Home >Opinion >Online Views >Global patients to lose if IP rights uncertain | Mark Elliot
In the absence of clear IP rights, innovative companies that require significant up-front costs will have little incentive to invest billions of dollars and decades in time in creating new products. Photo: Gianluca Colla/Bloomberg (Gianluca Colla/Bloomberg)
In the absence of clear IP rights, innovative companies that require significant up-front costs will have little incentive to invest billions of dollars and decades in time in creating new products. Photo: Gianluca Colla/Bloomberg
(Gianluca Colla/Bloomberg)

Global patients to lose if IP rights uncertain | Mark Elliot

While interest groups spin the outcome into a pricing issue, many important details about its implications are getting lost

The 1 April decision by the Supreme Court of India denied Novartis AG a patent for its Glivec cancer medication, an intellectual property (IP) right recognized in 40 other countries including the US, China, and Russia. This decision punctuates a series of recent court cases that call into question the future of public health and innovation in the Indian economy.

While interest groups spin the outcome into a pricing issue, many important details about its implications are getting lost. The claim that Novartis, one of the world’s biggest manufacturers of generic medicines, priced the cancer medication too high and out of financial reach for most Indians is misleading. Novartis, like many innovative companies, offers programmes under which medicines are subsidized or even given free. In the case of Glivec, 95% of the patients prescribed in India received the dosages free of cost and the remaining 5% were receiving it subsidized. Even in the hands of local generic manufacturers, the lowered price of $2,500 per year for Glivec is still well beyond the average Indian’s means.

So who sets to gain from this? Obviously, the Indian generic sector should see profits spike, at least temporarily. But it’s the global patient population that is set to lose if IP protections remain uncertain in this major economy.

In the absence of clear IP rights, innovative companies that require significant up-front costs will have little incentive to invest billions of dollars and decades in time in creating new products. In no sector is this more important than in medicinal research, where bringing a single life-saving treatment to market, and to patients, requires $1.3 billion in investment and 10-15 years of research and development, according to the Pharmaceutical Research and Manufacturers of America. Just think of the countless dead ends and the millions of man-hours scientists and doctors have spent to make even the slightest improvement to our healthcare. Millions of people suffering around the world won’t have access to cures because the capacity to pursue this kind of risky research will be disrupted.

But the implications go far beyond medicines. All innovative industries within and outside of India are likely to think twice about investing in the country.

In 2010, then president Pratibha Patil declared the next 10 years to be India’s “Decade of Innovation". Boasting of one the world’s fastest growing economies, India would be well served by protecting the spirit of innovation, which has driven the country to out-produce developed and developing countries in an array of industries.

Policy and judicial decisions that invalidate intellectual property rights, like the Glivec case, cast a daunting shadow over India’s otherwise promising business climate.

The Global Intellectual Property Center’s International IP Index: Measuring Momentum recently compared IP environments across the globe. Among the 25 indicators used in the index, ranging from enforcement to patent rights to ratification of international treaties, India ranked last in nearly every category. Many are questioning India’s commitment to promoting innovation and continuing on a path towards creating a knowledge-based economy. It doesn’t have to be this way. With the proper IP rights in place, and the appropriate protection of these rights, global innovative companies will have the incentive necessary to operate in India and explore its endless business opportunities. Stronger IP protections create jobs, stimulate economic growth, and promote innovation of new technologies across industries, in addition to fostering public health. From biotech to software to textiles, the protection of IP benefits all.

If India is to truly embrace its “Decade of Innovation", courts and local policymakers must begin to recognize the true value of IP. The stakes are too high and the potential for economic growth is too great for India to ignore. It’s time for the Indian government to take action and show the world it is ready to help foster innovation and promote the proper protection of IP rights.

Mark Elliot is the executive vice-president of the Global Intellectual Property Center at the US Chamber of Commerce.

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