[Ip-health] Huffington Post: Obama in India

thiru at keionline.org thiru at keionline.org
Mon Nov 1 06:49:29 PDT 2010


James Love

Director, Knowledge Ecology International
Posted: November 1, 2010 09:08 AM

Obama in India

Read More: India , Intellectual Property , Obama India , Pharma ,  
Pharmaceuticals , World News

On November 5, President Obama will begin a four day trip to India.  
This will begin with a Business and Entrepreneurship Summit that has  
been carefully organized with big U.S. and European business interests.

A number of NGOs working on public health issues are concerned that  
the President may push India to adopt more strict intellectual  
property protections on pharmaceutical drugs. They have reasons to be  

And, as is discussed below, there is also an emerging argument that  
current U.S. trade policies on medicines and intellectual property  
have an overall negative impact on our own domestic interests.


India has a population of more than a billion persons. Following more  
than a century of occupation by the British and years of questionable  
domestic policies, per capita income was just $450 per year in the  
year 2000, or $1.23 per day. From 2000 to 2009, per capita incomes  
have increased by 162 percent. India is now home to an estimated 46  
billionaires, and has a growing middle class that is the subject of  
considerable interest by the pharmaceutical industry.

As impressive and encouraging is the recent growth, India incomes are  
only a small fraction of the United States and other developed  
countries. India's 2009 per capita income of $1,180 was 1/40th of the  
U.S. level of $47,307. Like many developing countries, expenditures on  
health lag even more than incomes. In 2007, India spent only $40 per  
capita on health care. In the United States, the figure was $7,285.  
These are averages. For the millions living at the bottom of the  
distribution curve, conditions are extraordinarily difficult. The  
official poverty line in India is just 11.4 rupees for the rural  
population, and 17.2 for urban areas. Converted to U.S currency, this  
is 26 and 39 cents per day.

India, like most developing countries, is a member of the World Trade  
Organization (WTO), and is bound by its tough rules on intellectual  
property. Among other obligations, the WTO requires India to grant  
patents on pharmaceutical products - a rule designed in large measure  
to reverse India's decision in 1970 to abolish such patents.

India enacted legislation in 2005 to implement its WTO obligation to  
grant patents on pharmaceutical products. The legislation included a  
number of legitimate safeguards to limit the negative consequences on  
consumers. These safeguards, which were allowed by the WTO rules, were  
highly praised by public health and development groups, but condemned  
by big drug companies like Pfizer, Merck, Abbott, Norvartis or GSK.

Trade Policy and the Domestic India Pharmaceutical Industry

As a candidate, both President Obama and Secretary of State Clinton  
told health and development groups they would change the Bush  
Administration policy of pressuring developing countries over the  
issue of drug patents and other intellectual property concerns  
involving medicines. So far, this has not happened.

Not content with holding India to the WTO rules, the Obama presidency  
has called upon the US Patent and Trade Organization (USPTO), the  
White House office of the United States Trade Representative (USTR),  
and the Departments of State and Commerce to push India hard to do more.

One of the top priorities of the Obama Administration is a demand that  
India prevent generic drug companies from relying upon known  
scientific evidence that drug are safe and effective, unless they  
obtain the commercial rights to rely upon such studies. So called  
"data exclusivity" rules are designed to create monopolies even in  
cases where patents have expired, or were never granted.

The Obama Administration also wants India to lower its standards for  
obtaining patents, so that patent monopolies will be more ubiquitous.  
For example, the Obama Administration wants India to grant patents on  
new uses of older medicines, something not possible under the current  
India patent law.

The Obama Administration participates with large international  
pharmaceutical companies in an extensive public relations campaign to  
present such policies as necessary to promote India's development as  
an innovation powerhouse. But when subject to analysis, it is evident  
that the changes sought by the Obama Administration are designed to  
benefit Eruopean, Japanese and U.S. Pharmaceutical companies, the  
most, while presenting a growing threat to the efforts to promote more  
equal access to medicines, not only in India, but throughout the  
developing world.

Taken together, the policies (often quietly) advocated by the Obama  
Administration are designed to raise drug prices in India, and make it  
harder for India to export low cost generic drugs to other countries.  
The latter point is quite important, because today India is the  
leading source of high quality generic medicines for the world, a role  
that is being threatened by the pressures on India from the European  
Union and the United States to embrace even tougher intellectual  
property rules for medicines, and a wave of recent acquisitions of  
leading Indian generic companies by large Japanese, U.S. and European  
pharmaceutical firms.

The Obama Administration is not alone in its advocacy of higher  
intellectual property right (IPR) norms for the Indian biomedical  
sector. The European Union is currently engaged in negotiations over a  
controversial intellectual property chapter in a proposed trade  
agreement with India that covers these same topics.

Are public health groups naïve in objecting to the Obama  
Administration and European Union efforts to push higher IPR norms for  
the Indian biomedical industry? Are the U.S. President and the EU  
trade negotiators simply protecting domestic incomes and jobs by  
forcing India to pay for its fair share of medical R&D? Looking only  
from a U.S. (or European) perspective it may seem that calling for  
higher IPR on medicines is a simple matter of looking out for number  
one. But there are considerations to weigh that suggest otherwise.

