Drug prices, not just a poor nations’ issue

In about a month, the Office of the United States Trade Representative will unveil its Special 301 Report, a scorecard of sorts that rates trading partners on their performance in protecting and implementing Intellectual Property Rights (IPR).

The annual exercise is of interest to the Indian pharmaceutical industry, as past reports have dwelt at length on issues like compulsory licensing (CL) and pre-grant oppositions, for example, that have all to do with medicines. In fact, the report is closely tracked by health advocacy workers as well, as access to medicines becomes an increasing concern for governments across the world.

In February, chiefs of a clutch of drug majors were “grilled” by the US Senate on issues related to high drug prices, foreign media reports said. Earlier this month, Finland’s government resigned, reportedly, on its inability to push through healthcare reforms.

Though drug makers may point out that pricing and patents are different issues, the reality involving medicines is that all discussions are in the realm of healthcare.

Again, for the pharmaceutical industry, IPR and patents are tools given to innovative companies to protect their research and recoup investments in it. But this view is losing ground, with even the World Health Organisation poking holes into it in a recent technical report on the pricing of cancer drugs.

As a producer of less expensive generic versions of original drugs, India has often had to bear the brunt of pro-IP advocacy group campaigns. There still is much heart-burn over the solitary CL India issued on Bayer’s kidney cancer drug Nexavar in 2012.

A decision based on sound technical reasoning, it ended up making the drug affordable, as it paved the way for a less expensive version to come into the market. A CL allows another company to make its version of a patent-protected drug on payment of royalty to the innovator company that originally made the drug. Another bug-bear for pro-IP groups is the pre-grant opposition feature that allows companies to oppose what they see as a “frivolous” patent application at the Patent Office.

India’s worries

Last year’s Special 301 report persisted with India’s placement on the Priority Watch List, on grounds that included some of the above concerns. India is one of 12 countries on the list that includes Canada, Russia and China.

In the exercise building up to the Special 301 report, a strong pitch was made last month to the USTR on behalf of the domestic pharmaceutical and indeed the country, to remove India from the Priority Watch List, this time. The submission by late DG Shah, representing the Indian Pharmaceutical Alliance (a platform of large Indian drugmakers), listed the steps taken by India to address US industry’s concerns.

They included the fast-tracking of administrative and judicial processes in the country, besides India’s accession to two WIPO (World Intellectual Property Organisation) treaties, among other things. With trademarks and copyrights also coming under the Special 301’s sweep, the report also addresses issues in the info-tech and entertainment industry where IPR plays a critical role.

But it is on the point of medicines, that the Indian submission makes the critical observation that concerns involving access were not restricted to just developing countries. Countries like France, Switzerland and the Netherlands are speaking a similar language in the interest of public health.

The Netherlands’ move

“The need for compulsory licensing as a safeguard cannot be wished away,” says the Indian submission, as it goes on to narrate how the Health Minister of Netherlands told the Dutch Parliament in November 2017 that he would ‘extensively explore’ the use of compulsory licensing to tackle the problem of what he called ‘absurd’ pricing.

“In this, the Health Minister is reported to have followed the recommendations of the Netherlands Council for Public Health and Society, an official government advisory body,” the submission notes, adding that the Netherlands is one of the countries in the European Union whose law permits the use of CLs in ‘public interest’.

More recently, the submission adds, “on 30 January 2019, a request has been made to the Federal Council in Switzerland to exercise its right in the pubic interest for a compulsory license for public non-commercial use of pertuzumab sold by Roche under the brand name PerjetaTM through a reference to the Federal Patent Court.”

A curious point that the submission makes is that no CLs had been granted in India since 2012 and not even an application for a CL was made after 2015, despite the launches of patented products in the country. While that statement could bring some comfort to foreign companies operating in India, pro-health groups worry precisely on that count and question whether there is a slow-pedal happening due to outside pressure.

“The Government of India believes that India’s patent law is TRIPS-compliant and represents a balance between the incentive to innovate and public health,” the submission says, clearing the air on the contentious Section 3(d) of the Patents Act. It only prohibits the grant of patents on new forms of known substances that do not enhance efficacy, it reiterates.

“Ïndia also seeks to safeguard public health by prohibiting the grant of secondary patents (and extension of monopoly) for a known substance without evidence of therapeutic benefit. This allows the entry of affordable generics after the expiry of the primary patent and serves the cause of public health by increasing access in a country like India where most people will find the cost of patented drugs prohibitive,” the submission says.

How the upcoming Special 301 Report will assess these explanations is something that will unravel this month. However, what is becoming increasingly clear is that the rumble against high-priced drugs and the growing cost of healthcare is only getting louder across the globe. And companies and governments are under pressure to act, and fast.

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