The government of the USA is pushing India to revise its existing robust Intellectual Property (IP) framework that effectively protects the national and public interest by balancing the rights of IP owners with their obligation to society. Submitting to the US agenda will adversely impact innovation, production and prices, especially of medicines and medical care. Multinational pharmaceutical companies will reap the benefits of an unfettered run of the Indian market. Indian companies will have no incentive to innovate low-cost remedies. And as usual the biggest loser, the common man, will have to pay even more for basic medicines. However, four key moves by the NDA government indicate that instead of pushing back it is preparing a welcome mat for ‘Big Pharma’.

If the Obama administration succeeds in forcing India to revise its patent laws, the change would harm not only India and other developing countries; it would also enshrine a grossly corrupt and inefficient patent system in the US, in which companies increase their profits by driving out the competition – both at home and abroad. After all, generic drugs from India often provide the lowest-cost option in the US market once patent terms have expired.

The government of India led by Prime Minister Narendra Modi took a lot of credit for standing up to pressure from the United States which wanted India to agree to a trade facilitation agreement in the World Trade Organization (WTO) without finding a permanent solution to the issue of what should be appropriate food stock-holding norms. In November, the US agreed to India’s concerns whereas it had earlier accused this country of almost single-handedly blocking a deal in the WTO.

But this is only one part of the story. Quietly and somewhat surreptitiously, the Modi government has accommodated and acquiesced with American interests by going along with the demands of large multinational corporations (MNCs) that manufacture pharmaceuticals. The government is in the process weakening domestic companies that have been producing and selling a wide range of medicines at a fraction of the prices at which the MNCs market their products across the developing world, notably in African countries. Such medicines include drugs for treating HIV/AIDS, diabetes and cancer.

Prime Minister Modi has been trying to market the “Make in India” slogan he coined. One of the few industry segments where India is still ahead of China is in the production of pharmaceuticals. Some of the recent decisions taken by the government may end up making Indian pharmaceutical companies weaker, making it increasingly difficult for such firms to compete against international conglomerates – often called Big Pharma. That’s not all. The government’s actions will weaken local companies to an

extent that will threaten to make the objective of providing “affordable medicines for all” difficult to achieve.

Move 1: Rollback of pharmaceutical pricing guidelines

Over the recent past, the Modi government has initiated several moves that willy-nilly play into the hands of Big Pharma. These moves relate to contentious issues ranging from pricing of widely-used medicines to Trade Related Aspects of Intellectual Property Rights (TRIPS) of pharmaceuticals and pharmaceutical formulations in the WTO. The first of these moves, which came a short while before the Prime Minister’s visit to the US in September, saw a rollback of the guidelines on prices of medicines that were issued by the National Pharmaceuticals Pricing Authority (NPPA) in May.

The guidelines, issued under the Drug Price Control Order, 2012, gave the NPPA the power to fix prices of even those drugs that were not on the national list of essential medicines. Using these guidelines, in July, the NPPA had capped the prices of 108 medicines. Many of these drugs are meant for those suffering from cardiac diseases and diabetes, two ailments that are very widespread in India. Within barely two months of the NPPA capping the prices of these 108 drugs, the government curiously instructed it to revoke the guidelines. While the government subsequently clarified that the July cap on prices would remain, what the new move has done is to effectively ensure that the NPPA cannot take similar action in the future. The government decision has been interpreted as one that is against the interests of consumers. And, not surprisingly, given the timing of the move, the decision was perceived as one that would send the “right signals” to US-based drug MNCs.

Move 2: Instituting Indo-US ‘working group’ that threatens sovereign policy making

The next indication of the government putting the interests of the pharmaceutical industry above that of India’s poor came during the course of the Modi’s visit to the US. While his Madison Square Garden “rock star” performance attracted considerable media attention, few looked into the fine print of the US-India joint statement issued at the end of the visit. That statement contained a paragraph that talked of establishing an annual “high-level intellectual property working group” which would have “appropriate decision-making and technical-level meetings as part of the trade policy forum”.

In Frontline magazine, Amit Sengupta of the Delhi Science Forum pointed out that the working group “is a formal arrangement with the U.S. on IP issues. The working group has decision-making powers which are usually vested in Parliament and therefore threatens the sovereign policy space.”

Academics in the US have pointed out that the American administration consistently uses trade working groups to push for more strict patenting regimes that favour Big Pharma. Professor Brook Baker of the North-Eastern University School of Law has cautioned that the working group would give the US a dedicated forum to continue to pressure India to adopt tougher patent protection measures. Jamie Love of the non-government organisation, Knowledge Ecology International, too has warned that the Indian government would be under pressure to liberalise drug patents and to block or restrain the use of compulsory licensing.

