[e-drug] Size of the Indian mailbox

["Andy Gray" <Graya1@ukzn.ac.za>]

E-DRUG: Size of the Indian mailbox
----------------------------------

Dear E-druggers

Previous postings have tried to cast some light on the issue of the
Indian patent "mailbox". I've been referred to this Indian publication,
which provides some detail: "There are an estimated 9,000 applications
for drugs pending in the "Mail Box". The government, in reply to a
question raised in Parliament, said that there were 5,636 applications
for drugs in the "Mail Box", of which 4,398 were filed by foreign
corporations."

Note: 1 lakh = 100 000; 1 crore = 1 000 000

Copied as "fair use", with tables removed (worth accessing in the
original if you have Internet access - see URL below).

regards
Andy
~~~

http://www.hinduonnet.com/fline/fl2204/stories/20050225002609700.htm
Frontline Volume 22 - Issue 04, Feb. 12 - 25, 2005
A costly prescription 
SIDDHARTH NARRAIN
in New Delhi 

The United Progressive Alliance government's promulgation of an
ordinance amending the Patents Act of 1970, a model piece of legislation
hailed around the world for checking exploitation by pharmaceutical
MNCs, draws international criticism.  

INDIA'S patent legislation, hailed as a model all around the world for
its far-reaching provisions, is on the verge of being amended. The Union
Ministry of Commerce has promulgated an ordinance amending the Patents
Act, 1970, to fulfil India's obligations under the World Trade
Organisation's Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS). The ordinance, promulgated in December 2004,
makes wide-ranging changes to the Act and paves the way for a product
patent regime to replace the process patent system. A process patent
only protects the method or process that the patent holder uses to
manufacture a drug. This allows other pharmaceutical companies to make
the same drug using a process different from the one that is patented.
The different versions of the medicine thus produced are called generic
drugs. 

The British-framed Patents and Designs Act (1911), which was in force
until the 1970 Act was legislated, provided for a product patent system.
Prior to 1970, 85 per cent of medicines available in India were produced
and distributed by multinational corporations (MNCs) and the prices of
drugs in the country were among the highest in the world. 

The Patents Act was framed after years of deliberation and on the basis
of the recommendations made by the Justice Rajagopal Ayyangar Committee
(1958). The report of the committee, which was constituted by the
Central government to revise the law relating to patent and design,
said: "[T]he monopoly created by patent and the reward to the inventor
by the grant of such monopoly offer advantages which have been claimed
for the system only in highly industrialised countries which have a
large capital available for investment in industries and a high degree
of scientific and technological education." The Act provided for process
patents for pharmaceuticals and agro-chemical products. This enabled the
growth of a strong local generic drug industry, which produced the same
drugs as the MNCs at relatively low prices . When Indian generics such
as Cipla, Ranbaxy and Hetero began manufacturing drugs, especially for
Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome
(HIV/AIDS), at much lower prices, the demand for these drugs grew in
countries that could not afford to buy these drugs from MNCs. 

DEVELOPED countries first linked intellectual property rights with the
development of trade, investment and services during the General
Agreement on Tariffs and Trade (GATT) negotiations which began in
Uruguay in 1986. This international regime, given a final shape in the
TRIPS agreement in 1994, was to control and govern almost all aspects of
intellectual property rights. TRIPS had no caveats and no member-country
could withdraw from it. The only concession given to developing and
least developed countries (LDCs) was an initial discretion in
implementing the provisions, which were to be progressively eliminated.


However, the derailment of the WTO's Seattle Ministerial Conference in
1999 by anti-globalisation activists forced a rethink. The Doha
Ministerial Conference in 2001 adopted the Doha Declaration in which
countries agreed to implement the TRIPS agreement in a manner supportive
of the WTO members' right to take measures to protect "human, animal,
plant life or health or of the environment at the levels it considers
appropriate". India, along with Brazil and South Africa, played a
crucial role in bringing together developing countries on the issue
(Frontline, December 7, 2001). 

<snip - Table>

According to TRIPS, while developing countries (which includes India)
had time until January 1, 2005, to enact domestic legislation to conform
with the agreement, LDCs were given time until 2016. Since the Indian
patent regime did not provide product patents for pharmaceuticals and
agro-based products, it became obligatory to provide for a "Mail Box"
facility for filing patent claims to protect these products with effect
from January 1, 1995. Similarly, those "Mail Box" patent applications
that satisfied certain conditions were entitled to receive exclusive
marketing rights (EMRs) for five years. The date of application of TRIPS
provisions, other than product patents, was January 1, 2000. The Indian
government introduced the Patents (Second Amendment) Bill in December
1999 in order to implement TRIPS provisions other than product patent
