Congressional Letter Challenging Indian IP Policy Falsely Condemns Protectionism While Trouble-Shooting for Big Pharma

by Professor Brook K. Baker, Health GAP Senior Policy Advisor

On June 18, 2013, 170 Members of Congress wrote to President Obama complaining about Indian trade policy and more particularly India's intellectual property "climate."  Under the umbrella of claiming that policies of the Government of India favor domestic producers over U.S. Exporters – in other words, that India is protectionist – the Members of Congress claimed that "the intellectual property (IP) climate has become increasingly challenging in India."

In particular, the letter complained about IP issues affecting pharmaceuticals:  "For example, last year several biopharmaceutical companies inappropriately had their patents revoked or their appeals denied by the India courts to market a variety of life-saving drugs in India.  Additionally, the Indian Government issued its first compulsory license (CL) on a stage three liver and kidney cancer drug.  It has been reported that additional drugs may be subject to CLs imminently and that the decisions related to these CLs are being improperly driven by an interest in growing the pharmaceutical market in India.  These actions by the Indian Government greatly concern us because innovation and the protection of intellectual property are significant driving engines of the U.S. economy."

Under the WTO TRIPS Agreement, India has every right to define standards of patentability so long as they satisfy minimum standards of patentability set forth in TRIPS, namely novelty, inventive step, and industrial activity.  India has elected to define and apply standards of patentability rigorously.  When this rigorous standard is applied in India, it prohibits patents on secondary patents involving new uses of existing medicines or minor modifications of existing medicines/active ingredients that do not significantly enhance therapeutic efficacy.  Although Members of Congress and Big Pharma executives, including those from Novartis and Pfizer, condemn an Indian decision denying a patent on secondary form of the anti-cancer medicine Glivec, they neglect to acknowledge that both Novartis and Pfizer have received hundreds of patents on medicines in India in the past 8 years and that it is only the frivolous or unworthy patents that are being screened out.  Moreover, rather than serving domestic producers, the Novartis decision in India would allow imports of Glivec from any of the other 160 countries in the world that also do not presently have patents on Glivec.

The U.S. is notorious with respect to the ease by which pharmaceutical companies extend their patent monopolies on medicines by seeking secondary or "evergreening" patents, what is euphemistically called patent lifestyle management in polite Pharma circles.  These kinds of patents can add decades to the 20-year period of initial patent exclusivity.  Yet even in the United States, the Supreme Court, academics, and other policy makers are beginning to question the wisdom of weak U.S. standards for patents and the impact of lax patent standards both on affordability and the ecology of innovation.  Thus, the Supreme Court has recently tightened standards on inventive step, prohibited patenting of naturally occurring genes, and questioned the competitive impact of sweetheart deals that delay generic entry.  Instead of trouble-shooting for Big Pharma, Congress should turn its attention to revising standards of patentability upward in the U.S., reducing patent thickets, and restricting patent trolls.  Maybe then we could get some of our bloated healthcare costs under control and reduce the federal deficit and the pharmaceutical-tax on productivity.

Likewise, the WTO TRIPS Agreement allows India and any other country to issue compulsory licenses on any grounds they want to as long as certain procedural safeguards are followed.  Using fully lawful compulsory licensing procedures, India did issue a compulsory license on an overpriced Bayer cancer medicine, citing three justifications in a 60-plus page decision:  excessive pricing, failure to supply the market, and refusal to produce locally.  As a result of this license, the cost of the cancer medicine has now fallen more than 97%, showing the excess mark-up that Bayer imposes on patients.  Rather than acting arbitrarily, the legal system in India allows a court review of the compulsory license decision, which Bayer is now pursuing.  Moreover, instead of acting protectionist in a trade sense, India is protecting public health, public resources, and common sense in the face of monopoly pricing.

Although Members of Congress and Big Pharma companies are complaining about the issuance of compulsory licenses, the U.S. has perhaps the easiest system in the world for issuing government use licenses (by any government official or federal contractor) and has used these rights on hundreds of occasions.  Although there are not routine rights for compulsory licenses for all sectors of the economy on pharmaceuticals, there are CL provisions with respect to other technologies, and the U.S. maintains rights to march-in and grant licenses with respect to IP generated with federal resources.  

It is deeply ironic when the world's biggest wolf cries wolf.  Any objective examination of U.S. trade policy, including that represented in the current negotiations of the Trans-Pacific Partnership Agreement, would conclude that the U.S. is relentless in its pursuit of heightened standards of patentability, data protection, and enforcement in order to protect the interests of Big Pharma and other IP-intensive domestic industries.  Over 600 industry representative sit on advisory committees to the U.S. Trade Representative having privileged access to otherwise secret trade agreement proposals.  It's an affront to democracy that the first Member of Congress gained access to the text of just three sections of the proposed TPPA just this past week, while industry reps have been able to lobby U.S. trade negotiators constantly for three years to advance their monopoly interests.  It's an insult to our collective intelligence when Members of Congress misleadingly condemn alleged "protectionism" in India while tolerating monopoly encroachment globally and doing so to protect "jobs and investments" in the United States.

We could only wish that more countries, including our own, would emulated India's IP policies.  Maybe then we would have more affordable and equitable access to global public goods like medicines, maybe then Medicare would not be bankrupted, and maybe then the fruits of prosperity would not be siphoned off to IP rent-seekers who deliver so little in terms of innovation despite massive monopoly-based profits both here and abroad.

| download the Congressional letter 

Donate Stay Connected