Abstract
The growing magnitude of IP regime in Pharma industry is like a double edge sword which provide exclusive monopoly alongside financial benefit. In emergence of IP protection laws and its penetration in pharmaceutical industries are posing various challenges before developing nations. The dilemma around commercial nature of IP and right to health responsibility arises conflicting interest between developing and developed nations. The accessibility and affordability of medicines to large masses, market competition and medicine pricing are some of the prominent areas of conflict. The significance of R&D in making of new drugs, mostly prevalent in developed nations like U.S and E.U. This huge expenditure on clinical trials and marketing approval of a drug is outweigh by the market of generic drugs in developing countries. Thus, gives rise to controversial debate on demand and supply of original and generic medicines. This study emphasis on two-fold aspects of IP protection in pharmaceutical industry. Firstly, it analyzes the issue of extended patent protection, trade secret and data exclusivity in pharma industry. As this can cause harm to market of generic medicine specifically located in developing nations. Secondly, this paper also provides a global outlook towards IP protection in Pharma industry through norms of TRIPS and WTO. This determines to what extent this exclusive right can be granted in order to balance the interest of big pharma giants in developed nations and the right to access cheap medicine in developing nations like India, at the time of health emergency. Moreover, there are case studies from India and Brazil, which gives an elaborative description of challenges faced by developing nations to balance the interest of big pharma giants and local pharmaceutical manufacturers. The idea is to critically examine the benefit-risk ratio of emergence of IP in pharmaceutical industry with its impact on health sector of developing nations.
Keywords: pharma industry, TRIPS, patents, generic drugs, IP laws, monopoly
Introduction
The contemporary era of modern science and technology has succeeded in easing the lifestyle of human beings through various inventions. One such contribution is in the field of medicine, this resulted in manufacturing of various life-saving drugs over the period of time. These new innovations in pharmaceutical industry have set a new discourse towards mitigation of many lives threating diseases such as polio, tuberculosis, hepatitis etc. Still there are new researches going on to find out the cure for other fatal diseases like cancer, HIV/AIDs etc. The struggle in making these drugs or medicines can be evident during covid era. This was the time the whole world was ingulfed by unprecedented situation of life and death. This pandemic has also posed the challenge before the pharma giants for manufacturing of effective vaccine to cure the disease.
The manufacturing of covid vaccine also brought the issue related to the patent protection in the limelight. The debate around granting patent monopoly to drug manufacturer and access to right to health by other people in the world, are two conflicting ideas. This is the most recent example, which showcases the interaction between pharmaceutical industries and IPR laws. Intellectual Property protection provides the exclusive right to the owner to accrue commercial out of that product. In the field of medicine, the IP protection which is prevalent is known as patents. The patentability of the medicine or drugs resulted in price hike and become inaccessible and unaffordable for large number of people, especially belonging from developing nations. According to Christophe Weber, GlaxoSmithKline’s former senior vice president and regional director of Asia Pacific, the challenge faced by higher prices of drugs due to the pharmaceutical industry’s research and development business model. Though the IP protection in pharma industry is crucial for gaining profit and it also secure the rights of owner who has put enormous amount of investment and labour in R&D. This helps the industry to gain competitive edge in global market as well resulting in booming country’s economy.
This study provides a critical analysis of challenges faced by the developing nation to procure the original medicine for its large masses. And how the issue of price rise and patent evergreening making these life-saving drugs inaccessible for the people. Moreover, in this globalized world, the market of generic medicines is booming creating the competition for pharma giants. This is beneficial for the developing nation, but at the same time may have negative implication on health. It is high time for developing nations to strengthen their IP laws and to establish a sovereign framework for R&D in making drugs suitable for curing the health issues. There is also need for developing nations to balance the interest of local pharma industry and big pharma giants of developed world.
Research Methodology
This study adopts doctrinal research methodology, focuses on empirical analysis of secondary sources, consists of legal interpretation of existing IP laws in India and international guidelines provided by TRIPS. The spectrum of other sources consists of data gathered through blogs, articles, journals and official documents accessed through the official website of World Intellectual Property Organization (WIPO).
Review of Literature
T.G Agitha’s article on ‘Intellectual Property Regime and Developing Country Health Concerns’ critically analyze impact of globalization of IP regime on developing nations with special focus on pharmaceutical industry. It states the modern trend in the field of research in pharma industry, which primarily based on incremental innovation, innovation or derivatives rather than inventing new molecular entities. As a consequence, this lowers the patentability standards, encourages evergreening of patent and extend the patent protection and has negative implication on public health. The protection under Data Exclusivity, place the industry of generic medicine at back foot. As they cannot able to use clinical trial data before the expiry of the exclusivity period. Further, this article states that how this R&D technique in pharmaceutical is ineffective in curing the health issues of developing nations due to lack of market demand.
