New Delhi: A ship loaded with medicine from India drops anchor at a European port from where it will sail for Brazil. European officials seize the cargo and later send it back to India. They say the drug is a generic version that violates a patent protected in Europe. A generic drug is cheaper than the patented version.
The seizure has led to a full-blown war of words in three corners of the world—and put the spotlight back on contentious issues such as intellectual property (IP) laws, access to affordable medicines and the use of non-tariff barriers against exports from developing countries.
The governments of India and Brazil have taken a strong stand against the European Union (EU) for seizing an in-transit shipment of a drug manufactured by Dr Reddy’s Laboratories Ltd (DRL). Brazil’s ministry of external affairs has threatened to take the issue up with the World Trade Organization (WTO) that settles trade disputes between countries. And Brazil, with strong support from India and Bangladesh, at a recent executive board session of the World Health Organization (WHO) in Geneva, also succeeded in blocking a controversial resolution backed by the European Commission (EC) and WHO-funded International Medical Product Anti-Counterfeiting Taskforce, or IMPACT. The resolution had been widely criticized for mixing up issues of public health and private IP rights in the context of defining “counterfeit” drugs.
Patent tussle: India’s ministry of commerce and industry is working out a legal strategy to convince the European Union to drop the provision under which the shipment from Dr Reddy’s Laboratories was seized. Bharath Sai / Mint
The Indian ministry of commerce and industry is working out a legal strategy to convince the EU to drop the provision under which the DRL shipment was seized. “We plan to approach the WTO if the EU fails to take suitable action,” said G.K. Pillai, secretary, department of commerce.
On 15 January, Mint had reported that a DRL shipment of the generic version of losartan was seized in transit in the Netherlands. This shipment, on its way to Brazil, was held by the customs authority at Rotterdam, which said it infringed the patent of the original drug—Cozaar. Losartan is not patented in India or Brazil. The patent for Cozaar in the Netherlands is held by DuPont, while US-based pharma multinational Merck and Co. holds the marketing rights.
“We have taken up the issue with a national-level industry body. But we hope the Indian government will take it up at the government-to-government level...as it is an industry-wide problem,” said DRL chief executive G.V. Prasad.
Referring to the EC regulation, a DRL spokesperson told Mint in an email response, “...These provisions may have a significant impact on Indian companies, most of which use the EU route to transport pharmaceutical products to markets where the patent is not recognized or the product is off patent. By forcing (them) to opt for a different route...the cost of transport may significantly add to the cost of producing...thus adversely impacting the India’s ability to remain competitive.” He added, “This will, obviously, also impact the availability of much needed medicines in developing countries, to which India exports...”
On its part, the Indian government will provide legal support to the industry. “Indian companies like DRL and IndSwift whose goods were seized in transit will get legal and financial help from us to file cases in the EU court of justice. They have shown interest in our offer,” said Pillai. (Mint first reported about Indswift on 12 December.)
According to the EC regulation, the EU customs are empowered to detain goods in transit on suspicion of an infringement of IPR. “Therefore, customs have a right to stop goods of which they suspect that an intellectual property right (in this case a patent) is infringed,” Maria Assimakopoulou, spokesperson, taxation and customs union, EC, told Mint in an earlier email. The spokesperson has not responded to the newspaper’s email about India and Brazil’s opposition.
“The shipment was seized on grounds that it infringed... the patent... However, it is made in India with full respect to international legislation concerning (IP) rights. In Brazil and in India, the product is not protected by a patent and can be imported freely,” said an official of the Brazilian ministry of external affairs in an email.
The fear of more such episodes has been expressed earlier. “After the EU regulation was introduced, MSF (Medecins Sans Frontieres, an international medical and humanitarian aid organization) expressed concern about its potential to hamper the transit of perfectly legitimate medicines for use in developing countries. This concern remains,” said Michelle Childs, policy director of the non-profit, MSF Campaign for Access to Essential Medicines.
Patent lawyers suggest a larger battle lies ahead. Rajeshwari Hariharan, partner, patents division of the law firm K&S Partners, said, “...if it is in transit...it is deemed to be in storage, and storage is one of the acts that fall under IPR... I would agree though that it is a non-tariff barrier... (I)t would still remain (an) infringement but the countries can take it up with WTO and ask for?amendment in the law.”
“The seizure of in-transit consignments not meant for the EU markets operates as a non-tariff barrier and is antithetical to the very spirit of free trade envisaged under the WTO. But the current wording of TRIPS leaves much to be desired and may provide enough flexibility to the EU to justify such seizures. It may be far more fruitful for India and Brazil to engage in a diplomatic dialogue with the EU to resolve this issue and amend the text of TRIPS to prohibit such seizures in the guise of IP enforcement,” said Shamnad Basheer, a professor in IP law at the National University of Juridical Sciences, Kolkata.
TRIPS, or the agreement on aspects of intellectual property rights related to trade, provides for basic protection that each government has to give to the IP of fellow WTO members, while balancing the long-term benefits and possible short-term costs to society. Governments have certain flexibilities to be able to tackle, for instance, public health problems.
This gives an option, argue others. Sangeeta Shashikant, a lawyer with the Third World Network, an international non-profit, says India and Brazil can and should explore legal options including approaching the WTO Dispute Resolution Body. “The TRIPS agreement clearly states that any IP enforcement measures should be applied in such a manner as to avoid the creation of barriers to legitimate trade,” she said.
Asked how Brazil would now deal with issues such as seizure of generic shipments in transit, the official said in an email, “...(A) motion to accept recommendations by IMPACT that could lead to confusions (between counterfeit and generic drugs) was stopped by countries such as Brazil and India. Other options, including (going) to the WTO, are still being considered.”
India, Brazil and other countries from the South-East Asia region, been campaigning against the IMPACT resolution for its attempt to redefine counterfeit drugs to include generics. The losartan case led Brazil to take an aggressive and successful stance this time.
But the battle between affordable generics and costly patented drugs is far from over. “There is the Acta (anti counterfeiting trade agreement) being negotiated between certain countries as well as the SECURE (standards to be employed by customs for uniform rights enforcement) which promotes strict IP enforcement being developed by the World Customs Organization,” said Dilip G. Shah, secretary general of the Indian Pharmaceutical Alliance.
Meanwhile, the EC regulation continues to provide ample scope for abuse, as customs authorities are unlikely to be able to gauge what constitutes IP violation. As Hariharan said, “The customs officials aren’t aware of patents. The patent owner traces the entire shipment and is aware of the route of the product and knows exactly which port they can seize the shipment at. Then they notify the customs authority of that port, and the product is seized.”