[Ip-health] The Hindu: Pharma units await clarity on compulsory licensing

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 30 03:05:34 PDT 2010


URL: http://www.thehindu.com/thehindu/biz/2010/08/30/stories/2010083050391400.htm

BusinessPharma units await clarity on compulsory licensing

When the government initiated discussions last week to lay down norms  
for the issuance of compulsory licensing (CL) for medicines under the  
Indian Patent Act 1970, it rekindled the issue facing the Indian  
pharmaceutical industry of the affordability of and the access to  

The topic was raised through a draft discussion paper issued and  
circulated by the Department of Industrial Policy and Promotion  
(DIPP). The CL issue is to be discussed while adhering to provisions  
of the Trade Related aspects of Intellectual Property Rights (TRIPS)  
agreement to which India is a signatory since 1995. CL is a system  
whereby a government permits third parties (other than patent holders)  
to produce and market patented products without the consent of the  
patent holder. Essentially, the paper proposes to elicit a response  
regarding the scope of the TRIPS in regard to CL and the availability  
and access to medicines, particularly amid the backdrop of the growing  
presence of multinational pharmaceutical companies in India and  
declining domestic sales.

Speaking to The Hindu, Dilip G. Shah, Secretary General, Indian  
Pharmaceutical Alliance (IPA), a body representing Indian  
pharmaceutical players, said, “The discussion is welcome. In the years  
since TRIPS, no Indian company has applied for a CL either in India or  
in developing countries. This is because there is lack of clarity on  
the government's position and the procedure is very cumbersome.”

Mr. Shah said that statistics indicated the Indian pharmaceutical  
market as $19 billion. “Over the last five years, the share of  
multinational pharmaceutical companies has risen from 15 per cent to  
25 per cent and in five years could exceed half the market. They could  
then influence the price of products, which is dangerous. Import of  
finished dosage forms has been rising and their prices are  
unaffordable even for middle-class.” These fears are founded on the  
large acquisitions of Indian pharma businesses and the fact that  
already most of these companies were export-oriented and once  
acquired, they would become even more so.

The DIPP's draft discussion paper suggested four options to combat the  
threat. These include, invoking the provisions at the time of a public  
health emergency, invoking the Competition Act 2002 to find out if the  
price or the availability of a drug is a result of an anti-competitive  
agreement or a combination which has an adverse effect on competition,  
a review of the foreign investment policy for pharmaceutical companies  
and finally, expanding the ambit of the drug pricing authority to  
regulate prices of a larger number of drugs than the present 74.

“Barriers to acquisitions can be created. If medicines are considered  
a sensitive sector as even developing and poorer countries are  
dependent on India for drugs, this can be done. Investments should be  
moved from the automatic route to the Foreign Investment Promotion  
Board (FIPB) route to ensure better clarity,” said Mr. Shah adding  
that the imposition of a price control would hurt the domestic  
industry. “It is after all price-based and MNCs using transfer pricing  
would not be impacted. Imports of finished dosage forms rose 30 per  
cent in the last five years on the basis of transfer pricing.”

Clearly, the DIPP paper has prompted the domestic industry and  
lawmakers to take notice of the need for more transparency in the laws  
and their implications to facilitate growth of this industry and Mr.  
Shah said, “We had projected it to reach $40 billion by 2015. This can  
be done as the domestic market doubled between 2005 and 2010 and the  
export market has grown 2.5 times, but a more conducive environment  
must be in place.”



Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru at keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997

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