[Ip-health] News: business-standard.com- U S Bhatia: Why EU seizes Indian drugs

Marine Avrillon Marine at haieurope.org
Mon Nov 1 03:18:27 PDT 2010


U S Bhatia: Why EU seizes Indian drugs 


India's status as the pharmacy of the world is at stake 

U S Bhatia  October 30, 2010, 0:51 IST 



India's status as the pharmacy of the world is at stake


During 2008 and 2009, at least 16 consignments of Indian generic drugs
were seized by Dutch authorities while in transit through the
Netherlands. Most of these were essential drugs destined for developing
countries in Africa and Latin America. Perceiving a clear violation of
GATT and TRIPS provisions, India along with Brazil had sought
consultations with the EU under the WTO dispute settlement process.
India and Brazil have now to decide whether to request for a panel to
adjudicate the dispute


The Indian generics industry has played a crucial role in ensuring
availability of low-priced but high-quality drugs not only in India, but
in much of the developing world. According to a UNITAID study, Indian
generics manufacturers supply over 80 per cent of donor-funded AIDS
medicines to developing countries. Domestically, the Indian industry now
faces challenges due to the implementation of the commitments that India
undertook under the TRIPS Agreement. In overseas markets, the renewed
push for enforcement of IPRs being spearheaded by some developed
countries threatens to circumscribe the market access that Indian
industry has enjoyed so far.


India's emergence as the pharmacy of the world is not a fortuitous
development. It took place in a facilitative policy environment which
has changed significantly in recent years. Domestically, the biggest
change involves the implementation of commitments that India undertook
under the TRIPS Agreement. While it is too early to arrive at definitive
conclusions about the impact of the re-introduction of the product
patent regime in India from 2005, some indications are clearly visible.


The earlier often antagonistic relationship between the generics
industry and pharma MNCs is being increasingly replaced by a more
cooperative relationship as the Ranbaxy-Daiichi Sankyo deal evidences.
More such consolidation of the Indian pharma industry can be expected
either through M&A activity or through partnership arrangements. An
intensification of such consolidation has implications from the public
health standpoint, an issue which the Parliamentary Standing Committee
on Health and Family Welfare addressed in its report to Parliament in
early August.


These concerns include the continuing willingness of the industry to use
TRIPS flexibilities as well as on the issue of drug pricing. While R&D
activities in India have certainly increased, the outcomes are not yet
visible in the marketplace. There is little to suggest that research on
neglected diseases has increased. The USP of the Indian generics
industry remains the development of low-priced generics, but the focus
of the industry, at least of the bigger players, appears to be
increasingly on development of generic versions of drugs going off
patent in developed country markets for sale in such markets.


Given the close relationship between a robust generics industry and
public health, policy-makers would need to keep a close watch over
developments in the industry to ensure that competitive conditions are
maintained and that the generics industry continues to play its role in
providing affordable, quality-assured medicines to India and the world.
In this connection, the Discussion Paper issued by the Department of
Industrial Policy and Promotion on Compulsory Licensing is a positive
development. However, given that India has not used the facility after
the coming into force of the TRIPS Agreement, it would be interesting to
see how this matter progresses.


The role that the Indian generics industry plays in public health
regimes in a large number of developing countries is often not
adequately appreciated in the Indian discourse. While the Indian
generics industry has only a 20 per cent market share globally, it has a
predominant share in supplies of ARVs for treatment of HIV/AIDS in
developing countries. It can be safely argued that if Indian companies
had not intervened in this sector with their significantly cheaper
versions, a very large number of HIV/AIDS patients would have gone
untreated. Indian generic drugs play a similar role in the treatment of
other diseases in a large number of developing countries, especially in
Africa. India's generic industry has, through its interventions in such
countries, created much goodwill for the country. There are few better
examples of India's soft power.


However, Indian generics companies continue to face stiff opposition in
a number of foreign markets from pharma MNCs and their host governments.
The gist of the strategy deployed by them is to deliberately confuse
"counterfeits" with generic products. In the TRIPS Agreement, the words
"counterfeit" and "pirated" are used only in the context of trademarks
and copyrights, respectively, and not in the context of patents. Patents
are territorial in nature and enforceable only in the national
jurisdictions where they are granted. The crux of the dispute between
India and the EU involves an extra-territorial enforcement of patent
rights by the EU in the case of goods in transit to third countries
without there being any threat of diversion to EU markets.


In the last few years, determined efforts have been made by a number of
developed countries to push through an activist agenda on enforcement of
IPRs for fighting counterfeits and piracy. Generic drugs are also a
target in this effort. A number of inter-governmental organisations like
the World Customs Organisation, World Health Organisation, and World
Intellectual Property Organisation have witnessed skirmishes on this
issue. However, due to the determined opposition of developing countries
like India, these efforts have not been successful.


Africa is a major battleground in this battle given the huge public
health challenges it faces. Efforts have been made to influence domestic
IPR legislation in a number of African countries by equating generic
drugs with counterfeits. Thanks to the role played by vigilant NGOs like
Medecins Sans Frontieres, Action Aid, Oxfam, etc. as well as African
NGOs, the vital role being played by generic drugs in combating
pandemics like HIV/AIDS in Africa has been highlighted and such national
and regional legislation prevented from being finalised or notified for
enforcement. However, this is a continuing battle and should be a major
focus of India's economic diplomacy in Africa in the near future.


The author is former Indian ambassador to the World Trade Organisation



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