Two-way xenophobia

Robin Cook's medical thriller, Foreign Body is, for a change, not a cautionary tale but about xenophobia — a failing or weakness hitherto generally attributed to the Third World, being displayed by the American healthcare industry.

A vastly entertaining and informative novel, it tells how a bunch of American medics, fearing flight of patients to India from the US, hatch a diabolic conspiracy to malign the fledgling Indian medical tourism industry by stooping to the extent of killing three American patients, who had come to India to avail of inexpensive but expert treatment at two private hospitals, in three successive nights, one at a time, through overdose of succinycholine, and promptly informing CNN post-haste for it to do its best in scaremongering.

And the recent admission of guilt by the Ivy-league Lancet institute that New Delhi flu was without basis points to the brewing xenophobia in the western world which is clearly envious of our medical tourism potential. To be sure, the book is not an unmitigated scaremongering exercise through and through. There are vignettes to be taken note of by our policymakers — doctors can't order post-mortem in India, only police or magistrates can and while morgues come under the Home Ministry, forensic pathology comes under Health.

M&A fears

While some American hospitals seem to be paranoid of the Indian hospitals out to ensnare its patients, in India there is a mortal fear of American and other pharmaceutical companies on the prowl seeking backdoor entry through the M&A route.

Two big-ticket acquisitions namely of Piramal Healthcare by Abbot Laboratories of the US and of Ranbaxy by the Japanese Daiichi Sanyo have, in particular, set the cat among pigeons.

And those who have consumer interest in mind are worried that drug prices may go up sharply to the detriment and discomfiture of the common man. The Health Minister, Mr Ghulam Nabi Azad, also has taken up cudgels for the common man, and seems to be wary of the untrammelled access to foreigners which the 100 per cent FDI through the automatic route regime amounts to.

There seems to be a move afoot to restrict the automatic route for FDI into the pharmaceutical sector to 49 per cent so that those coveting Indian drug companies with more than majority stakes are driven to approaching the Foreign Investment Promotion Board (FIPB) for clearance. The idea is clearance by FIPB can be subject to reasonable restrictions including protection of consumer interests.

There can even be outright rejection of the proposal to take up higher equity stakes if the FIPB finds that no lifesaving drugs are being brought to the table although any tectonic shift to dirigisme would be considered regressive and conducive to fostering corruption inevitable in a discretionary power regime by the market enthusiasts. Besides, we would be, in the event, setting the clock back and bearing out and reviving the computer-chips-yes-potato-chips-no dichotomy.

Compulsory licensing

It is amazing why we in India have not been invoking the compulsory licensing regime under which anyone can approach the office of the Controller of Patents for grant of licence to manufacture the patented drug in case the patent holder is, among other things, not meeting the demand for the drug at reasonable price.

In the pre-2005 era, there was no felt need for invoking the compulsory licensing regime because intrepid Indian companies were in any case stepping into the breach thanks to the process patent regime obtaining then. But post-2005 with India willy-nilly adopting the product patent regime mandated by the WTO, there is very little elbow room for practitioners of reverse engineering which process patent encouraged, and it is in such a milieu that the compulsory licensing cries for invocation

Two-way Xenophobia

Quite a few South American countries, notably Brazil, have been in the forefront in invoking this eminently consumer-friendly dispensation and one hopes the same Indian companies which relished challenging the existing patents in the US would develop stomach for making applications for compulsory licensing. Failing private initiative, government itself can step in and ordain other manufacturers to compulsorily manufacture the drugs after it gets the compulsory license from the patent holder. If this requires further amendments to the patent law, so be it.

Experience with operating competition law the world over shows that it is better to prevent abuse of monopoly rather than nipping an incipient monopoly in the bud because a monopolist usually also brings the best product and technology. Therefore in the field of FDI also except in sensitive sectors such as atomic energy etc, it would be advisedly better not to baulk at 100% FDI but to make

A more agile and imaginative use of the compulsory licensing regime would be in consumer interest.

(The author is a Delhi-based chartered accountant.)

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