Compulsory licensing is when the government of a country allows a company to produce a patented pharmaceutical product or use a manufacturing process without the consent of the patent owner – this is one of the “flexibilities” on patent protection included in the WTO’s agreement on intellectual property or the TRIPS agreement. Compulsory licences are one of the most effective tools used by developing countries to break the monopoly pricing power of drug MNCs, especially for life-saving and essential drugs. Even the US government used this provision to threaten Bayer when the anthrax epidemic took place in 2009.

In November came indications that a group of lobbyists representing American pharmaceutical firms would, during a visit to India, be meeting up with judges and members of the Intellectual Property Appellate Board (IPAB) who handle disputes relating to intellectual property rights (IPR). After activists raised a hue and cry about the proposed meetings, these were called off.

Move 3: Appoint friends of ‘Big Pharma’ to key government positions

It is noteworthy that in October the Modi government appointed a person who holds strong pro-Big Pharma views to an influential position. He is none other than Arvind Subramanian, chief economic adviser to the government of India in the Ministry of Finance. As recently as March, Dr Subramanian, who used to be an academic in an American research institution, had advised the US government to initiate disputes against India before the WTO on pharmaceutical patents. He had argued for dilution of provisions in the Indian patent law that prevent frivolous patenting and also prevent pharmaceutical companies from getting extensions on patents through tweaking existing drugs and claiming them to be innovations.

He had submitted a written testimony to a US Congressional committee as part of the process of review of IPR protection of various countries, including India. In that testimony, Dr Subramanian stated: “If India does not address the problems created by … compulsory licensing… the US should consider initiating WTO disputes against India.”

He justified this approach on the ground that India took its WTO obligations seriously and had a good track record of implementing WTO’s dispute settlement rulings. He added that for the US, “the virtue of using WTO dispute settlement was that it would be diplomatically and politically less confrontational than unilateral and bilateral actions”. In the same submission, he recommended that “India could consider eliminating the additional efficacy requirement for patentability in Section 3 (d) of its patent law” and that “India could commit to a stay on government-initiated compulsory licenses”. Both these recommendations align closely with the demands of the US pharmaceutical industry.

Move 4: Constitute an executive body to create a ‘new’ IP policy. Pack said committee with pro-industry experts and keep public interest representatives out.

The constitution of a six-member committee on October 22, 2014 by the Department of Industrial Policy and Promotion (DIPP) in the Ministry of Industry and Commerce has also raised quite a few eyebrows. Especially since a three-member committee formed by the DIPP itself in July 2014 had submitted its draft of an IPR policy just one day earlier!

The earlier committee comprising Prabuddha Ganguly, IPR chair professor of Tezpur University; Shamnad Basheer, IPR expert; and Yogesh Pai, assistant professor at National Law University, Delhi were not even told that they had been rendered redundant.

Moreover, some IP experts are wondering why a new IP policy is even necessary. In fact, even the new six-member committee in its first draft submitted on December 19, 2014 says; “India’s statutory framework is robust, effective and balanced. It is in consonance with national development priorities while being in conformity with international treaties, conventions and agreements to which India is a party. India’s laws are notable for their far-sightedness and have also anticipated international developments.” Sengupta in Frontline says, “The move to ‘evolve’ an IP ‘policy’ somehow conveys a sense that India did not have one. This is not true.”

The panel will be deliberating on the public interest ramifications of IPR. The committee is headed by the former chairperson of the IPAB, Prabha Sridevan, who was earlier a judge of the Madras High Court. Whereas Sridevan had upheld the grant of India’s first compulsory licence for Bayer’s anti-cancer drug, Nexavar, all other five members of the committee apparently have conflicts of interest.

One member is Pratibha Singh, a lawyer who is married to Additional Solicitor General Maninder Singh, who used to work as a junior lawyer under Finance Minister Arun Jaitley. The Singh family controlled law firm Singh and Singh has represented various Indian and international drug companies, including Cadila.

Frontline reports that a renowned researcher has pointed out a serious conflict of interest for Pratibha Singh:

“‘Singh is also pushing for the patent application for the pharma major Gilead’s $1,000 a day hepatitis C drug Sovaldi in the Patent Controller’s Office in Delhi.’ The drug is normally given for either three or six months and costs $84,000 for a 12-week course in the United States. Hepatitis C infection impacts approximately 150 million people across the world. A large number of them are in low- and middle-income countries.

