A balancing act

Ashish Prasad, Partner, Economic Laws Practice Delhi, analyses IPR in India, elaborates on the need to evolve an effective IPR policy to encourage innovation without compromising  public interest

Innovation is integral to the lives of individuals as it has over the years turned complications into progress, thereby improving standards. It has found a cure to diseases to which no cure was available, made tasks easier, found simpler solutions to problems, improved our knowledge, made our lives healthier, safer and more comfortable by improving availability of crops, drugs, medical procedures, appliances etc. To put it generally, innovation is developing a novel idea or concept to cause an improvement over existing knowledge or product to resolve problems faced by humans.

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force on January 1, 1995 sets the minimum standards for Intellectual Property Rights protection for all members of the World Trade Organisation (WTO). It provides a framework for granting legal protection to new creations, innovations and technological advancements, thus incentivising innovators to invest in research and development of new products and processes.

The National IPR policy of India by promoting amongst others, innovation, licensing, technology transfers, patent pooling, cross sector partnerships, reducing API imports by incentivising manufacture of API in India etc. follows the TRIPS framework and attempts to provide for an enabling structure for new innovations.

At the same time, over the years there have been considerable debates amongst economists and policymakers regarding the development of the Intellectual Property Rights (IPRs) regime in order to balance public interest and the rewards to be accorded to the innovator. The pharma industry illustrates this conflict the best; need for the state to ensure that medicines are available and affordable by all and the interest of the pharma industry in engaging in continuous research and development for the invention of new drugs and medicines.

In India, this conflict of interest is manifested in the tussle between innovated drug manufacturers and manufacturers of generic/follow on products. Indian law and policy is designed to encourage generic drug manufacturers to develop and market follow-on drugs so that fruits of innovation are available to the masses at lower costs.

It is but natural therefore, that developed countries are calling for stricter implementation of tougher and more restrictive conditions in the patent laws of the developing economies in the form of TRIPS-Plus provisions to curb the manufacture of generic drugs. One of the most prominent examples is pushing for protection under Article 39.3 on data exclusivity which disallows clinical trial data that is generated by the innovator company to be used by another company for obtaining approvals to market the generic versions of the drug for which the trial had been conducted. Acceding to this provision can considerably delay the market approval as well as availability of generic versions of medicines for many years since this would require generic manufacturers to conduct clinical trials afresh. This would increase the cost of production of generic medicines leading to a higher price burden on the consumers.

As the tussle continues, multinational innovator companies have often knocked the doors of the judiciary seeking protection of their IPRs. The judiciary has in turn taken a nuanced stand and walked the fine line between the interest of the innovator and public interest. Recently, the Delhi High Court, while dealing with the first case on bio-similar approvals in India, between Roche and The Drug Controller General of India and well known Indian drug manufacturers (Mylan & Biocon) in its decision disallowed the right to question the approval granted by the DCGI in an appeal before division bench. The interim decision by the single judge had earlier denied the Indian manufacturers to market their product as a bio-similar to the drug innovated by Roche. With another battle for bevacizumab already in courts, it appears that we are about to see the same pattern that was seen during the rise of the generic manufacturers. This decision has a far reaching impact on the pharma industry of India as the generic drug/bio-similar manufacturers would be encouraged to innovate and develop substitutable products in the interest of public. On March 8, 2017 in the case of Bayer v. Union of India the Delhi High Court held that export of drugs for the purposes of clinical trial was covered under the exemption as provided under Section 107 A of the Patents Act, 1970. The Indian judiciary has by far been able to set a well-reasoned standard, maintain equilibrium of obligations under the TRIPS, Patents Act and the social interest of the country.

It is now well known that the innovator pharma companies, in the interest of protecting their legitimate IP rights, adopt various strategies including delaying of the introduction of bio-similar/generic versions though litigation tactics. They have now realised the opportunity vesting with the generic market and have now sought to enter the generics’ market.

President Trump’s decisions to withdraw the TPP may have temporarily jolted the existing negotiations undertaken during President Obama’s regime. However, it may not be long before when India will be asked the same question again i.e. to give its consent to incorporate the TRIPS-plus provisions which would then affect the Indian pharma industry, especially the generic segment.