Dilution of Section 3(d), compulsory licensing unlikely despite US concerns
Disappointed with India’s new National IPR Policy, the US has upped the ante for a world-class patenting regime in India, but the Narendra Modi government has refused to undertake a review of the same in terms of changes in substantive provisions in the Patents Act like Section 3(d) and compulsory licensing, official sources told FE.
“There is absolutely no proposal to do it (diluting Section 3(d)),” said a senior government official. Section 3(d) prohibits the grant of patents to new forms of known substances that do not result in enhanced efficacy. “We have received comments from stakeholders on the draft patent rules; these are under examination. Based on the changes, the Patents (Amendment) Rules 2015 are expected to be notified in January,” he added.
India’s decision to persist with its policy, which it avers is fully compliant with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), is despite US trade representative Michael Froman raising concerns over India’s patent laws in the US’ latest annual Special 301 Report on national IPR regimes.
India’s stance was also reflected in the recent WTO ministerial meeting in Nairobi.
“Even though provisions like Section 3(d) allow national flexibilities world over, the larger debate at the WTO was that countries should graduate to TRIPS-Plus provisions. However, despite the pressure tactics by some developed nations, India and other developing nations stood firm, which resulted in the reaffirmation of the TRIPS at the Nairobi ministerial,” said a senior commerce ministry official.
This reaffirmation very categorically protects the rights of developing countries in the sense TRIPs flexibilities are still having the same force, and a country is well within its rights to use those flexibilities to prevent evergreening of pharmaceutical products, he added. One of the reasons for the pressure on developing countries to adopt TRIPS Plus was that the Trans-Pacific Partnership between the US and 11 others contains many TRIPS-Plus provisions.
The USTR had maintained the country on a ‘Priority Watch List’ in its latest review, although he spared it from the action-triggering ‘out-of-cycle review’ this time around. The USTR report had, while welcoming Modi’s intent to align India’s IPR laws with international standards, said progress on this front would be watched “over a few weeks”.
In this context, New Delhi’s decision could invite reciprocal actions from the US.
Foreign direct investment (FDI) into the Indian pharma industry since 2005 — when the Patents Act was last amended to usher in product patenting for pharmaceuticals — has been to the tune of $12 billion. The Big Pharma housed mostly in the US, which spends billions of dollars annually on R&D and is faced with a drying-up of new blockbuster drugs, say that India would have added at least as much to the FDI in the sector during the period if patenting norms were more liberal and in sync with those of Western countries.
Under Section 3(d), examples of new forms include salts, esters, ethers, polymorphs, metabolites, pure forms, isomers and new particle sizes. Typically, these new forms are sought to be patented as ‘follow-on’ second or third patents on the same product and invariably prolong patent monopoly for it.
Although the duration of a patent is 20 years, the actual period of market exclusivity could be much lower — 10-14 years in most cases — as there is a huge lag between the patent grant (which usually precedes marketing by a few years) and the commercial exploitation of the product in question.
The US is equally disturbed by India’s invocation of the compulsory licensing provision in March 2012 to give the right to manufacture and market kidney cancer drug Sorafenib to Hyderabad-based Natco Pharma, sidestepping the patent held by German drugmaker Bayer. The reason cited was the high price of the drug. The USTR, endorsing the Big Pharma’s view in this regard, argues that under TRIPS, CLs can be used only to address extreme urgency and national emergencies.
During his visit to India in November last year to take part in the meeting of India-US trade policy forum, Froman had decried India’s move to extend CL provision to the larger manufacturing sector and introduce stringent localisation norms for defence, solar power and retail sectors and ‘high’ import tariffs on information, communication and technology products. These, he had said, could adversely impact US investments in the Make in India programme.
Whatever the debate is around CL with regard to the pharma sector, taking that same argument to the manufacturing sector and suggesting CL will spur manufacturing, is something we have concerns about.” Froman said.
The USTR also expressed concerns over India giving preference to local R&D and local innovation when it comes to according them IPR rights, an allegation refuted by the Indian government and industry, citing that most patents in India have gone to foreign applicants.