The patent claim of Gilead in India has been opposed by the Indian Pharmaceutical Alliance (IPA), the global patient access group I-Mak, and other pro-public health groups. The IPA had opposed the grant of patent to the new drug as it perceived it to be in violation of Section 3(d) of the Indian Patents Act, which prevents patents on new versions of existing molecules. Gilead is also entering voluntary licensing agreements with some Indian generic companies for the sale of this drug. However, such agreements have been criticised by patient groups and public health activists for their restrictive terms and conditions and as being attempts to ward off competition from generics. An IP expert pointed out: ‘These licensing agreements have several restrictive clauses. For example, active pharmaceutical ingredients (API) for the medicines can only be bought through Gilead-appointed agents. Also, Sovaldi is required in the Middle East [West Asia], Central Asia and Russia. But as per the agreement this drug cannot be sold in these regions.’”

Dr Unnat Pandit, deputy general manager of Cadila Pharmaceuticals is a member of this committee. Another member of the panel, advocate Punita Bhargava, is a niece of minister Jaitley and founding partner of Inventure that describes itself as a firm providing “legal services in the field of intellectual property laws”. Yet another member of the committee is Narendra K. Sabarwal, retired deputy director general, World Intellectual Property Organisation and head of the IPR committee of the industry lobby group, the Federation of Indian Chambers of Commerce and Industry (FICCI). The last member of the panel is Rajeev Srinivasan, director of Asian School of Business in Kerala, a private business school.

It was found rather strange that the DIPP did not choose any expert from the academic world who specialises in IPR though another wing of the government, the Ministry of Human Resources Department, has instituted some 20 chairs in IPR in various universities, including national law universities, the Indian Institutes of Technology and the Indian Institutes of Management.

The government’s rather conciliatory attitude towards Big Pharma has ironically come at a time when courts in India have been proactive in upholding the patent rights of domestic producers of pharmaceuticals against HIV/AIDS, cancer and diabetes. Switzerland-based MNC Novartis recently moved the Delhi High Court seeking to restrain Cipla from making an affordable generic version of its drug, Onbrez, used in respiratory ailments, for sale in the local market. Novartis argued in its affidavit filed in court that it will continue to import the drug from Switzerland, and not locally manufacture it, which is allegedly illegal because the law states that a patent has to be “locally worked” to make it affordable and easily available to domestic patients. Cipla’s version of Onbrez is priced at one-fifth the price of the Novartis product.

Earlier, Bayer of Germany failed in its attempt to block the sale in India of a cheap generic version of its cancer drug, Nexavar, after a ruling of the Supreme Court upheld earlier court judgements. An Indian company, Natco, had opposed Bayer’s challenge to a compulsory licence allowing it to sell a copycat version of the drug used to treat kidney and liver cancer. Bayer had claimed the compulsory licence had weakened the international patent system thereby constraining research on new drugs. Natco had been granted permission in 2012 by the country’s patents office to sell a generic version of Nexavar at Rs 8,800 for a month’s dose, against a price of Rs 2,80,000 charged by Bayer.

In another much publicised case in 2013, Novartis had suffered another defeat in the Supreme Court when its attempt to win patent protection for its cancer drug Glivec was dismissed. In recent years, courts in the country have revoked patents granted to other Big Pharma companies such as Pfizer , Roche and Merck.

On a different plane, in August, the Vasundhara Raje government in Rajasthan announced that it would scale down the state government’s free medicines and diagnostics scheme, Mukhyamantri Nishulk Dava Yojna that had been launched in 2011 by the previous Congress government led by Ashok Gehlot. The Raje government said it would adopt a “targeted approach” instead of letting the scheme remain “universal” as it was originally conceived. The scheme applied to anybody who sought treatment from a public health facility in Rajasthan. However, under the new dispensation, only beneficiaries of the food security programme will be eligible and this scheme is itself being reviewed. Nearly 8.5 million people would be removed from the list of beneficiaries, the state’s minister for food and civil supplies, Hem Singh Bhadana, told the Rajasthan assembly in July. This is clearly against the interests of the underprivileged.

The string of instances cited all indicate that the Narendra Modi government is paying lip service to the cause of “affordable medicines for all” and the avowed goal of “Make in India” while devising policies and programmes that favour large multinational pharmaceutical corporations instead of domestic companies that make cheap medicines for the poor in this country and in the world.