Amitav Singh’s article on ‘Intellectual Property Rights in Pharmaceuticals’ provide an insight on India’s step towards amending its IP law to grant product patent after 2005, this resulted in condemnation out of fear, as this will make certain life-saving drugs out of reach. But later Indian companies adopted ‘reverse engineering’ technique to freely manufacture expensive drugs. Due to India’s lower cost in R&D, labour cost, which is one-eighth of the US; MNCs started investing in India, opened subsidiary outlets and made scope for contract research in pharma industry.
Correlation of Intellectual Property Rights and Pharma Industry
Intellectual Property is the most crucial aspect in this modern era of technological advancement. The development of IP laws over the period of time has infiltrated in various fields. There are instruments of IP ranging from copyright, trademark, design, patents etc. These instruments provide an exclusive rights and valuable commercial benefit to the proprietor. In the correlation of IP and Pharmaceutical industry, patent protection plays the key role. This encourages innovation in pharma industry which constitute Research and development (R&D), mapping, planning, pricing of life-saving medication. It is a significant factor in the sustenance and growth of pharma industry. The patentability in pharma industry in regulated by minimum standard laid down in Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. India also became signatory to this in 1995 by becoming the member of World Trade Organization (WTO). Later India amended its IP laws to make it TRIPS compliant resulting in amendment in Patent Act of 1970, in the year 1999, 2002 and 2005.
All the developing nations, who joined WTO also became the signatory to TRIPS. This is challenging for many nations as they lack awareness regarding IP regime. As many developing nations were the colonies of British and other European invaders, this has damaged their financial backbone. These countries were so poor that providing basic amenities was a challenge for them. Thus, idea to promote innovation and adopt R&D model in pharma industry is very far-fetched. At initial stage due to economic stability and business incentives, provided the developed countries with competitive edge over these developing economies. Hence, this strengthens the IP regime in developed countries at earlier stage and allowed the pharma industry in these countries to rapidly grow. In Australia there are various form of protection with variation in the term but most countries predominantly recognized utility model type of patent for drug invention. The country like US also provide tradesecret and data exclusivity protection in drug manufacturing.
Later, in second half of twentieth century these developing nations also became part of International IP regime through TRIPS and were provided with grace period of four years to implement the agreement within their domestic legal system. Now eventually, almost every member nation has complied with TRIPS and have their own domestic IP regime, which can regulate their pharma industry. This evolutionary nature of patent protection in pharma industry poses challenge before the developing economies to strike the between encouraging research and innovation and maintaining consumer-friendly pricing of proprietary products.
IP laws Shaping Pharma Industry in Developing Nations: Case Study on India and Brazil
In this highly globalized world, there is a lot of burden on pharmaceutical industry for providing cheap and accessible medicines in the world. To fulfill this goal there is the need for making domestic laws of the nation accommodative towards WTO and TRIPS guidelines. This somehow restricted these nations to have sovereign framework of patent laws. However, this resulted in countries excluding the inventions from certain area like pharmaceutical sector from the scope of patent or are limiting the protection in the term of process patent only. India is the most suitable example of process patent.
India and its Generic Market
India is considered to be one of the largest markets of generic medicines. The supply of these medicines constitutes the 40% of generic demand in United States, approximately 50% in Africa and the country has overall 20% of export share in global generic medicine market by volume. Despite one of the biggest pharmaceutical industry India struggles to provide cheap and affordable medicine and healthcare facilities to the common masses. Till 2005 India only grant process patent, with amendment in Patent Act 1970, India started giving product patent as per compliance of TRIPS. Due to expensive patented drugs available in the market, it becomes out of reach for many lower-middle class income groups. The huge gap between rich and poor is also one of the factors in boosting generic medicine demand in the country. The huge amount of investment in research and development and lack of advance technologies discourages the manufacturing of original drugs in the country. Though the IP regime helps in acquiring new technologies through technology transfer, subsequently encourage the innovation in pharma sector. Apart from higher price of patented drugs, India also faced challenge of evergreening of the patent by these medicine manufacturers. In the case Bayer Corporation v. Natco Pharma the Court granted a compulsory license to Natco Pharma Ltd. under section 84 of the Patent Act, 1970. The basis of such decision was based on price point, accessibility and fulfilment of the public demand. This generic drug manufacturer company got the license for expensive drug called ‘Nexavar’. The foreign corporations want to continue their monopoly in the market, so they filed an application for a new patent with minor changes in the composition of the original drug. This practice is called ‘evergreening of patent’. It prevents the drug from coming into the public domain and becoming accessible. As per the historic decisions given in Novartis v. UOI, the Supreme Court defined the scope of Sec 3(d) of the Patent Act 1970, which prohibits the evergreening of patents. The analysis of Indian Pharma sector only indicates the rapid growth of pharma industry can only take place through implementation of progressive IP laws which provide stringent protection while adopting the changing trends in modern pharma industry. This will also prevent the supply of counterfeiting of drug in Indian market.
