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Thursday, 10 March 2016 03:51
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If true, India’s stand on compulsory licence welcome


Though there is no official confirmation, according to a US-India Business Council—the advocacy group represents 350 global firms invested in India—statement to the office of the US Trade Representative, India had given an informal assurance that it would not be pursuing policies of compulsory licensing that allow local firms to make cheap copies of patented drugs. The last time India did this was in 2012, when Bayer’s liver-and-kidney cancer drug Nexavar was licensed to Natco to bring down the cost of treatment from R2.8 lakh a month to under R10,000—with the billions of dollars of R&D spending no longer needing to be recovered, it is not surprising prices crashed as much. A private assurance doesn’t count for much, especially when you see how little the government has done on retrospective taxation where so many public assurances were given, but there has been some proof of this as well. In 2014, the industry ministry cautioned against excessive use of compulsory licensing—it is to be used for public emergencies only—and this January, the patent office rejected an application by Hyderabad-based Lee Pharma to make AstraZeneca’s diabetes medicine Onglyza, though a direct correlation between the two is difficult to establish.

While compulsory licensing gave India a bad name with western drug producers, it has to be kept in mind that, used too often, this can prevent producers from filing patents for cutting-edge drugs in India and could also open up the country to challenges at various international fora—and while it is western firms who are at the receiving end of such policy today, it could well be Indian innovators in the years to come; a Ficci paper estimated counterfeiting/patent violations as costing seven major Indian industries upwards of R100,000 crore in 2014 and that did not include pharma. India already has too many controls in pharma, ranging from price ceilings to the maximum annual increase in drug prices; this has resulted in slower production of price-control drugs and has also contributed to the fact that anywhere between 30-40% of drugs sold are spurious—with low margins at home, producers of repute are content to concentrate more on exports and leave less remunerative parts of the domestic industry to smaller firms. It also has to be kept in mind that not granting compulsory licences in a mindless fashion is very different from giving up Section 3(d) of the Patents Act that prevents ever-greening of patents, a big factor in keeping drug prices low in the country, and something the US has been campaigning against for years.


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