Intellectual Property Woes for Pharmaceutical Companies in India

BY: ROSANGELY FRICK

In the past month India has taken consistent, proactive steps to provide generic drugs at lower cost to its population. India’s Comptroller-General of patents issued a compulsory license upon Bayer’s Nexavar last year.[1. Richard Baddeley, India’s Intellectual Property Appellate Board (IPAB) Rejects Bayer’s Appeal of Compulsory License, Lexology, (Mar 7 2013), http://www.lexology.com/library/detail.aspx?g=e5853881-e592-44b2-9747-4163af14384a.]  In March, the Court dismissed Bayer’s appeal to that decision.[2. Id.]

The patentability and overall intellectual property protection afforded to drugs across borders, falls within the ambit of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”).[3. David Carel, Drug Production: Public Interest vs. Intellectual Property Rights, Yale Journal of Medicine & Law: An Undergraduate Publication, (Feb. 8 2010), http://www.yalemedlaw.com/2010/02/drug-production-public-interest-vs-intellectual-property-rights/.] TRIPS is an international agreement which (among other things), seeks to balance the need for affordable medicine in developing countries against the goal of incentivizing pharmaceutical innovation.[4. Id.] In essence, TRIPS gives pharmaceutical companies the option to grant a license to a government or organization to produce a generic, cheaper version of a patented drug.

In 2001, in an interpretive statement of TRIPS, the Doha Declaration (“Doha”) established that a nation state has the ability to issue a compulsory license, granting itself the power to produce the patented medicine, provided that the state gives the pharmaceutical company adequate remuneration.[5. Id.] Under Doha, the compulsory license may be issued when: (1) the patent holder fails to offer the drug in the market during a time of emergency or (2) when the patent holder charges excessive prices for the needed drug.[6. Id.]   Debate is sparked by undefined terms like “adequate renumeration” or “emergency.”[7. Xiaolu (Erin) Wei, Drugs and Intellectual Property Rights, MIT Law Club, (Fall 2006), http://web.mit.edu/lawclub/www/Drugs%20and%20Intellectual%20Property%20Right1.pdf.]   Currently, what constitutes an emergency or adequate compensation is at the discretion of the nation state.

Pharmaceutical companies also argue that disallowing exclusive patentability disincentivizes pharmaceutical innovation since companies need to recover the costs of the new drugs through profit realized from exclusive patenting.  In this case, Bayer has issued a statement that it will remain “committed to protecting its patents for Nexavar and will rigorously continue to defend [its] property rights within the Indian legal system”.[8. Intellectual Property Watch, Bayer Will Appeal India Compulsory License on Its Cancer Drug, (Mar. 5, 2013, 2:21 pm), http://www.ip-watch.org/2013/03/05/bayer-will-appeal-india-compulsory-licence-on-its-cancer-drug/.] But Bayer could be facing an uphill battle as it might be up against what could be the start of a trend towards disallowing exclusive patents on certain pharmaceuticals.  On April 1st, the Indian Supreme Court rejected a request for patent protection by the German produced drug Novartis.[i9. Victoria Slind-Flor, Novartis, Facebook, Vivendi, Aereo: Intellectual Property, Bloomberg, (Apr. 2, 2013, 7:01 AM), http://www.bloomberg.com/news/2013-04-02/novartis-facebook-vivendi-aereo-intellectual-property.html.]  While The Court in Novartis noted that the drug was not innovative enough to meet the standard of patentability, pharmaceutical companies remain skeptical of India’s true motivations, noting that the companies have already established programs that make the drugs available to the poor.[10. Id.]

Perhaps pharmaceutical companies are overreacting, but maybe their fear is substantiated by a deeper principle.  It could be that India is affirming the idea that “the rights of human beings to life-saving products should come before property rights.”[11. See Supra, note 7.]

 

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