Some good news on generics

Some good news on generics

Producers of generic pharmaceutical products in India, under increasing pressure in the past few years, have some reasons to cheer following two recent developments.

The first: according to some news reports, Union commerce and industry minister Anand Sharma announced last week that India and the European Union (EU) have been able to resolve a significant dispute —one that arose from the seizure of generic pharmaceutical products, exported by Indian firms and transiting through EU ports during 2008-09, for violation of the EU’s intellectual property laws. If true— Mint reports in today’s edition that a stalemate actually continues—this is an encouraging move. The second development is the announcement this month that the proposed Anti-Counterfeiting Trade Agreement (ACTA)—a treaty being negotiated between 11 states and jointly initiated by the US, the EU and Japan, to check trade in counterfeited and pirated goods—is near completion with provisions that seem less onerous for the generic pharmaceutical industry.

This seizure of generics had snow-balled into a major commercial row after customs inspectors in Germany, France and the Netherlands had detained export consignments of Indian firms for as long as eight months at the request of companies such as Sanofi-Aventis SA, Novartis AG and Eli Lilly and Co. in at least 20 cases. With bilateral consultations failing to secure assurances from the EU, India (along with Brazil, one of the countries to which the exports were headed) approached the World Trade Organization to resolve this dispute. The complainants argued that the commercial interests of EU members were not affected, since the generic products were merely transiting through their ports. What’s more, the EU, by taking punitive action against goods that were in transit, had violated the mutual agreement among WTO members to grant freedom of transit through their territories. The agreement to grant freedom of transit, a bedrock of international trade policy, was agreed under the aegis of the General Agreement on Tariffs and Trade (GATT) in 1948: It allows WTO members to conduct trade through the routes most convenient for international transit, for traffic in transit to or from the territory of other members.

For the EU and India, the dispute could not have come at a worst time, considering that they are in the process of deepening their bilateral economic relations through a comprehensive trade and investment agreement. In fact, many saw the dispute over drug seizures as something that undermined the political commitment of the two parties to conclude the agreement before the end of 2010. Once the dispute is out of the way, the negotiating process can get a fresh impetus.

When the ACTA negotiations were launched in 2007, the stage seemed set for another push by the US, the EU and Japan to rachet up the norms and standards of intellectual property protection beyond those provided in the WTO Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS). For many students of the multilateral trading system, the ACTA process had strong parallels with the moves to include intellectual property rights in the GATT multilateral trading system almost three decades back. It was the US then, with the support of European countries, which had argued for checking the proliferation of “trade in counterfeit goods" by getting GATT members to commit to accepting the norms and standards for protecting intellectual property rights. Many have argued that a problem essentially of “counterfeit trademark" goods and “pirated copyright" products was unnecessarily pitchforked into the larger issue of intellectual property rights in general.

The explicit objectives of ACTA were twofold. First, the agreement was intended to strengthen enforcement of intellectual property rights; more precisely, the framework was expected to be TRIPS-plus. Second, the proposed agreement was designed to include some of the more onerous provisions of intellectual property enforcement that were on the domestic statute books of the states backing the agreement. For instance, the border protection measures the EU included in its own legislation, which allowed the customs authorities to indulge in the acts of seizure of generic drugs, were part of the negotiating texts.

In the past few rounds of ACTA negotiations, there were indications that the motley group of countries backing the agreement had considerable differences over the inclusion of such specific forms of intellectual property.

The most significant was the view of the US and Japan that the proposed agreement should only include (counterfeit) trademark and (piracy of) copyright; while the EU’s position was that ACTA should cover all forms of intellectual property rights, and not focus only on copyright and trademark. The US drew its support from business organizations, including the International Trademark Association and the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy, which have argued that the focus of the agreement should remain on counterfeits and pirated goods and not the general enforcement of intellectual property rights.

These differences have been reflected in the “near" final draft unveiled this month. The most significant of these is that suspected patent infringements have been excluded from the purview of border measures. This is an important development for India’s generic industry, since the EU was attempting to introduce provisions authorizing seizure.

Biswajit Dhar is director general at Research and Information System for Developing Countries, New Delhi.

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