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Geneva: The patent law for pharmaceutical products in India and other developing countries, including provisions that define what constitutes inventions, could face a legal challenge because of a controversial new norm being pushed by the US and Switzerland.

The norm, which would adversely affect Indian pharmaceutical companies, calls for applying non-violation complaints (NVCs) to the World Trade Organization’s (WTO) trade-related intellectual property rights (TRIPS) agreement.

NVCs enable a WTO member to raise a dispute against another member’s actions or policies that caused it a loss, even if there is no violation of a WTO agreement.

So far, NVCs are applied only to the WTO’s provisions governing trade in goods and trade in services but not to the TRIPS agreement because of an existing moratorium.

The US and Switzerland, which represent the interests of the largest pharmaceutical companies like Pfizer Inc., Merck and Co. Inc., Eli Lilly and Co., Bristol-Meyers Squibb Co., Roche Holding AG and Novartis AG, among others, want to terminate the moratorium on the application of NVCs to the TRIPS agreement at the WTO’s 10th ministerial conference in Nairobi, Kenya, later this year.

Despite raising numerous concerns on the amended Indian patent Act, particularly the 3(d) provision that prevents pharmaceutical companies from extending their 20-year product patents by making minor changes or improvements, the US and Switzerland chose not to bring a dispute at the WTO.

But NVCs provide a special legal instrument to the US and Switzerland to take Indian pharmaceutical firms to task at the WTO on the ground that the Indian patent provisions are causing a material loss even as they remain consistent with the trade body’s IPR provisions, said IPR analysts familiar with the issue.

The US and Switzerland could also be pushing the NVC issue on systemic considerations and not exclusively for their industry interests, a European TRIPS official said.

But a large majority of countries drawn from Asia, South America, Africa and even industrialized countries such as Norway and Canada have consistently opposed the demand from the US and Switzerland to introduce the application of NVCs to the TRIPS provisions. Notwithstanding a near-isolation on the NVC issue, the US and Switzerland have not relented on their stand and continue to remain inflexible, trade officials argued.

On 9 July, the chair for the WTO’s TRIPS council, Ambassador Abdolazeez S. Al-Otaibi of Saudi Arabia, convened a closed-door meeting of select countries to explore whether he can bring about a compromise between the two sides which remain daggers crossed on the issue at this juncture.

The chair invited officials from the US, Switzerland, the European Union, China, India, Brazil, Peru, Argentina, South Africa and Nigeria on behalf of the African group as well as Russia, Egypt and Taiwan to discuss the way forward on the NVCs at the 10th ministerial meeting.

Trade officials from Peru, India, Brazil, China, Russia, Egypt, Nigeria and South Africa told the chair that the NVCs are inapplicable to the TRIPS agreement on several grounds. Unlike other WTO agreements, the TRIPS agreement is asui generis agreement that is not designed to protect market access but rather to establish minimum standards of intellectual property protection, Peru stated on behalf of the 17 countries that are calling for inapplicability of NVC to the TRIPS agreement.

The 17 countries, including India, Brazil, China, Bolivia, Colombia, Cuba, Ecuador, Egypt, Indonesia, Kenya, Malaysia, Pakistan, Peru, Russia, Sri Lanka and Venezuela, had earlier called for a permanent moratorium on NVCs under the TRIPS agreement. “We are going to submit our proposal to ensure the inapplicability of the NVCs next week," a Peruvian official said on condition of anonymity.

India stated that the overwhelming majority of WTO members called for the “inapplicability" of the NVCs to the TRIPS agreement. The best way to end the controversy on applying NVCs to the TRIPS agreement is to make it permanently “inapplicable" and thereby end the cycle of extensions of moratoriums, the Indian official argued.

The US argued vehemently at the meeting that NVCs be made applicable to the TRIPS agreement. If there is no consensus on the extension of the moratorium at the WTO’s 10th ministerial conference beginning on 15 December, the NVCs will automatically apply to the TRIPS agreement, the US maintained, according to the participant.

Switzerland said it supports the US for applying the NVCs to the TRIPS agreement.

The EU maintained that the US and Switzerland have not been able to convince members why the application of NVC to the TRIPS agreement is required and under what circumstances it is relevant, a EU official said, asking not to be named.

The chair said the NVC issue must be resolved once and for all. Ambassador Al-Otaibi said he will convene another meeting in October to see if a solution could be found to the NVC issue, which remains unresolved since 2001.

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