Stage Set For India To Frame Compulsory Licensing Provisions As Contrasting Groups Make Their Case

The Department of Industrial Policy and Promotion is analyzing and interpreting comments on a contentious subject that has kept Indian and multinational drug firms bitterly divided for more than five years, while forcing the government into a dilemma over an acceptable policy.

MUMBAI - After soliciting views from stakeholders on a "discussion paper" to outline conditions under which a compulsory license could be invoked, India's Department of Industrial Policy and Promotion is now trying to figure out what to do.

DIPP is tasked with analyzing and interpreting the numerous comments and views on a contentious subject that has kept Indian and multinational drug firms bitterly divided for more than five years, while forcing the government into a perpetual dilemma over framing an acceptable policy.

By the end of the deadline, a wide spectrum of comments - from 30 sources - had poured in, ranging from prominent law firms to academics and patient groups as well as big industry associations such as the Indian Pharmaceutical Alliance, Organization of Pharmaceutical Producers of India, Biotechnology Industry Organization, Pharmaceutical Research and Manufacturers of America, U.S.-India Business Council, Japan Pharmaceutical Manufacturers Association, Indian Drug Manufacturers Association and Oxfam.

Caught In The Crossfire

Having found no amicable solution to determining the ideal situation under which to invoke a compulsory license, the Indian government kicked off fresh moves by floating a discussion paper to bring the warring industry factions onto common ground for formulating a consensual law.

Contentious issues surround compulsory license policy, including royalty payments to innovators and the discretionary powers of India's Controller General of Patents in calling for compulsory licenses to be issued to generic drug makers.

The issue was complicated further in August when, as part of its exhaustive analysis of the recent trends in the Indian pharmaceutical industry, the Indian government's key policy making arm linked the spate of recent pharma acquisitions with availability and affordability of medicines.

The department paper raised concerns that existing provisions of compulsory licensing may be rendered ineffective due to the acquisitions made by multinational companies (Also see "Indian Firms Must Be In Indian Hands, Says Government Paper; Highlights Threats to Compulsory Licensing And Drug Pricing" - Scrip, 25 Aug, 2010.).

Referring to the big takeovers, the department argued, "If large Indian generic companies with the capability to manufacture drugs based upon a compulsory license (when they are issued to them) are themselves taken over, then the regime of cheap and effective drugs may be threatened."

By the comments dispatched to the policy department, the possibility of an easy solution looks to be a far cry.

Compulsory License: Troubling Message?

While multinational companies have broadly pitched against compulsory licensing - linking it with disincentivizing innovation - associations representing Indian companies and their allies have been vociferous in their demands for a robust and effective compulsory licensing provision underlining suitable royalty payments to innovator companies to broaden the reach of affordable drugs to Indian patients.

BIO expressed its disappointment over the discussion paper, framing the issue in the role intellectual property plays in biotech collaborations and investments.

"We were disappointed to see the recent DIPP's discussion paper on compulsory licensing of biopharmaceuticals, which sends a deeply troubling message to investors and collaborators at a time when the industry and the government of India are seeking to increase investment, collaboration, and innovation in the biotech sector," the lobby said, adding that it recognizes compulsory licensing provisions that are in compliance with the WTO's TRIPS agreement.

BIO noted that it did not believe that the mechanism proposed in the discussion paper that is aimed primarily at "reducing prices and boosting domestic manufacture of copies of innovator products, would aid in achieving these goals."

Voicing its concerns, BIO said the discussion paper sets the stage for the perception of weakened IP rights for innovators, which disincentivizes collaborations and investments in the biotech sector. "Clearly, such an outcome will not result in the availability of innovative biotechnology products for the Indian public, and would be contrary to the goals of the biopharma strategy supported by the Government of India," BIO said.

In a similar vein, the U.S.-India Business Council opined that adopting the policies proposed in the DIPP paper would inhibit growth of all IP-intensive industries by creating "enormous uncertainty," which would have a chilling effect on incentives to innovate in and for India.

"The issuance of the DIPP paper has already created ripples of uncertainty which have alarmed many of our members across all fields of technology," USIBC said. "The adoption of the policies as set forth in [this] paper would no doubt inflame these sensitivities by creating unfavorable impressions of India's respect for valuable IP. There is a real risk that resulting political narrative could bring forth repercussions which further impede the bilateral trade relationship."

IDMA: Compulsory License And More Demands

On the other side of the spectrum are Indian companies that fear a multinational dominance in the Indian market in the wake of Indian companies selling out to attractive valuations. The Indian Drug Manufacturers Association said that no changes in the amended Indian Patent Act of 2005 are needed. In particular, the group is opposed to any changes to the patent act's Section 3(d), which deals with incremental innovation.

Section 3(d) of the act has stirred up considerable controversy over the last five years within the Indian drug industry - splitting multinational and Indian pharmaceutical companies - as it stipulates that mere discovery of a new form of a known substance without enhanced efficacy cannot be granted a patent (Also see "Insider Analysis From Nishith Desai Associates: Learning and Unlearning from Section 3(d) Of The Indian Patents Act (Part 1 of 2)" - Scrip, 22 Jun, 2009.).

IDMA said medicines are being launched by multinational companies at exorbitant prices, and yet no company has applied for a compulsory license mainly because Indian companies are too small to risk costly litigation with MNCs. And since most Indian companies are in trading relations with multinational firms, they are not keen to spoil their terms with their partners and ask for compulsory licenses, according to the association that represents 600 Indian members.

In that light, IDMA said the government should be ready to help a company obtain a compulsory license so that "urgently required medicines reach the public quickly and at a reasonable price."

OPPI, the lobby group that mostly represents multinational companies, noted that compulsory licensing of patented inventions is not a sustainable or viable course of action to address India's health care challenges.

"Proposals to promote the use of compulsory licenses could inhibit technological development in the pharmaceutical sector in India," the OPPI explained, "thereby undermining efforts to make medicines and other products widely available to patients."

- Vikas Dandekar ([email protected])

[Editor's note: This article appears courtesy of PharmAsiaNews.com, Elsevier Business Intelligence's source for Asian biotech and pharmaceutical news. Register for a 30-day risk free trial.]