provisions. This Bill was referred to a Joint Parliamentary Committee.
It was amended on the basis of the recommendations made by the committee
and enacted in December 2002. The National Democratic Alliance (NDA)
government tabled a Bill in December 2003 to introduce the product
patents regime in all fields of industrial economy. The Bill lapsed when
general elections were called in March 2004. The United Progressive
Alliance (UPA) government's ordinance has made only minor changes to the
Bill. 

The amendment expands the scope of what can be patented. Vandana Shiva,
director of the Research Foundation for Science, Technology and Natural
Resource Policy, said: "The second amendment of the patent law opened up
agricultural patenting. It deleted old exceptions; for example, plants
were not patentable earlier. With the third amendment they have now
brought product patents. In agriculture, a product patent could mean
that a company may take the gene of a salinity-resistant rice variety,
put it into a variety of rice through genetic engineering, and take a
patent on it. But since the product patent is on the trait or salinity
resistance, it means that any occurrence of that trait without paying a
licence fee is an infringement, and there are cases to this effect. So,
in the Basmati rice case, if we had not defeated Rice Tech, there would
have been several cases of Rice Tech claiming a patent and then having
that monopoly on the aroma and the size of the grain." 

Vandana Shiva said: "While the government was preparing to table the
ordinance, it tabled another totally unnecessary law called the Seed
Act. The Seed Act of 1966 was doing its job fine. It provided for
quality and reliability in seeds. The farmer's varieties were not
regulated. The new Seed Act undoes the 1966 Act. It now requires
compulsory registration of all farmers, which means that any farmer
growing his or her own traditional varieties will be treated as illegal.
This is the way this compulsory seed registration has been used in other
countries to shut down the farmer's seed supply alternatives. Therefore
I would say that the implications for agriculture are huge." 

The ordinance also makes patentable computer software, which has
technical application in any industry or which can be incorporated into
hardware. This could impede the development of software in the country.
Richard Stallman, the co-developer of the Linux/GNU operating system and
proponent of free software, said: "Every programme is full of
implementations of various methods on how to do things. If each of those
computational methods could be patented, then writing a programme can
mean infringing hundreds of patents." According to him, moving from a
copyright to a software patenting regime is a mistake and will increase
the cost of developing new software. Indian software companies which
want to develop their own products and compete at the global level will
be hit hard by this amendment. 

"Invention", as defined by the ordinance, is too broad and could lead
to "ever-greening", that is, filing patent applications for new forms of
older patented drugs and of new uses of older drugs, thereby blocking
the entry of generic drugs into the market. B.K. Keayla, convener of the
National Working Group on Patent Law, said: "China and the United States
define `invention' broadly in their patent laws and have to deal with
over three lakh claims annually. This kind of volume will create chaos
in India." The ordinance prohibits "mere new use" for a known substance,
which does not clarify whether polymorphs, hydrates, isomers,
metabolites and so on are patentable, which can lead to "ever-greening".
D.P. Shah, secretary of the Indian Pharmaceutical Alliance, said: "A
good example is Aventis, which in 1979 obtained a patent for
fexofenadine hydrochloride. In 1996, Aventis obtained a second patent
for the same compound claiming that it was a substantially pure drug." 

Gajanan Wakankar, executive director of the Indian Drug Manufacturers'
Association, said: "The compulsory licensing provisions are adequate
only as far as the conditions are concerned. But the procedures are
extremely lengthy and we feel that these procedures will defeat the
purpose. The procedures are such that the patent holder has the upper
hand and can thwart the application of a compulsory licence by delaying
it." 

The ordinance reduces the grounds for pre-grant opposition and says
that henceforth it will only be treated as a representation and not as a
party to the proceedings. It has a provision for post-grant opposition
directed against the Controller who grants the patent. Ironically, the
Controller will finally dispose of the post-grant opposition. The
weakening of pre-grant opposition makes it tougher to prevent the filing
of frivolous patents. 

<snip - Table>

Commerce Minister Kamal Nath described the ordinance as an interim
measure to fulfil India's obligations within the stipulated time. He
stated that it would be discussed in detail in the Budget session of
Parliament. While justifying the provisions of the ordinance, he claimed
that the fear that prices of medicines will spiral is unfounded because
97 per cent of all drugs manufactured in India are off-patent and will
remain unaffected. 

D.G. Shah said: "We have been told a number of lies consistently by the
government. Our estimate is that drugs worth Rs.3,000 crores will have
to be withdrawn from the market. Our total market is worth $4.5 billion.
