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The United States Trade Representative has, in its “2018 Special 301 Report”, placed India on the “priority watch list”, again. A move that has been labelled ‘anti public health’ by international humanitarian organisation Médecins Sans Frontières or the Doctors Without Borders.
The “Special 301 report” assesses US trading partners on their track record when it comes to protecting and enforcing intellectual property. And, India has always received a critical review for reasons, including its balancing act between granting pharmaceutical patents and taking policy decisions to keep medicines affordable.
Lacking in IP enforcement
The annual US report does not usually raise the hackles of the Indian government. But this time, its observations on counterfeits, for instance, need to be addressed by the Indian industry and Government, at least for its local audience.
In its 2018 report, the USTR said that India remains on the Priority Watch List “for lack of sufficient measurable improvements to its IP framework on long-standing and new challenges that have negatively affected US rights holders over the past year.”
Interestingly, others on the “priority watch list” include Canada, China, Argentina, Colombia and Russia. Canada is the only G7 country identified in the Special 301 Report and its “downgrade to the Priority Watch List this year reflects a failure to resolve key long-standing deficiencies in protection and enforcement of IP, “the report explains.
The “Priority Watch List” classification indicates that problems exist in that country involving its IP protection, enforcement, or market access. But of relevance to India is that the amended Special 301 statute directs the USTR to develop action plans for each country identified on this list for at least one year.
Long-standing IP challenges
The report outlines challenges facing US businesses in India as those that make it “difficult for innovators to receive and maintain patents in India, particularly for pharmaceuticals, enforcement action and policies that are insufficient to curb the problem, copyright policies that do not properly incentivise the creation and commercialisation of content, and an outdated and insufficient trade secrets legal framework.”
It also pointed to “new and growing concerns, including with respect to reductions in transparency by India’s pharmaceutical regulator through the removal of a requirement that applicants submit information about a product’s patent status, as well as positions that India supports and voices in multilateral fora on IP issues, continue to generate scepticism about whether India is serious about pursuing pro-innovation and -creativity growth policies.”
Referring to India as one of the world’s most challenging major economies with respect to protection and enforcement of IP, the report says India is yet to take steps to address long-standing patent issues that affect innovative industries. “Companies across different sectors remain concerned about narrow patentability standards, the potential threat of compulsory licensing and patent revocations, as well as overly broad criteria for issuing such licences and revocations under the India Patents Act.”
Counterfeit concerns
Two key reasons why India should take note of this report include its possible influence on US government action and its observations on counterfeits.
The report says that the identification of countries and IP-related market access barriers and steps necessary to address those barriers “are a critical component of the Administration’s aggressive efforts to defend Americans from harmful IP-related trade barriers.”
On counterfeiting, it says, “Ninety percent of the value of all counterfeit pharmaceuticals seized at the US border in fiscal 2017 was shipped from or transshipped through four economies: China, the Dominican Republic, Hong Kong, and India.”
It goes on to say, “China and India are reportedly leading sources of counterfeit medicines distributed globally. While it is impossible to determine an exact figure, studies have suggested that up to 20 per cent of drugs sold in the Indian market are counterfeit and could represent a serious threat to patient health and safety.”
Citing a 2017 report by the OECD and EU Intellectual Property Office, the USTR report says India is reportedly a key producer and exporter of counterfeit foodstuff, pharmaceuticals, perfumes and cosmetics, textiles, footwear, electronics and electrical equipment, toys, games, and sporting equipment.
“With respect to counterfeit pharmaceuticals, the report found that India was the origin for 55 per cent of the total value of global counterfeit pharmaceutical seizures—by far the largest and noted that these counterfeit pharmaceuticals are shipped “around the globe, with a special focus on African economies, Europe, and the United States.”
Public health applause
India though received support on the public health front from MSF. “The US has used this report to unfairly target countries such as India—known as the “pharmacy of the developing world” because it supplies affordable quality generic medicines globally—Colombia, Malaysia, and other countries for using legal measures allowed under international trade rules to improve access to medicines.”
The report is yet another tactic the US uses to pressure other countries into letting pharmaceutical companies easily attain and hold patents, blocking more affordable generic versions of medicines from reaching patients, it said.
"People everywhere struggle to afford the medicines they need because companies set high prices—not based on R&D costs and not because patients aren’t paying their fair share—just because they can. And governments allow them to. Global trade policies give countries the right to act in the face of public health needs—they should be encouraged, not punished, for using these safeguards as they are meant to be used,” said Leonardo Palumbo, US advocacy adviser for MSF’s Access Campaign.
“Instead of penalising countries like India for trying to care for their citizens, the US should instead be taking the opportunity to work with countries to promote measures that get medicines into the hands of the people who need them most,” he added.
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