    1. Trade-offs will be needed on both sides. Polices that drive up  
the prices of medicines in India are bitterly opposed by the general  
population, and unpopular with many Indian political leaders. In order  
to get India to implement policies that reduce access to medicines,  
the U.S. and the EU will have to give something in return. India may  
want changes in agricultural policies that reduce incomes of U.S. or  
European farmers, increase its allocation of H1B visas, expand  
outsourcing of work from the United States, or countless other things  
that may be raised or linked to a negotiation. These issues are often  
not obvious. For example, it is widely rumored that in the past, the  
U.S. Government made concessions regarding India's implementation of  
treaties obligations regarding nonproliferation of nuclear weapons, in  
return for changes in its intellectual property laws. People need to  
ask, what will be the "cost" to us of getting India to make changes in  
its intellectual property laws?'

    2. The US benefits from low cost generic medicines. The United  
States is now the single largest purchaser of generic AIDS medicine in  
the developing world. There is simply no way that the United States  
can meet its global obligations to treat poor persons who have AIDS  
unless we can obtain inexpensive generic version of second and third  
generation AIDS drugs. The policies we are advocating in India will  
make that more difficult. The U.S. also depends upon India to provide  
inexpensive generic medicines for our domestic market. If India is  
forced into managing a complex patent system that is constantly gamed  
to extend patent protections forever, we will lose an important  
supplier of inexpensive medicines.

    3. Higher drug prices make it more difficult to transfer global  
health programs to national governments. When medicine prices are  
high, the United States, European and other high income countries are  
increasingly asked to pick up the tab, not only for AIDS drugs, but  
for new vaccines involving cervical cancer, for malaria treatments,  
and other public health problems. If we want developing countries to  
shoulder these costs themselves, and increase national outlays on  
health, we can't at the same time be making them too expensive for  
their own taxpayers.

    4. Loss of exports. In the developing world, higher medicine  
prices often lead to reduced access and worse health outcomes. Poor  
health lowers economic growth, and reduces purchasing power. This in  
turn leads to fewer U.S. exports of goods and services in developing  

    5. Harsh policies on medicines hurt the U.S. Brand. News media  
coverage of U.S. trade policy is often non-existent in the U.S. But in  
developing countries, efforts by the United States to raise the prices  
of medicine are often reported on the front pages of newspapers in  
developing countries, and becomes the subject of extensive discussion  
among academic experts and policy elites, generating unwelcome  
anti-American sentiment. It is no accident that one of the most  
dramatic concessions the U.S. Government has made in terms of trade  
policy was the November 2001 Doha Declaration on TRIPS and Public  
Health, where the WTO agreed that members "should" implement IPR rules  
in way that promotes "access to medicine for all." At that moment, the  
U.S. was coming to grips with the realization that there is a much  
resentment and even hatred toward the United States.

    6. Reputations for not honoring promises erode trust in future  
promises. In 2001, the US and European countries agreed at a Doha  
Ministerial meeting that developing countries would be able to  
implement their WTO obligations on intellectual property rights in a  
manner that promotes access to medicine for all. The US has agreed to  
similar text in a more recent negotiation at the World Health  
Assembly. In order to get the US to approve that language, developing  
countries made concessions in other areas. By reneging on these  
promises, the U.S. makes it clear that it won't keep its word.  
Whatever short term benefits we may achieve, there should be more  
appreciation for the longer term consequences of reduced trust in our  

In a number of respects, the current demands on India, which are so  
inappropriate given the consequences for poor people all over the  
world, are a product of the larger failures of the U.S. political  

The top companies shaping U.S. Policy toward India on IPR and medicine  
are Pfizer, Merck and Abbott. The CEOs of these same three companies  
had direct access to Obama immediately after the inauguration, where  
they traded money for an ad campaign to support the health care bill  
for a promise to gut the legislation of any cost controls involving  
the pharmaceutical sector. Democratic Party leaders like Howard Dean  
and Joe Trippi were hired to lobby for BIO, the industry trade group.  
There is also a revolving door between the pharmaceutical industry and  
the government. This is particularly true for officials working in the  
area of trade policy.

Given the private incentives politicians have to raise cash from drug  
companies, or government officials have to seek high paying industry  
jobs after they leave the government, there is no reason to believe  
that the public interest is in fact first and foremost in everyone's  
minds in Washington, DC.

We hope that President Obama takes some time in his trip to India to  
think hard about the hundreds of millions of persons who are poor, not  
only in India, but throughout the world, and ask himself, as a  
Christian, as an ambassador of hope, as a former community organizer  
for poor people, as a winner of the Nobel peace prize, as the  
President of the United States of America, and the face of our  
country, what is the right thing to do?

It is not unreasonable to ask the President to truly honor the 2001  
Doha promise that countries will have the freedom to implement  
intellectual property laws in a manner that promotes access to  
medicine for all. In the end, an announcement along these lines,  
backed up with deeds, would do more to protect U.S. interests abroad  
than any of the suggestions he is getting from big pharma CEOs these  

(this may be redistributed under any creative commons attribution license).

Follow James Love on Twitter: www.twitter.com/jamie_love

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