When all other means fail, arm-twisting is an option for the mighty. This may well be the thought behind US drug major Pfizer’s recent plea to the US Government — to review “all available policy tools’’ to push India to better protect intellectual property of American companies.

India’s refusal to buckle under pressure from the US and EU after issuing its first compulsory licence last year to Hyderabad-based company Natco has global drug companies worried. The licence was given for selling a generic or copied version of Bayer’s anti-cancer drug Nexavar.

Natco was allowed by the Indian Patent Office to sell the copied version of Nexavar at Rs 8,800 for a month’s treatment, compared with Bayer’s version priced at Rs 2.8 lakh, making treatment affordable to thousands of patients afflicted by kidney cancer.


The fact that the country is now examining requests for compulsory licences — permits issued for producing copied versions of patented medicines without consent of the patent holder — for more life-saving drugs has only led to more heartburn for multinationals.

They are trying to deal with patent expiry worth an estimated $150 billion between 2010 and 2017.

India’s firm stand on not allowing patents on new versions of old drugs, where changes are just cosmetic, has already created much bitterness among global pharma biggies. Pfizer recently had to bear the brunt of the country’s stringent rules when its patent for cancer drug Sutent (sunitinib) was revoked by India’s patent office; it was seen as being not inventive.

So, it is not surprising that Pfizer chose to urge the US Government to use pressure tactics on India.

At a Congressional hearing discussing renewal of a duty-free access scheme, of which India is a major beneficiary, Pfizer urged that pressure be brought upon India to tighten intellectual property protection.

The Generalised System of Preferences scheme, which allows certain labour-intensive products from developing countries to be imported duty-free into the US, subject to a number of conditions, is set to expire in July this year.

But can the US actually threaten India with withdrawal of duty-free benefits, if it refuses to tighten its intellectual property regime in line with the US demand?

It seems highly unlikely, as the benefits that India gets through the GSP scheme are insignificant compared with what it can achieve by issuing compulsory licences.

However, this does bring to light the limited options before the US and the EU, to make India change its intellectual property rules.

Pfizer, no doubt, has alleged that India has “routinely flouted trade rules’’ to encourage its own generic industry at the cost of patent holding companies — but the million-dollar question is whether trade rules have been actually flouted. The answer to that question is a simple ‘no’.


The Trips Agreement — the multilateral pact on intellectual property under the World Trade Organisation that was almost forced down India’s throat in 1995 — prompted India to move to a product patent regime from a process patent regime within ten years.

India came up with a new Indian Patent Act in 2005 that was in sync with its commitment under Trips and tightened the patents law in the country by protecting not just the process through which a new product was created but the product itself.

This meant that other companies could not use a different method to create a similar product for which a patent had been granted during the life time of the patent.

But India and other developing countries also managed to extract some flexibilities within Trips. Having the authority to issue compulsory licences to generic manufacturers for producing copies of patented medicines in a situation of national emergency was one such concession.

The Trips & Public Health Agreement further allows countries that do not have manufacturing capacities to issue compulsory licences to drug companies in another country to manufacture generic versions of patented medicines.

Through intense negotiations India was also able to get the flexibility of not granting patents in a way that it would lead to ‘ever-greening’.

So there is nothing underhand about India issuing compulsory licences for cancer drugs. Neither is it against Trips norms to revoke patents, if it is established that there is nothing novel about a new drug.

Yes, one needs to protect the rights of patent holding companies that spend millions of dollars on research and development every year. But isn’t it exactly why the Trips Agreement was signed and India was made to change its laws?

Issuing a compulsory licence for a drug does not exactly pulverise the fortunes of a patent-holding pharmaceutical company, as there are rules to be followed. The Indian Patent Act lays down that such licences can be issued at least three years after the grant of the patent and the patent holder has to pay a royalty fixed by the Government.

Moreover, if a company believes that there isn’t enough ground for issuing a compulsory licence, it can always approach the judiciary as many companies, including Bayer and Novartis, have already done.


The European Union recognises that there is little it can do to force India to unilaterally tighten its IP regime.

That is why it is trying its best to incorporate intellectual property in the bilateral free trade agreement being negotiated, in the hope that it would place additional obligations on India.

But non-government organisations, including those in Europe, have kept a hawk-eye on the negotiations forcing India to reiterate time and again that it would not do anything that would go against the interests of the poor.

The issue of patents versus generics is not just a fight between patent holders and generic producers. It is a battle to make medicines affordable to the millions of poor.

That is one of the main reasons why the mighty pharmaceutical giants are not finding it easy to have their way.