US Drug MNCs Bare Their Fangs

THE Indian government has prepared a draft of the amended Patents Act, designed to comply with the obligations under the WTO agreement. The draft is going through a process of consultations, and is likely to come up for discussion in the next session of parliament.

Among other features, the new Act would provide Patent Protection to new products for 20 years. The principal concern regarding this amendment is that it would allow MNCs (who anyway control most patents on drugs) to charge exorbitant prices for new drugs because of their monopoly over the right to produce new drugs. It may be recalled that the Indian Patent Act of 1970, specifically disallowed patenting of drugs — only processes used to manufacture a drug could be patented. Moreover the patent period was kept at just seven years. These measures prevented MNCs from holding monopolies, even in the area of production of new drugs.

Monopolies created by patent rights conferred on large drug companies also lead to enormous centralisation of Research and Development capabilities among a few global players. With Patent Laws in developing countries being forced to “harmonize” with standards laid down by the WTO agreement, the situation can only worsen. When a few MNCs in the US and Europe are going to determine the research priorities for the whole world, it is drugs like Viagra that will continue to be researched and propagated. For the MNCs, the “markets” of the developing nations are too small to warrant resources and attention. So, increasingly, there will be no research done to develop drugs for the poor in the Third World – drugs for Malaria, T.B., Kala Azar, Cholera, Typhoid, etc.


The government claims that the changes to the Indian Patents Act are necessary due to commitments made by India under the WTO agreement, and further that the new Patent regime will actually strengthen India’s pharmaceutical sector. Both these claims are fallacious. Earlier articles in this column have carried extensively the dangers to the pharmaceutical industry inherent in the proposed new Patent regime.

The argument that the new regime is necessary because of prior commitments is more insidious. On the one hand such an argument seeks to justify the changes in the Patent Act, and on the other it attempts to absolve the present government of any responsibility on the plea that the WTO commitments were given when the Narasimha Rao Congress(I) government was in office. This line of reasoning needs to be contested at different levels.

The present BJP-led government may be reminded that many of their leaders, including senior ministers, were in the forefront in opposing India’s position on Patents during the GATT negotiations that led to the WTO agreement in 1995. Such leaders include senior ministers of the present Cabinet like Yashwant Sinha, George Fernandes and Murli Manohar Joshi. Both Joshi and Fernandes were members of the Forum of Parliamentarians, that had opposed precisely the changes that are now sought to be incorporated in the Indian Patents Act. The latter, in fact, was the convenor of this forum (along with Dr.Ashok Mitra). The present government cannot take refuge behind the plea that they are only fulfilling commitments made in 1995. Their leaders continued to oppose the new Patent regime even after the WTO agreement became a fait accompli, and in fact their opposition went to the extent of rejection of the Patents Amendment Act, brought to the floor of Parliament by the then Congress government in 1995.

What has changed since then? If anything, the case for viewing the WTO agreement on Patents (as well as in almost all other areas, like agriculture, services, etc.) as discriminatory to developing countries, has only been strengthened. Many countries which changed their Patents Act are now asking for a review of the agreement. Yet the Indian delegation at the aborted WTO negotiations at Seattle thought it fit to sidestep attempts at building unity among developing countries, and instead tried to make common cause with the US. The leader of the delegation, Murosali Maran, in fact, categorically stated that the interests of developing countries are too diverse to allow a common negotiating position to emerge. This is a far cry from India’s record – right up to the eighties – when India was seen as the natural leader of developing countries in international negotiations.


A defence of this volte face (which in point of fact, started when the Congress was the ruling party in the late 1980s), is crucially dependent on the ubiquitous TINA (There Is No Alternative) bogey. But developments in the last five years have shown that the TINA factor is in fact a powerful argument for pursuing a strategy that is quite the reverse of what India is following today. Yes, there is no alternative. There is no alternative today to making common cause with developing countries (who far outnumber the developed countries in the WTO and represent more than 80% of humanity) for a thorough review of the WTO agreement. This is necessary for the very survival of the tottering economies of the Third World.

In India, concessions after concessions have been granted, allowing entry of foreign entities into all spheres of productive activity. The government has bent over backwards to be accommodative – going much beyond what is required by the WTO agreement. But like a bloodthirsty predator, global capitalism’s hunger refuses to be satiated. Whatever concessions are given, are seen by MNCs to be too little. The WTO is on a spree of annexation, incorporating areas under its ambit that have little or nothing to do with trade. Environment and labour standards are just two such examples.

