes on this wish list to concerned ministries – ministries of commerce, health, chemicals and fertilizers and law – for their “opinion”. Only the naïve would believe that when the PMO sends an industry note to different ministries, it is an innocent effort to receive opinion. Press reports indicate that the PMO, in fact, forwarded the OPPI’s wish list with its own covering note that asked the concerned departments to submit their views, which would be consolidated by the department of pharmaceuticals.

The PMO’s action is a cause for concern because of the very high price that may have to be paid by Indian patients if the OPPI’s suggestions are acted upon by the government. Let us examine the major proposals made by the OPPI, which the PMO now wants discussed.

MNCs Attack India’s Patent Act

First on OPPI’s wish list is Section 3(d) of the Indian patents act. The principal reason for incorporating this section in the Indian act in 2005 was to prevent the rampant practice, globally, of MNCs to retain monopoly rights over a drug even after its patent term expires. This practice – known as “evergreening” – involves sequentially patenting the same medicine by making very small changes to its molecular structure. Thus, when the patent of a drug A is about to expire, the company would make a minor change in its structure and call it drug B and apply for a patent. Generally, such minor changes are obvious to experts and should not qualify as an innovation that merits patent protection. Section 3(d) is designed to plug this loophole in patent law by specifying clearly what constitutes a minor modification in an existing drug, that should not qualify for grant of a patent. Section 3(d) thus states: “the following are not inventions within the meaning of this act --  (d) the mere discovery of a new form of a known substance which does not result in increased efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such process results in a new product or employs at least one new reactant”.

It is also important to understand why MNCs have been so upset with this provision. Analysis of “new” drugs introduced in the global market show that less than 3 per cent are true innovations that have real benefits for patients. As opposed to this, up to 70 per cent are drugs that are not real improvements over existing medicines. Most of these drugs are developed by making slight alterations to existing drugs. But, importantly, these are the bread-butter for pharmaceutical MNCs, because they constituted the bulk of products that pharma MNCs patent and from which they extract monopoly profits. After India introduced this provision in its law many experts have held this out as a model provision that should be incorporated in the patent laws of other countries in order to prevent frivolous inventions from being granted patents. The OPPI claims that the Section 3(d) weakens innovative activity in India. In fact, it is the other way around – the section encourages real innovative activity and prevents attention being diverted towards patenting of frivolous and trivial innovations.

Data Exclusivity: Ploy to Delay Competition

The second issue on the wish list OPPI is data exclusivity. Before a new drug is granted marketing approval by a drug regulatory agency, clinical trials need to be conducted to prove that the drug is both effective and safe. Marketing approval is granted after a company submits this data to the regulatory agency. MNCs have long argued that they have exclusive right to this data and the data cannot be used when a generic competitor wants to introduce the same drug. If exclusive right over test data is granted – hence called “data exclusivity” – generic companies would need to do all the clinical trials again, for submission to drug regulatory agencies. Generally such exclusive rights are demanded for a period of 5-7 years. This would delay low cost generic substitutes (i.e. the same medicines produced by domestic companies) from being introduced, would mean extra costs for companies and extra costs for the generic medicines produced, and would also mean unnecessarily subjecting people to clinical trials when evidence already exists regarding the safety and efficacy of the medicine being tested.

MNCs see data exclusivity as a method of extending monopoly control over a medicine, even after the expiry of its patent term. In situations where the patent on a medicine does not exist, this can also be a method to delay or prevent competition from generic manufacturers. The TRIPS agreement does not talk about data exclusivity but only refers to “data protection”, and says that countries can have their own way of protecting test data. A few years ago the Satwant Singh committee in India gave an opinion that India does not need to amend its laws to provide for data exclusivity, and that data exclusivity need not be provided for in the case of medicines.

Patent Linkage: DCGI to act on behalf of MNCs?

The third major item on the wish-list of OPPI pertains to “patent linkage”. Simply put, it seeks to link the patent status of a medicine to the process of registering a drug with the drug regulatory authority. Traditionally, the process of granting patents and the process of drug registration are kept distinct and are undertaken by entirely different agencies. The logic for doing so is clear – the two processes examine different kinds of claims. The patent office examines if a product is truly a new invention, while the drug regulatory agency examines if a drug is really effective and safe. MNCs now argue that the DCGI (the drug regulatory agency in India) should examine if a drug is patented by another company, before it registers a drug of a particular company. Such a practice would have several problems. First, the DCGI does not have competence to check the patent status of a drug. Patent grants are complex processes and often encumbered by layers of litigation, not entirely transparent to everybody. Second, a patent is infringed only if a drug is marketed by another manufacturer. Mere registration of a drug by a competitor before patent expiry does not count as a patent infringement. In fact, the TRIPS agreement allows a patented drug to be produced by a competitor, if it is for research purposes. Third, a patent is a private right. Drug MNCs have no ground to argue that its private right should be safeguarded by a public body such as the DCGI. If its patent right is infringed upon as per the Indian law, MNCs can always approach the relevant legal institutions. In reality, the bogey of patent linkage has been raised by MNCs to introduce another layer of procedural delays that would slow down the introduction of low-priced medicines by competing Indian companies.

Evidence of Good Behaviour?

It is curious that the PMO has chosen to have a finger in the patent pie at a time when two of the issues raised by the OPPI are sub-judice. Novartis is suing the Indian government on the issue of Section 3(d) and Bayer is engaged in a court battle with the government on the issue of patent linkage. Should not the PMO’s action be viewed as a clear attempt to influence cases to which the government itself is a party and stands on the opposite side of the OPPI?

The stakes for pharma MNCs are very high, for they seek to secure super-profits that are impossible to imagine in any other sector. Their drugs, when under patents, often cost 10-50 times more than what it would cost an Indian generic company to produce. For example, Pegasys (pegalyted interferon) a drug by Roche that is used to treat Hepatitis C (precursor of cancer of the liver) costs Rs 5,00,000 for the full course. Ten years back these MNCs would charge $10,000 (almost Rs 5 lakhs) for a year’s treatment for HIV AIDS patients. Indian companies now offer the same medicines at a cost of $100 a year. This is the kind of profiteering that denies millions treatment, which OPPI wants to secure by lobbying with the PMO. That much is clear to us, but why is the PMO engaged in encouraging such a practice?

The timing of the PMO’s peccadillo may supply an answer to this question. India continues to be on the US’s 301 watch list. The US administration, it would appear, is still not entirely satisfied with the proof of good behaviour  supplied by our government through passage of bills such as the nuclear liability bill. It needs more proof that India is indeed ready to sign away its sovereignty. Perhaps the PMO’s recent adventure is another step towards this, in anticipation of Barack Obama’s forthcoming visit in November.