[Ip-health] press piece on India and USITC hearings

Baker, Brook b.baker at neu.edu
Tue Feb 25 10:13:20 PST 2014

‘The hearings might adversely affect India’s pharma industry’
By editor
Created 25 Feb 2014 - 00:00

India’s use of flexibilities in connection with intellectual property (IP) is being strongly challenged by a section of United States’ industry. This month, the United States International Trade Commission (USITC) held public hearings in Washington DC as part of its investigation titled “Trade, Investment and Industrial Policies in India: Effects on the US Economy”. Industry associations from the US and India, public interest groups like Doctors without Borders and Knowledge Ecology International and several US academics have testified before the USITC. Meanwhile, India maintains that its laws and policies are its sovereign function.
In an e-mail interview with Patralekha Chatterjee, Professor Brook K. Baker of the Northeastern University School of Law, Boston, who submitted a pre-hearing statement before the USITC, along with two other academics, argues that India’s patent policies are consonant with the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), an international agreement administered by the World Trade Organisation.

Q: What is the significance of the recent hearings before the US International Trade Commission (USITC)?
A: The main thrust of the USITC investigation against India rests on Congressional claims that “Indian industrial policies discriminate against US imports and investment for the sake of supporting Indian domestic industries” and that those barriers have adverse effects on the US economy and jobs. There are non-specific complaints about tariffs and customs procedures and more specific complaints about local content and technology transfer requirements.
In the context of IP, the investigation focuses on copyright protections and enforcement in the digital environment.
More ominously the investigation focuses on whether India has applied its patent law in a discriminatory manner, particularly against US pharmaceutical companies so as to advantage its domestic industries. It questions local working requirements in India’s compulsory licensing regime and provisions that allegedly compel foreign firms to “transfer their intellectual property to Indian entities.”
Two of the prime examples used by pharmaceutical company representatives in the ITC hearings concern the Indian Supreme Court’s 2013 decision upholding the denial of a patent on Novartis’s cancer medicine, Glivec, based on Section 3(d) of the Indian Patents Act, and the Intellectual Property Appeal Board’s decision affirming the grant of a compulsory license on Bayer’s cancer medicine Nexavar. These two decisions have both opened the door for generic competition and have resulted in 95 per cent plus price reductions.
The investigation is potentially quite serious because it will inform and potentially justify continuing action in the US Congress intended to put pressure on India to reverse its pro-development industrial policies and to dismantle its carefully crafted intellectual property regime that uses most of the flexibilities allowed under governing international law, most particularly the WTO TRIPS Agreement.

Q: What happens next, and what could be the worst-case scenario for India?
A: The results of the investigation and its industry derived estimates of adverse impacts on US business interests, could lead to stronger action by the office of the United States Trade Representative, including designating India as a Priority Foreign Country, which could in turn lead to the imposition of trade sanctions. In addition, the US might gain ammunition that it could use in state-to-state dispute resolution within the WTO such as the solar-energy related complaint it has just filed against India.

Q: As someone who filed a pre-hearing statement before the USITC, and who has been following the wrangles over India’s patent regime, do you think India’s arguments are being understood?
A: The US Congress and indeed the USITC do not have any real understanding of the IP flexibilities allowed under international law. They are mainly responding to misleading complaints from US business interests that want stronger government support for the kind of monopoly rights enjoyed in the US.
One of the main challenges in the hearings is for India and other experts to convince the USITC that just because US business does not get every monopoly protection it wants — or that it enjoys in the US — does not mean that US industry is being treated unfairly or discriminatorily in India. One of the ironies right now is that the US Supreme Court is trying to strengthen patenting standards in the US at the same time that US officials are trying to crush higher standards in India.

Q: Should Indian pharma industry be worried? What are India’s options?
A: The Indian pharmaceutical industry should be worried that the monopolistic multinational drug industry will gain more power to delay competition.
More patents in India and restrictions on compulsory licenses will reduce the number of medicines that Indian generics can produce or they will have to wait many years to enter the market. If their economic prospects become weaker, they are more vulnerable to takeovers by US and EU companies and to more adverse terms in ordinary licensing agreements.

Q: In the patents vs patients debate, what is the most practical way forward, both for developed countries like the US and developing countries like India which still have millions of poor people who cannot afford expensive drugs?
A: The impact of a rollback of IP flexibilities and high standards of patentability would be disastrous both for India and for the millions of patients in low- and middle-income countries who rely on India for affordable generic medicines that meet global quality standards. If India lowers its standards of patentabilty, more patents will be granted and there will be multiple so-called secondary patents that effectively extend the time period of monopoly protection and monopoly prices.
Generic entry will be delayed and thus affordability will be delayed as well.
Similarly, if India is forced to abandon its use of lawful flexibilities, like compulsory licenses (a flexibility widely used in the US) then there will be no end run around patent monopolies. Ninety per cent of the medicines used to treat over 10 million people in developing countries who are living with HIV/AIDS come from India.
The Indian price is 1/2 of 1 per cent of the price of those same medicines in the US. Poor people, in India and elsewhere, will face a medicines embargo, an embargo enforced by patents and prices rather than by gunboats. The US and other rich countries would do better to stop harassing India and instead reexamine their broken system that not only blocks affordable access but deform pharmaceutical R&D as well.

Professor Brook K. Baker
Health GAP (Global Access Project) &
Northeastern U. School of Law, Program on Human Rights and the Global Economy
Honorary Research Fellow, Faculty of Law, Univ. of KwaZulu Natal, SA
400 Huntington Ave.
Boston, MA 02115 USA
(w) 617-373-3217
(c) 617-259-0760
(f) 617-373-5056
b.baker at neu.edu<mailto:b.baker at neu.edu>

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