Tripping Over Trips

India, China, and other developing nations have made headway in producing generic versions of much-needed medicines, but the Trade-Related Intellectual Property Rights (TRIPS) is challenging this increasingly booming sub-industry. The effort to curb the further development of the generic drug industry stems from the fact that generic medicines, which is far more cheaper than branded ones – are eating into the profits of Big Pharma.

Big Pharma’s reaction was typical: all World Trade Organization (WTO) member-countries are required to fastrack the full implementation of the TRIPS agreement.

As the world’s leading manufacturer and exporter of generic medicines, India’s handling of the TRIPS issue had been a rallying point for health institutions and activists worldwide because of its possible ramifications in the global generic drug industry. No less than the World Health Organization and the UNAIDS urged India to take full advantage of the TRIPS flexibilities when it amended the act. India was forced to amend its Patents Act of 1970 in compliance with the TRIPS agreement.

The first sign that India might be caving in to pressures was a December 2004 ordinance it passed that would grant patents to products and not just to the process. The ordinance, which did not go through the Parliament, was passed because India had to beat the January 1, 2005 deadline set by the WTO. The revision would have an impact on the generic industry because Indian manufacturers utilized the original act’s differentiation between “process patents” and “product patents.” With the 1970 Act focusing on process patents, manufacturers were able to produce generic versions of branded medicines through reverse engineering.

The current ordinance has effectively watered down the 1970 Act, but health activists were able to score some points with the inclusion of several amendments, two of which address the most crucial issues. With regards to generic exports, the amendment would still allow foreign countries to export generic medicines from India without having to obtain a compulsary license from the patent holder. Another amendment guarantees existing Indian companies the right to market generic medicines (even those that are still under patent), as long as a royalty fee is paid.

The Indian chapter of the People’s Health Movement (PHM-I), however, cautions that the ambiguous wordings of the revised ordinance might be subjected to abuse. For example, manufacturers may still produce generic versions of new drugs, as long as the producer makes a “significant investment” and paid a “reasonable royalty” to the patent holder. The crucial questions are how significant the “significant investment” and reasonable the “reasonable royalty” are?

In its critique of the new bill, PHM-I admitted that the new ordinance is far from ideal and that certain provisions may have a negative impact on public health. The group pointed out the need for all stakeholders to continue monitoring the bill’s implementation. “This is possible only if both the political and the committed peoples movements mutually appreciate the positive roles being played by them without
trying to take up self righteous positions,” it said.

Sources: Health Alert Asia Pacific, Issue No. 9 (www.hain.org) www.phm-india.org ; www.ictsd.org