Lead Author: Yogesh Pai
Organization: National Law University, Delhi
Country: India


The broad objective of the High-Level Panel is presumably focused on the impact of international norms that regulate the policy space of Sates to undertake measures for ensuring equitable access to medicines. However, it will be useful if the committee takes in to account how States (especially, the developing countries and the least-developed countries) have, in practice, by including several key provisions in their IP law, facilitated equitable access to medicines. By studying a specific example of India, a developing country notable for being the ‘pharmacy of the world’, this note offers deeper insights on the current situation on access to patented medicines in the light of India’s compliance with international intellectual property, trade norms, human rights obligations and public health. However, in offering these insights based on working of the Indian law, this note does note claim that the Indian approach can be readily imported by other countries without assessing the need and context of ensuring of healthcare to its citizens.


I welcome the “United Nations Secretary-General’s High-Level Panel on Access to Medicines” for providing me with an opportunity to make submissions on a very pertinent topic. This subject has profound implications in achieving the Sustainable Development Goal # 3 in the broader context of the integrated nature of the 2030 Agenda for Sustainable Development. I take this opportunity to contribute to the Panel’s work by offering my comments on the proposed objective of the High-Level Panel, which is to recommend solutions for “remedying the policy incoherence between the justifiable rights of inventors, international human rights law, trade rules and public health in the context of health technologies.” 
It appears from the statement of proposed objective of the High-Level Panel that it has made a priori assumption of an actual ‘misalignment’ or ’policy incoherence’ between the rights of inventors, international human rights law, trade rules and public health in the context of health technologies. It would be useful if the High-Level panel discusses these assumptions in greater detail and invite public comments on the same before proceeding to examine how such policy incoherence, if any, can be actually resolved. The proposed objective appears to raise definitive conclusions, which ideally should have been assessed by way of detailed studies and by evaluating actual experiences grounded in empirical evidence. Such a priori assumptions lead to few unintended consequences. 
i. It needlessly restricts our approach in adopting an inquiry based on holistic understanding of the nature and content of actual misalignment and/or policy incoherence in ensuring equitable access to medicines, in as much as the proposed objective makes a normative claim;
ii. The proposed objective seems to overlook the work of several UN agencies in the past (viz., 2012 WHO-WTO-WIPO joint study on Promoting Access to Medical Technologies and Innovation) which has pointed that “lack of access to medical technologies is rarely due entirely to a single determinant”;
iii. Importantly, it discounts experiences of different countries in how they have sought to address issues of intellectual property, trade and public health from a complementary perspective during the last two decades.
The broad objective of the High-Level Panel is presumably focused on the impact of international norms that regulate the policy space of Sates to undertake measures for ensuring equitable access to medicines. However, it will be useful if the committee takes in to account how States (especially, the developing countries and the least-developed countries) have, in practice, by including several key provisions in their IP law, facilitated equitable access to medicines. By studying a specific example of India, a developing country notable for being the ‘pharmacy of the world’, I wish to offer deeper insights on the current situation on access to patented medicines in the light of India’s compliance with international intellectual property, trade norms, human rights obligations and public health. However, in offering these insights based on working of the Indian law, this brief note does note claim that the Indian approach can be readily imported by other countries without assessing the need and context of ensuring of healthcare to its citizens. 
India largely achieved self-sufficiency in medicines by way of a combination of policy instruments that facilitated strong local generic production. The withdrawal of product patents for pharmaceuticals between 1972 -2005 was one among these policy instruments that helped Indian generic companies to produce generic copies of patented drugs by focussing on achieving efficiency in process and scale. It led to a diverse matrix of capabilities in the Indian pharmaceutical sector. However, in order to ensure supply quality drugs and in compliance with stringent USFDA regulatory standards, only the 584 firms are able to meet the requirements as of 2015. Over a period of two decades since the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the Indian pharmaceutical industry has witnessed consolidation. At the same time, the advent of the product patent system since 2005 has led to a new scenario both in terms of challenges to India’s generic industry and in ensuring equitable access to medicines. It has led to a general assumption that patent owning firms would be able to charge prices way beyond what is generally considered as “reasonably affordable” for Indian patient population. 
Recent studies, however, have estimated that “a molecule receiving a patent experienced an average price increase of just 3-6 percent with larger increases for more recently developed molecules and for those produced by just one firm when the patent system began.” The study further notes that “the presence of substitute goods should moderate the pricing power of firms receiving patent protection”. Hence text book cases of pharmaceutical patents serving as strict monopolies that lead to significant increase in prices must be understood with appropriate caveats and caution in the Indian context. This is not to deny that there could be a steady or significant price increase in specific cases in the future depending on the nature of the drug, nature of the technology, disease burden, market size, domestic capabilities, barriers to market entry, drug regulatory challenges, availability of closer substitutes etc... However, to assume that patents in medical technologies, and particularly pharmaceutical patents, are always overpriced, or that there are no mechanisms to deal with the issues of pricing of patented drugs, which has led to policy incoherence is a mistaken assumption. There are several provisions in Indian law that places significant constraint on the continued ability of patent owning pharmaceutical firms to engage in drug pricing beyond what is considered as reasonably affordable. These provisions have significantly benefited the Indian generic industry and patient population at large. In fact, it is quite possible that the very threat of onerous regulation may have significant impact on the behaviour of pharmaceutical firms in exploiting their patents in a way inimical to public interest.
