Will this year’s ‘Special 301 report’ Trump up something?

In two months, the United States’ Special 301 Report will be released.

The US Trade Representative's (USTR) report assesses trading partners on their performance involving intellectual property (IP). And this annual IP report-card never fails to invoke vociferous reactions for and against it in equal measure.

Earlier reports have had IP experts and advocacy groups claiming that no one’s afraid of this report. But pharma industry circles watch it closely for the damage it can do by providing ammunition to lobbyists, who attempt to put pressure on governments in the US and India to wrangle more favourable policies for their industry. With many Indian and American drug-makers selling medicines in both countries, there is no doubt this report can be loved or hated, but not ignored.

Under the watch of the new Trump administration, this year's ‘Special 301 Report’ has generated much interest, even hope maybe, of an even-handed approach towards India. That shift is reflected in the submission made earlier this month by the Indian Pharmaceutical Alliance (IPA) to the USTR.

There has been a significant shift, says IPA’s DG Shah, as they make a case to take India off the USTR’s ‘Priority Watch List’. The IPA is a platform of India's top drug-makers.

“For the first time we are equating Section 3(d) of India’s Patent Act with (US) Hatch-Waxman provisions and argued that how Section 3(d) is simpler, less litigious, patient-friendly, and has potential to avoid “unjust enrichment” of the right holders,” says Shah.

Section 3(d) has been at the heart of many patent battles in India and it disallows patent exclusivity on a tweaked-version of an existing drug if it does not show greater efficacy. The country's first patent battle under the amended Patent Act (2005) was anchored in this rationale and it resulted in Novartis not getting a patent on its blood cancer drug Glivec.

Foreign companies in India are also concerned about the compulsory licence (CL) option and when it will be used. India has issued one CL to Natco to make Bayer's advanced kidney cancer drug Nexavar at a significantly lower price to make it affordable to more patients.

Addressing concerns including those on data exclusivity, etc., the submission concludes: “The improvements demonstrated in 2015 have been sustained and accelerated in 2016. These include improvements in the IPR environment through dialogue and consultation as well as adoption of the National IPR Policy, quadrupling of patent examiners and consistent judicial enforcement in accordance with Indian law.”

“Section 3(d) has caused considerable apprehension in the past that it would limit the patentability of useful innovations. We have shown that it only limits secondary patents that do not enhance efficacy and typically result in ‘evergreening’. We have also shown that Section 3(d) and Hatch-Waxman provisions are not dissimilar in terms of outcomes. Therefore, Section 3(d) ought not to be of concern,” it says.

But Patrick Kilbride, Executive Director of the Global Intellectual Property Center (GIPC) at the US Chamber of Commerce, observes that the new US administration appears to be taking a tough stance on trade issues, including IP. “It seems likely that the 301 report will receive increased scrutiny, with greater likelihood of follow-on action.”

Kilbride says companies continue to be concerned that “India’s intellectual property policies do not provide sufficient legal certainty for innovators to make high-cost, high-risk, long-term investments in the research and development that is necessary for life-saving medical breakthroughs.”

“If other countries were to adopt standards similar to those currently in place in India, namely unduly restrictive patentability criteria and a propensity to use “TRIPS flexibilities” or compulsory licences, we believe there would be far fewer bio-pharmaceutical innovations reaching patients with new treatments and cures,” he says.

IP expert KM Gopakumar points out that just as the US adopts policies that are good for its citizens, India needs to have policies that are good for its people, even as it stays in line with international trade obligations.

Come April end, when the report will be out, the cards will reveal whether the post-Trump phase of trade between the two countries especially involving pharmaceuticals will proceed on a collaborative or adversarial path.

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