Drugs and patents
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by Amit Sen Gupta
mailto:ctddsf@vsnl.com
History of Negotiations
In 1986 a new round of negotiations was initiated under GATT
(General Agreement on Tariffs and Trade). Popularly known as the
Uruguay Round of negotiations, this new round was used by the
developed countries to orient world trade to suit their inter-
ests. It was used to introduce a number of issues on the agenda,
which were hitherto not considered as trade issues and hence not
covered by GATT. Prominent among these were issues related to
Patents, Investment, Environment and Labour standards. The ploy
was clear - to use the threat of trade embargoes to force devel-
oping countries to follow the diktats of developed countries on
a whole range of economic and industrial policies on one hand,
and on the other to use these new issues to create barriers
against developing countries wishing to access the domestic mar-
kets of developed countries.
The basis for negotiations was the infamous Dunkel Draft (named
after Arthur Dunkel - the key author of the negotiating text).
The most contentious portion of the Dunkel Draft was that which
related to Patents - termed as Trade Related Intellectual Prop-
erty Rights (TRIPS) in the Dunkel Draft. Patent is a form of mo-
nopoly that is granted to an inventor for a limited period (20
years according to the final agreement), during which the inven-
tor has the sole right to use the invention and benefit from its
applications. Patents are granted as an incentive for innova-
tion. At the same time Patent laws all over the world have safe-
guards to prevent the abuse of the monopoly granted to the Pat-
ent holder.
India, since 1970, had a Patent law that was seen by many as a
model for other developing countries. The Indian Law stressed on
the obligations of the Patent holder and had strong provisions
that prevented the abuse of the Patent holder's monopoly rights.
Of particular importance was the fact that the Indian Patent law
did not provide for monopoly rights in the area of drugs and
agro-chemicals. The results were clear - the Indian drug indus-
try developed to become the strongest and most self-reliant in-
dustry in the developing world. Today the campaign on access to
drugs draws strength from Indian companies like Cipla who are
offering anti-AIDS drugs at one tenth to one fortieth of the
prices being charged by large pharmaceutical companies. This be-
came possible because of India's liberal Patent law of 1970.
It was, hence, natural that India (along with Brazil, Argentine,
Thailand, etc.) opposed the inclusion of TRIPS in the negotiat-
ing agenda. They argued that the issue of Patents was a non-
trade issue and that the history of Patent laws across the globe
shows that all countries have evolved their domestic laws in
consonance with the stage of economic development and develop-
ment of scientific and technological capabilities. Laws that
provide strong Patent protection limit the ability of developing
countries to enhance their S&T capabilities and retard dissemi-
nation of knowledge. But in the negotiations giant pharmaceuti-
cal MNCs railroaded all opposition and forced the signing of the
TRIPS accord. The draft which formed the basis of the accord was
prepared by industry representatives from the US, Europe and Ja-
pan. Curiously, in 1988-89 India made a complete volte face and
agreed to the inclusion of TRIPS in the GATT negotiations. The
capitulation by India punctured the opposition of other develop-
ing countries, and TRIPS entered the negotiations on world
trade. The TRIPS agreement was signed in 1995 (as part of the
WTO agreement) and countries like India were provided a transi-
tion period of ten years till 2005, to enact laws that were com-
pliant with the provisions of TRIPS.
Global Opposition to TRIPS
Since 1995, however, public opinion against TRIPS has hardened
across the globe. In large measure this is because of the outcry
regarding the HIV-AIDS epidemic. Since the nineties almost the
whole continent of Africa has come under the grip of this epi-
demic and in some countries an estimated third of the adult
population is infected by AIDS. The tragedy was compounded when
drugs to contain AIDS started being developed. These drugs al-
lowed AIDS patients the opportunity to live normal lives even if
they were infected. But there was a catch. Because of Patent
protection these drugs were priced beyond the reach of patients
in developing countries. The ridiculous effect of Patent protec-
tion was evident when one found that the cost of treating AIDS
patients in some African countries was many times their total
GNP! Even more ridiculous, and tragic, when we know that these
drugs can be produced at one fortieth of prices being charged by
MNCs.
AIDS has become a rallying point for activists from all parts of
the world and developing country governments alike. The coali-
tion that was built around the AIDS issue then pressed for
clarifications from the WTO that the TRIPS accord did not pre-
vent country governments from legislating in favour of protec-
tion of public health. In this they were supported by almost the
entire community of developing nations. The global drug MNCs
fought to the last to prevent this. But the momentum of the
global movement was able to force the adoption of a declaration
at the WTO Ministerial Conference in Doha in November 2001 that
clarified that countries could legislate to curb the monopoly
powers provided by patent protection to drug MNCs, in order to
safeguard public health.
Amendments in the Indian Law
In order to comply with the TRIPS Agreement the Indian Patent
Act has been amended twice in 1999 and 2002. A third Amendment
is to be moved before January 2005. Unfortunately, the previous
amendment and the proposed Third Amendment have failed even to
use the flexibilities available in the TRIPS agreement. As we
have seen earlier, the TRIPS agreement was bad for developing
countries. The Indian Govt. is making it worse by not even using
the possibilities available in the agreement and the clarifica-
tion issued in the Doha Declaration of 2001. Two significant ar-
eas where the Indian Law seeks to go beyond what the TRIPS
agreement requires it to, relate to the areas of compulsory li-
censing and pre-grant opposition.
The former (compulsory licensing) is an instrument that the
TRIPS allows by which Governments can allow domestic manufactur-
ers to manufacture patented products within 3 years of their in-
troduction. In the Indian law this provision is still weak and
cumbersome. Pre-grant opposition is an instrument by which Pat-
ent applications can be challenged - and a strong provision
would help in limiting the numbers of Patents granted. The pro-
posed amendment seeks to drastically dilute this provision. What
is disturbing is that these provisions in the Indian law are un-
necessary for us to comply with the obligations laid down by the
TRIPS agreement. In other words, when asked to bend the Govern-
ment is willing to kneel!
Implications of a New Law
What will be the implications of the new Act? Over a period of
time Indian companies will lose the opportunity to develop proc-
esses for patent protected drugs in the country. India will be-
come dependant on MNCs for technology to produce new drugs. Vo-
taries of the new Patents Act argue that old drugs will not be
affected by this Act. While this is true, it must be understood
that the rate of obsolescence of old drugs is extremely fast to-
day. Further, technological dependence on MNCs is the proverbial
"thin edge" which will be used by the MNCs to establish their
dominance over the Indian drug market once again (a position
they had lost after the mid seventies). They will then again
start charging exorbitant prices for drugs in the Indian market.
Since the early eighties, the categories of drugs which show the
maximum rise in sales are categories which include overwhelming
majority of drugs still under Product Patent or whose Product
patents have expired recently. In other words if we had a product
patent regime today, the drugs showing fastest growth would have
been priced way beyond the capacity of the average consumer. Not
only that. Today Indian companies are the largest suppliers of
low cost drugs to developing countries. For example, an estimated
60% of drugs to treat HIV-AIDS come from India. The new law will
make this impossible, thereby threatening the lives of hundreds
of thousands - not only in India, but across the globe.