Brazil and it’s pharma sector
Brazil as a developing nation has one of the booming pharma sectors and is largest pharmaceutical market in Latine America. The country has a positive approach towards intellectual property laws. These IP laws shape the pharmaceutical industry on the basis of balance innovation, public health and access to medicines. Brazil is also the member of WTO and signatory to TRIPS. It has made its IP laws in compliance with international standards. In order to carter the local health needs, it has used the strategy of flexibilities in TRIPS.
Alike India and other developing nations, pharmaceutical industry in Brazil face difficulty in balancing innovation through patenting and cheap access to medicinal drugs. Though the country has well-established market of generic drugs, still the big pharma giants gain profits out of patent evergreening. This leads to delay in production of generic medicines. In order to such grave issue Brazil has inclined towards using TRIPS flexibilities or exemptions. One such flexible strategy is related to compulsory licensing; this is one of the most debatable aspects of IP approach in the nation. This allows the generic production of patented drugs without the permission of the patent proprietor, particularly in the case of health and public emergency. In 2007, Brazil issued a compulsory license for the anti-AIDS drug ‘Kaletra’ produced by AbbVie. This was done to lower the price of the drug and improve access to HIV treatment. The decision draws significant international attention and set a precedent for the use of compulsory licensing to promote public health over patent rights. In 2016, Brazil issued another compulsory license for sofosbuvir, a key drug used in the treatment of Hepatitis C, further solidifying Brazil’s stance on prioritizing public health access.
It also uses TRIPS flexibilities, this includes parallel importation and compulsory licensing to balance the public health interest in case of emergency especially in the treatment of HIV/AIDS, anti-tuberculosis drugs, and vaccines. Due to this, significant tensions erupt with pharmaceutical companies, which argue that these practices undermine their intellectual property rights. This was evident in the year 2011, when U.S. included Brazil on its ‘Special 301 Watch List’, citing concerns over the country’s IP enforcement practices. Even during Covid, Brazil has given prominence to public health sector over navigating individual intellectual property rights. Despite all the challenges faced by Brazil in balancing generic market, interest of MNCs in pharma sector and to shape IP laws, the country is still evolving in field of intellectual property laws.
Conclusion & Suggestion
The IP regime plays a significant role in shaping the pharma industry in developing countries. The compliance of international standard by developing nations opens the new venture to enhance their inventive skills and innovation technique. But as the saying goes all that glitters is not gold, similarly the patent protection in pharmaceutical industry also poses several challenges before developing nations. The western model of R&D and financial stability helps the developed nations in outperforming developing nations in pharma sector.
The developing nations like India and Brazil always struggle in balancing the interest of local drug manufacturers, health sector and people’s right to get access to cheap medicines. These nations always faced pressure from their developed counterparts such pharmaceutical MNCs to strengthen their IP protection, especially in the country where there is strong generic competition for challenging and enforcement of patent.
The health issues in developed and developing economies varies, the developing nation facing the brunt of both communicable as well as non-communicable disease. Though developed nations have incentive to contribute in development of preventive, diagnostics and therapeutic tools but due to lack of accessibility and affordability of these patented drugs lead to decline in their demand in developing nations. Hence, these nations only manufacture original medicines as suitable for their social, economic and environmental conditions.
This highlights the urgent need for developing nations to establish their own R&D model which is suitable for their social, economic and environmental conditions. For this purpose, the developing country like India should build up a comprehensive national database of patients. The continuous evolution and strengthening of IP regime in these countries provides a backbone for enhancement of innovation in pharma sector. It will also boost the blooming market of generic medicines by adopting certain flexible strategies in IP protection. This will ensure stability in health sector during the time of emergency. For the effective implementation by other nations for smooth regulation of global pharmaceutical market, first the reformation in international standards to accommodate compulsory license in case of larger public needs. Secondly, there should be mandatory adoption of Bolar provision in TRIPS (Article 28.1), so that these generic manufacturers can get access for testing of drugs during patent term and this save time in getting early market approval, as in the case of Canada. Third, the unnecessary regulation in pharma industry to protect the clinical trial data through data exclusivity delays the manufacturing of generic drugs. This is highly, immoral stance in the case of health emergency. Medicines are meant for welfare of larger mankind; the monopoly should not be restricted in a few hands. It is not necessary to always get commercial benefit in every scenario from every invention. These inventions took place to cater the needs of humankind at large. However, the reformation and strengthening of existing IP protection in developing nations can help in balancing their interest and in the position to collectively bargain at the global pharmaceutical market.
Name – Varisha Chaudhary
College Name – Amity Law School, Amity University, Noida