PhRMA, the association representing the U.S. pharmaceutical industry,
claims that its members are losing $1.8 billion worth of revenue [or 40
per cent of the total Indian drug market] because there is no patent
regime in the country. If the U.S. pharmaceutical industry is saying
that 40 per cent of the market is eligible for patent, on what basis is
the Minister saying that only 3 per cent will be eligible?" . 

There are an estimated 9,000 applications for drugs pending in the
"Mail Box". The government, in reply to a question raised in Parliament,
said that there were 5,636 applications for drugs in the "Mail Box", of
which 4,398 were filed by foreign corporations. With 78 per cent of the
patent applications for drugs having been filed by foreign nationals and
with the danger of "ever-greening", the prices of medicines are likely
to rise. The government has said that the prices of life-saving drugs
will not rise. But details of which drugs are in the "Mail Box" have not
been made public. "How does one classify a disease like cancer? Can one
say cancer drugs are not life-saving? If a drug is not listed as
essential medicine in the Drug Price Control Order, does that mean it
can be priced at exorbitant rates?" asked Leena Menghaney, who is part
of the Affordable Medicines and Treatment Campaign (AMTC), a coalition
of non-governmental organisations (NGOs), patient groups and health care
workers that campaigns for sustained accessibility and affordability of
medicines in India. A comparison of the generic and patented drug prices
shows how drug prices are likely to rise exponentially . 

The government has to pass the ordinance in the Budget session of
Parliament. While the NDA has said that it will oppose the ordinance,
the Left parties are against it in its present form. D. Raja, national
secretary of the Communist Party of India, said: "We have told the
government that we will oppose the ordinance as it is not in the
national interest. It will have serious implications for the
pharmaceutical industry, agriculture and biodiversity. The government
will have to amend it drastically keeping in mind the national interest.
This is bound to come up in the coming Budget session and the Left
parties will take up the issue clause by clause." 

A detailed discussion on the contents of the legislation with such
far-reaching impact is essential. Wakankar said: "It is an important
piece of legislation and should be considered by either a joint
committee or a standing committee of Parliament." A.D. Damodaran, former
Director of the Council of Scientific and Industrial Research's (CSIR)
Regional Research Laboratory in Thiruvanthapuram, said: "Patent law is a
techno-legal document. It must be given to an expert committee for
consideration and the report of the committee should be made public." 

<snip - Table>

INTERNATIONAL reaction to the ordinance has been critical. Indian
generic companies brought down the prices of antiretroviral therapy for
HIV/AIDS from $12,000 to $140 a year. Bill Haddad, chairman and chief
executive officer of Biogenerics Inc., the largest generic drug company
in the U.S., said: "Two-thirds of the world' s population will be
systematically deprived of life-saving drugs as of January 1, 2005.
Countries in Africa dependent on Indian generic products, the WHO [World
Health Organisation] and AIDS organisations worldwide have written to
the Indian Prime Minister asking him to reconsider the ordinance."
Activists have organised demonstrations against the ordinance in front
of Indian embassies across the world. Olivier Brouant of the Medecins
Sans Frontieres said: "ARV treatment is given to 25,000 HIV/AIDS
patients worldwide. The Indian government has a big responsibility to
the rest of the world to ensure that these drugs remain affordable." 

The New York Times said in an editorial on January 18 that the
ordinance was heavily influenced by multinational and Indian drug-makers
eager to sell patented medicines to India's huge middle class.
Describing the decree as "a double hit that will cut off the supply of
affordable medicines and remove generic competition that drives down the
cost of brand-name drugs", the newspaper said that the ordinance was so
tilted towards the pharmaceutical industry that it did not even take
advantage of the rights countries enjoyed under the WTO regime to
protect public health. 

There are options in TRIPS allowing countries to meet public health
goals. For instance, Article 31, or the compulsory licensing provision,
enables governments of member-countries or third parties authorised by
these governments to use the subject matter of the patent without the
permission of the patent holder. Article 8 stipulates that "in
formulating or amending the national patent laws and regulations,
members may adopt measures to protect public health and nutrition and to
promote public interest in sectors of vital importance to their
socio-economic and technological development". The ordinance contradicts
the UPA's Common Minimum Programme, which promises that the government
will "take all steps to ensure availability of life saving drugs at
affordable prices".


Andy Gray MSc(Pharm) FPS

* Senior Lecturer
Dept of Therapeutics and Medicines Management
* Study Pharmacist
Centre for the AIDS Programme of Research 
in South Africa (CAPRISA)
Nelson R Mandela School of Medicine
University of KwaZulu-Natal
PBag 7 Congella 4013
South Africa
Tel: +27-31-2604334/4298 Fax: +27-31-2604338
email: graya1@ukzn.ac.za or andy@gray.za.net