[Ip-health] Patent protection not at the cost of local manufacture

Prathibha Sivasubramanian prathibha.siva at gmail.com
Fri Feb 15 21:48:08 PST 2019

Patent protection not at the cost of local manufacture
k m gopakumar

The amendment to the Drugs Price Control Order will undermine safeguards

When product patent protection was introduced in India for pharmaceutical
inventions, one of the anticipated consequences was that it would undermine
the local manufacturing of patented medicines — either through importation
or prevention of local manufacturers from producing the patented medicines
in the normal course. This apprehension has come true.

Transnational companies who enjoy patent monopoly on new medicines seem to
be more comfortable with importing their patented medicines rather than
producing it in India.

The situation just got worse with a recent amendment in the Drugs Price
Control Order (2013), where patented products under the Indian Patents Act
are exempted from price control for five years from the date of commercial
marketing by the company. This is an anomaly the Government needs to

Indian lawmakers had incorporated a few safeguards in the amended Patents
Act to discourage the patent holder from using the patent as an import
monopoly tool. Section 83 of the Patents Act set the general principles on
the “working of patents” as: (a) that patents are granted to encourage
inventions and to secure that the inventions are worked in India on a
commercial scale and to the fullest extent that is reasonably practicable
without undue delay; (b) that they are not granted merely to enable
patentees to enjoy a monopoly for the importation of the patented article.
These principles are further strengthened in the Patents Act by making
non-working of patents in India for three years from the date of the grant
of the patent as a ground for granting a compulsory licence (where another
company is allowed to make the product on payment of royalty to the

In fact, the Patent Office, Intellectual Property Appellate Body (IPAB) and
the Bombay High Court interpret the term “worked in the territory of India”
as local manufacturing and not the commercial availability.
Practical constraints

The latest amendment to Para 32 of the Drugs Price Control Order 2013
(DPCO) undermines the above-mentioned legislative objective through
administrative action. The amended Para 32 (i) reads: “A manufacturer
producing a new drug patented under the Indian Patents Act for a period of
five years from the date of commencement of its commercial marketing by the
manufacturer in the country”. This effectively means the DPCO provisions
cannot be applied to control the price of patent-protected medicines. This
would clearly incapacitate the government to control the price of patented
medicines even if they are classified as essential medicines and also
provide the patent holder a licence to import without fear of price
control. The original Para 32 provided an exception to patented medicines
from price control on the satisfaction of two conditions. First, a new drug
patented under the Indian Patent Act, 1970 (39 of 1970) (product patent)
and not produced elsewhere. Second, that the patented medicines are
developed through indigenous research and development. Thus it addressed
two policy objectives, viz, the promotion of domestic R&D and the promotion
of domestic production. The exception complemented provisions of the
Patents Act and ensured policy coherence.
People’s health over profits

The amended Para 32 of DPCO is also impractical to implement. Since there
are multiple patents on the same molecule/medicine it would be difficult
for the National Pharmaceutical Pricing Authority to make a determination
on whether the medicine falls within Para 32. This would lead to an easy
exit route for companies to seek exemption from DPCO and defeat its very

Legally speaking, DPCO does not overrule the provisos of the Patents Act.
However, when a compulsory licence is sought on the lack of working in
India, the patent holder may cite the DPCO provision to justify that the
commercial availability satisfies the requirement of working in the
territory of India. The patent holder may argue that the Government’s
support was evident in the amendment to Para 32, thereby vindicating their
(innovator’s) stand that commercial availability satisfied the working
requirement in the Patents Act.

The Government should not undermine the legislative intent behind Sections
83 and 84 of the Patents Act. In fact, it should uphold the legislative
intent, i.e. people’s health over the profits of pharmaceutical companies.

Prathibha Sivasubramanian

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