Since there are prohibitive costs while developing new products, especially in the pharma industry, the innovative products are protected by the Patents Act. The corporates holding patents are given an opportunity to recover their developmental cost by charging premium prices for the period of the patent. Later, it becomes available at affordable rates when it goes off-patent.
The World Trade Organisation of UNO (WTO) formulated TRIPS Agreement or Agreement on Trade-Related Intellectual Property Rights. To make the patented medicines available in developing countries, certain policy flexibilities were permitted. As we have already discussed one such instrument is compulsory licensing to an organization to manufacture or import generic version of the medicine. The generic version is made available at cheaper prices. The patent holder is paid adequate compensation in lieu of compulsory licensing.
This flexibility was permitted when patented anti-retroviral medicines were exorbitantly priced by patent holders at the time of AIDs crisis. Still big pharma put pressure on governments not to resort to compulsory licensing. In May 2000, the US challenged a Brazilian law on compulsory licensing at WTO.
In 2001, the WTO announced Doha Declaration on TRIPS Agreement. There was hard bargaining, but WTO members asserted that TRIPS flexibilities will prevail, including compulsory licensing. Brazil, India and South Africa were at the forefront of this struggle. Many developing countries availed of these flexibilities, including India. They resorted to compulsory licensing for making medicines accessible to patients at affordable prices.
However, India has availed of compulsory licensing in only are instance in the past 20 years. Very few countries have availed of compulsory licensing for pharmaceuticals.
Big pharma lobbies hard for stringent standards on IPR protection.
These days there are mutual negotiations with two countries or group of countries leading to free trade agreements (FTA). India and the UK recently concluded Comprehensive Economic and Trade Agreement (CETA). In article 13.6 of the CETA, the parties recognized that the preferable and optimal route to promote and access to medicine is through voluntary licensing. The voluntary license is granted by a patent holder. There is technology transfer on mutually agreed terms. Such a license can be granted to manufacture, import or selling of a patented medicine. These agreements are shrouded in secrecy. There is hardly any information in the public domain. The concern is about the limiting production and supply. The patent holders can rule the prices. They make profits out of a health crisis.
CETA’s provision on compulsory licensing is controversial. The aim is to prevent developing countries from resorting to compulsory licensing. With the reaffirmation of licensing flexibilities in 2001, the CETA has shifted the balance in favour of voluntary licensing. In future crisis, it is doubtful whether countries will get the benefit of compulsory licensing.
India may lose its leadership among developing countries when these issues come up for discussions in fora such as WTO, WHO and World IP Organization.
The government should ponder what India has gained from this controversial provision on patents in the CETA. Though the government retains its legal rights to compulsory licensing, CETA is big opposition to it. It should be explored how to minimize damage resulting from CETA.
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