Pharmaceutical firms worldwide are a major source of innovative drugs. It has been noted in several studies that the path dependency of pharmaceutical firms on the patent system is significantly higher when compared to other sectors. However, the way in which patents are exploited in the marketplace may raise barriers for innovation and access. The TRIPS Agreement recognizes that the ‘right to exclude’ may raise barriers to access and allows a host of flexibilities, general understood in terms of liability rules. They take the form of Article 30, Article 31, Article 44 and Article 40 (read with Article 8). Currently, the moratorium on non-violation complaints effectively allows every WTO member to adopt measures to protect public health that are not specifically barred by the TRIPS Agreement (e.g. price control of patented drugs). It is important that these flexibilities are maintained when countries accede to higher standards of intellectual property through bilateral/plurilateral free-trade and investment agreement.
India stands out in her approach to the treatment of pharmaceutical patents in several important ways. A detailed examination of India’s Patents Act, 1970, reveals that not only has India taken recourse to several post-grant flexibilities (liability rules) enshrined in TRIPS Agreement, it has also provided a host of exceptions which flatly restrict a wide variety of patentable subject-matter within the protective gear of patent law. It would be useful for the Panel to highlight the continued utility of some of these exceptions, most of which are subject matter exclusions permitted in Article 27 of the TRIPS Agreement. India has remarkably emerged as one of the few countries which have been able to implement the criteria of “therapeutic efficacy” in determining legal standards of patentability for a large class of incrementally modified pharmaceutical inventions. The Indian Supreme Court has approved of such an approach in the popular case involving Novartis v. Union of India (2013). However, it is a matter of fact that this particular provision has been mostly used in combination with other requirements of patentability (viz., novelty, inventive step and industrial application). Although this provision is designed to contain ‘ever-greening’, it has opened up early entry of generic drugs in the Indian market. While Section 3(d) of the Indian patent law has become a cause célèbre, it is yet to been how it plays out as an administratively manageable standard in terms of offering bright-line rules for patentability of pharmaceuticals.  
Similarly, India’s approach towards balancing patent rights and public interest is not divorced from procedural fairness. India is among the few countries which allow both pre-grant and post-grant opposition. These provisions provide broad standing for interested parties, including public health groups. It has led to streamlining of patent litigation where patents which do not muster the strength of patentability and patent-eligibility can be opposed at an early stage at the Indian patent office, without resort to proceedings in the courts and tribunals. Since the patent system is designed to achieve efficiency by aligning it to the incentives of competitors to challenge patents, such additional avenues indeed help to weed out questionable patents. This improves the public notice function of the patent system and facilitates early entry of generic drugs. Importantly, Indian patent law limits injunctive relief (but on payment of reasonable royalties) in cases involving infringement of mailbox patents where substantial investments were made prior to the publication of these applications. This may be one among the several reasons for the availability competing substitutes for mailbox patented drugs in India. 
Taking advantage of limited exceptions outlined in Article 30 of the TRIPS Agreement, the Indian patent law provides a regulatory review exception, research exemption and limited exceptions for importation and use of patented products for and on behalf of the Government for the purposes of its own use, including use in hospitals notified by the Government in case of any medicine. Of course, there is much to be desired in terms of the actual scope of these provisions owing to lack of judicial guidance. However, these provisions definitely point towards India’s concern for providing access to patented technologies. India’s patent law distinctly provides for international exhaustion.
Similarly, India has not only used the threat of compulsory licences to force firms to engage in voluntary licences and price discrimination, it has been actually able to successfully grant a compulsory licence to bring down prices and to induce local working in line with the conditions prescribed in Article 31 of the TRIPS Agreement. These provisions offer a wide latitude for any person interested (with a capacity to exploit the compulsory licence by local manufacturing) to apply for a compulsory licence anytime after three years from the grant of a patent. So far India has granted one compulsory licence on Bayer’s anti-cancer drug Nexavar (sorafenib). Notwithstanding the presence of an infringing product of sorafenib marketed by India’s generic major Cipla at a competitive price, the Indian courts proceeded to confirm the grant of the compulsory licence. It defined the conduct of infringing competitors as irrelevant to the question of whether or not Bayer had complied with her ‘obligations’ under law to meet reasonable requirements of the public with respect to the patented invention, engage in territorial working of the patented invention, and made it available at a reasonably affordable price. This decision, which has been confirmed by India’s highest court, has far reaching implications on patent holders’ ability to charge unreasonable prices since it has treated grounds for compulsory licensing as amounting to legal obligations on the part of the patent holder in ensuring equitable access.
