Unfair trade

| Updated on January 19, 2018 Published on February 05, 2016

The EU is using non-tariff barriers to block Indian generics

The European Union’s recent change in its trademark legislation, which has provisions that could potentially confiscate shipments of Indian medicines to other destinations via European ports or airports, smacks of another attempt by European drug companies to check Indian generics. This is not the first time the EU has used non-tariff measures to protect the interests of its domestic lobbies. Last year, it used some minor discrepancies in lab tests as a handle to ban over 700 generic formulations manufactured by GVK Biosciences — a move India viewed as an attempt to choke India’s $15-billion generic pharmaceuticals sector, and led to the talks on the proposed India-EU free trade agreement being called off. While EU authorities have argued that the changes to the trademark rules were “unlikely” to lead to confiscation, India has good grounds to be wary. Between 2009 and 2011, EU customs authorities confiscated several Indian off-patent generic drug consignments going to Brazil via European ports and airports, over alleged infringement of EU intellectual property rights (IPR). India, together with Brazil, filed a case against the EU in the World Trade Organisation protesting the action. India argued that such seizures were against the multilateral Trade Related Intellectual Property Rights (TRIPS) agreement, as the medicines were off-patent both in India and the country to which they were being exported. In 2011, the EU reached an understanding with India under which it would no longer seize Indian drug consignments in transit to other countries for IPR violation.

The entire controversy cannot be delinked from the battle for the world’s generic drugs market; as a leading player, India’s cheap generics threaten the market of patented products from multinational drug companies. India’s exports of generics are estimated to rise from $15.4 billion in 2014-15 to $40 billion by 2020. Many global drug majors, whose patents worth billions of dollars are facing expiry, have been engaging in what India calls ‘ever-greening’ of their patents by making small improvements in the older versions and then patenting the new versions. Section 3(d) of India’s Patent Act does not allow ever-greening of patents. Indian authorities have refused patents when only minor innovations were involved; this has irked the large global pharma companies.

With the collapse of the Doha Round, and the rise of large multi-lateral trade pacts such as the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership, India needs to be particularly watchful of the use of non-TRIPS provisions to block legitimate market access.

Published on February 05, 2016
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