In this context it, would be instructive to examine the latest 301 submissions made by the Pharmaceutical Research and Manufacturers of America (PhRMA) to the US government. The 301 submissions are requests by the industry to the USA Trade Representative to put certain countries on the 301 “Watchlist”, which is a bilateral pressure mechanism based on US Law 301. Here, a slight digression is called for.

In a previous article in this column it was reported that the WTO Dispute Settlement Panel had ruled that the US Trade Sanctions Law (Sections 301-310), is not violative of WTO trade. The background to this ruling was a complaint made by the European Union against the US, to the WTO Dispute Settlement Panel, contesting the legality of the US law. The US gave a commitment that provisions of the US 301 Law would not be used to initiate unilateral action against WTO member countries. But such commitments notwithstanding, US MNCs continue to pressure the US government to coerce sovereign governments into implementing policies favourable to these MNCs.


In its submission the PhRMA has stated that it wants 39 countries to be put on the “Watchlist” — three “priority”, nine “priority watch”, and 21 “watch”. The countries listed are as follows.

“Priority”: Argentina, Egypt, India.

“Priority Watch”: South Korea, New Zealand, Hungary, Israel, Pakistan, United Arab Emirates, Brazil, Canada, Dominican Republic.

“Watch”: Australia, China, Hong Kong, Indonesia, Philippines, Thailand, Vietnam, Czech Republic, Estonia, Lithuania, Poland, Russia, Slovak Republic, Slovenia, Kuwait, Lebanon, Qatar, Saudi Arabia, South Africa, Turkey, and Uruguay.

The comments in the submission regarding India, are indicative of the fact that even the amended Patent Act will be subjected to pressures by the US pharmaceutical companies, (and by extension the US government, for it must be remembered that the TRIPS agreement under WTO was largely drawn up on the basis of submissions by organisations such as the PhRMA.). The submission says:

“The Indian Government is fully aware of its obligations under the WTO TRIPS Agreement, but is unprepared to meet its current obligations. Accordingly, PhRMA urges the U.S. Trade Representative to initiate a dispute settlement action in the WTO against the Government of India.”


“At the time of this submission, a Parliamentary Select Committee was considering another delaying tactic, a three-month “road-show” for regional discussion of the patent law before its formal consideration in the Parliament.”

The audacity is amazing – a consultative process initiated by a sovereign nation to enact its domestic laws is termed as a “road show”!

The submission details a number of objections to the draft Patent Act – viz., it

“Retains sanction, including compulsory licences, for patent owners that do not “work” their patented inventions within India”,

“Extensive authority would continue to be available to the Indian government to use patented technology without the consent of the patent owner”, etc.

The submission goes on to say,

“We are also disappointed that India’s greatest efforts have been reserved for Geneva and Seattle, where it has attempted to gain support from other WTO members for weakening industrial property standards now found in the TRIPS Agreement, rather than sincerely attempting to meet its own obligations.”

Thus, even India’s weak efforts to seek a review of TRIPS receives a rap on the knuckles. It goes on to say,

“The damage caused to U.S. pharmaceutical manufacturers due to the deficiencies of the Indian patent regime thus goes beyond displaced sales in the Indian market, and reaches to the ability of U.S. companies to compete in other significant markets, especially in the Asia-Pacific and Middle East regions.”

The last statement is very important, for it reveals the real concern of US drug MNCs regarding the existing Patent Laws in India. Our Act of 1970 not only allowed new drugs to be made available at cheaper prices, it also led to the creation of a platform for Indian companies to become global players. This process had just started, and Indian companies had started competing for the US market for generic drugs. More than the alleged loss of revenues in the Indian market, it is the threat from Indian companies in their own backyard that has prompted the US drug companiess to bare their fangs.

Some large Indian companies have started following the principle of – “If you can’t beat them, join them”. They believe that they can tie up with US MNCs as junior partners to access the US market. How this belief squares up with the stated intent of their US masters is impossible to fathom. Bill Clinton, we are sure, would have a number of concerns on his agenda when he visits India. It has been obvious for long that the US government’s position on Patents is indistinguishable from that of its drug MNCs. So we are also sure that prominent among Bill Clinton’s concerns will be the concerns of US drug MNCs. We wait to see how the once great votaries of “swadeshi” – the likes of Yashwant Sinha, Murli Manohar Joshi and George Fernandes – will deal with these “concerns”.