Perhaps, this is one among the reasons that has led to a host of pro-access measures by certain sections of the patent owing pharmaceutical firms in India by way of differential pricing and non-exclusive licensing. Apart from its positive impact on affordable access to medicines, these voluntary measures undertaken by pharmaceutical firms not only bring new competitive synergies in the market, but are responsible for building sustainable local capacities. Some firms also engage in patient assistance programmes in ensuring access. However, beyond such anecdotes, further empirical studies outlining the actual impact of such voluntary measures will provide evidence into the practices of pharmaceutical firms in providing affordable access to drugs.
Importantly, along with the availability of broad based grounds for third party compulsory licences, Indian patent law has provisions to invoke compulsory licences in cases of national emergency, circumstances of extreme urgency and public non-commercial use. While there is wide latitude in terms of the actual scope of these provisions, India’s attempt to invoke these provisions is at a preliminary stage. Although India’s Ministry of Health is been seized of the matter since 2013, it has offered little guidance on the class of drugs which could fall within the scope of these provisions. Other provisions involving compulsory licences specifically take into account certain situations outlined in the context of Article 31 relating to compulsory cross-licensing of blocking patents, and export compulsory licences articulated in Article 31 bis of the TRIPS Agreement. Furthermore, there is an ongoing stalemate on the question of adopting a price control model for patented drugs in India, a model which is currently being used to regulate prices of generic drugs. Indian law complements measures that LDCs could take in using current transitions period in TRIPS, including the para 6 mechanism in ensuring equitable access to medicines. 
Increasingly, it is noted that there is a strong regulatory turn in ensuring affordable access to drugs beyond questions of data exclusivity. Sustainable production of Bio-drugs (including off-patented biologics) highlights pertinent questions on potential barriers to access created by technical barriers and strong drug regulation. Unlike small molecules, which involves chemical based drugs, ‘biosimilars’ or ‘follow-on-biologics’ raise complex technical and regulatory questions in balancing quality with equitable access. Unless optimally designed, regulatory standards potentially exclude competitors from the market. Although India has limited capacity in the production of bio-drugs, some firms are making attempts to break the barriers by experimenting new business models to synergise and overcome technical and regulatory barriers. However, litigation in these areas shows that regulation can be formidable a challenge to early entry of biosimilars.  
It is important to note that not all measures, which are termed as “TRIPS-plus” have their genesis in international intellectual property agreements. There is evidence in the Indian context that some of the provisions in her patent law that move beyond the common minimum standards of the TRIPS Agreement were unilaterally designed. They specifically relate to enforcement of patents. In fact, Bilateral Investment Protection Agreement (BIPA) that constrains the regulatory space on several intellectual property issues was liberally signed by India without recourse to its implications on intellectual property standards. India’s recent Model BIT is an example of unilateralism where it has agreed to expose its patent law standards to the test of TRIPS consistency in the context of investor-state arbitration. The reason for legislating such provisions may be have been due to pressure from diverse stakeholders and the continued relevance of intellectual property as a policy instrument to attract foreign direct investment. This is despite recent attempts to restrict regulatory power of States by way of designing TRIPS-plus standards in the Transpacific Partnership Agreement (TPP), to which India is not a party.
The above is notwithstanding the existence of systemic issues of drug innovation and access that move beyond pure questions of misalignment or policy incoherence between international intellectual property norms and other international obligations to ensure equitable access. Such systemic issues are widely noted in the area of neglected tropical diseases. There is evident market-failure in the ability of the patent system to offer enough incentives in the absence of a viable commercial market for neglected diseases. Different policy options have been articulated to delinking R&D costs from product pricing. India’s open source drug discovery (OSDD) programme of the CSIR in the area of anti-tuberculosis drugs is an attempt worth studying in greater detail to understand the advantages and pitfalls of such a model. The existence of structural bottlenecks in developing and least-developed countries also contributes to raising barriers to equitable access to medicines. Higher budgetary allocation by States may have positive outcomes on healthcare and in ensuring equitable access. Wide-spread popularity of health insurance schemes can signal positive outcomes for access to medicines.  

One significant issue that has not been addressed by policy makers is in relation to the risk shared by universities and publicly funded research institutes in bringing out valuable inventions and its consequent implications on pricing of such drugs. The High Level Panel must build on the work undertaken by the WHO in implementing the Global Strategy and Plan of Action (GSPOA) adopted by the World Health Assembly in 2008. It is doubtful if international IP norms stand in the way of such alternative measures to address systemic issues in healthcare since these measures exist outside the scope of formal IP protection. There are no major studies that have directly proven the link between international IP protection and non-availability of addition measures to address systemic issues in medical innovation and to ensure equitable access. Exhaustive studies grounded in empirical evidence are highly recommended as part of the work of the High-Level Panel. 

I request the committee to take note of India’s experiences in designing her intellectual property laws in line with her attempts to comply with international intellectual property law, international human rights obligations, trade rules and public health in the context of health technologies. I believe that such measures are a step ahead in the direction of achieving the health and well-being related goals of the 2030 Agenda for Sustainable Development.

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