Home / Companies / US steps up lobbying efforts against compulsory licensing

Mumbai: The US has stepped up efforts to lobby with the Indian government to restrict the country’s use of a global trade law that allows local companies to make and sell copies of patented drugs or other products in special circumstances.

The move has irked activists, patent experts and drugmakers in India, who have written to the government protesting the US’s campaign.

The US was the most annoyed when India in February issued its first compulsory licence to Hyderabad-based Natco Pharma Ltd to make a cheaper copy of German firm Bayer AG’s patented cancer drug Nexavar.

Taking a stand: US Patent and Trademark Office deputy director Teresa Stanek Rea said that India’s grant of compulsory licence did not satisfy international norms. Photo: Eric Bridiers/US Mission Geneva

The US’s deputy under secretary of commerce for intellectual property and deputy director of the US Patent and Trademark Office (PTO), Teresa Stanek Rea, admitted in a 27 June meeting of the US house committee that the office had “someone on the ground in the embassy in Delhi who constantly engages with all of the respective officers in India to discuss with them the importance of not granting CL (compulsory licence) in a situation where it is not wanted."

Mint has reviewed a copy of Rea’s statement to the house committee.

Watch video

The US is lobbying India to curb its use of the trade law that allows local pharma companies to sell copies of patented drugs. Mint’s C.H. Unnikrishnan gives us the lowdown.

Loading video...

Kalpana Reddy, first secretary, intellectual property, at the US embassy in New Delhi could not be reached for comment.

According to patent experts in India, the grant of a compulsory licence by a country, invoking its statutory rights as a member of the World Trade Organization (WTO), is the equivalent of a court decision based on submissions from all the parties involved, including the patent holder.

Compulsory licences are granted when a patent is proved to be not working for the benefit of the public. In Bayer’s case, the provision was invoked because the patented drug is too expensive to be afforded by a sizeable population that needs it, they said.

“Any intervention in this process either by engaging government offices or individual officials will be considered unwarranted and it is in violation of the judiciary practices," said a New Delhi-based patent attorney who declined to be identified as he works with several US pharma clients.

The Indian Pharmaceutical Alliance (IPA), a lobby representing top Indian drugmakers, has written to foreign secretary Ranjan Mathai asking if it was legitimate for diplomats stationed in India to indulge in such lobbying to protect the commercial interests of private companies.

“Foreign trade or diplomatic missions in any country can have dialogues with local government on protecting their own interests and it’s nothing illegitimate as Indian decisions are in the best interest of this country ultimately," an official in the ministry of foreign affairs said.

“As far as the compulsory licensing of (Bayer’s drug) is concerned, government of India has already made its stand very clear to the US government and such decisions will take place even in future if need arises," said this official, who was assigned to respond to a Mint query on behalf of Mathai.

Tapan Ray, director general, Organisation of Pharmaceutical Producers of India, a lobby representing foreign drugmakers in India, said it was only natural for the US government to discuss the issue with New Delhi.

“Compulsory licensing in India had raised concerns among the innovative companies in the world including US, and that government seems to have clarifications on this. Naturally, when there are concerns raised by domestic industry, the government will try to engage in dialogues with the respective government," he said.

Rea said in her statement to the house committee that India’s grant of compulsory licence did not satisfy international norms that allow for the provision to be invoked in a national crisis.

The Trade-Related Aspects of Intellectual Property Rights (TRIPs) that has set the international IP standard for WTO members, “very much allows compulsory licence as one of the flexibilities that can be used in case of national requirements, including emergencies," said Gopakumar Nair, a patent lawyer and managing partner at patent law firm GN Associates.

“These unfortunate comments by the deputy commissioner of the US PTO are reflective of a growing tendency by developed countries to demonize compulsory licensing—a perfectly legitimate legal tool," said Shamnad Basheer, an IP law professor at the National University of Juridical Sciences, Kolkata.

“More importantly, compulsory licensing is not restricted to public health emergencies, as many would have us believe. In fact, the US itself routinely resorts to compulsory licencing, albeit through its courts which refuse to issue injunctions against infringers in many a case," Basheer added.

The February order of the former controller general of India’s patent office, P.H. Kurian, to allow the compulsory licence generated positive responses from the international IP community.

The 62-page order “has sent a clear signal that the provision of compulsory licence in Indian patent law have teeth and that a patent holder selling medicine at unduly high prices faces real prospect of entry of low-cost competitors," Arvind Panagariya, a professor at Columbia University, wrote in a column in The Economic Times on 30 May.

IPA said Rea had briefed the house committee only about one of the factors—the absence of local manufacturing of the drug—for India’s decision to grant the compulsory licence. But there were two other “compelling factors that forced India to grant the compulsory licensing of Bayer’s drug. These include poor access of the drug to patients even after three years of the patent grant and the unaffordable high price," said Dilip G. Shah, secretary general, IPA.

Natco sells the Nexavar copy at 8,800 for a month’s treatment, way lower than Bayer’s monthly dose price of 2.8 lakh.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout