The Patent Controversy

PATENTS AND medicine are inextricably inter-linked. Patents are a monopoly. Drug companies possess separate monopolies over many life-saving and other drugs, including those that treat HIV-AIDS. As monopolists, these companies have no compunctions about fixing high prices for essential drugs. High prices create a clear divide between the rich who can afford the medicine and the poor who cannot.

India's thriving pharmaceutical industry has shown that the price fixed by the monopolists has nothing to do with the cost of production. Yusuf Hamied of CIPLA has declared that he can supply medicine for HIV to Sub-Saharan Africa, India and the rest of world at affordable prices. The monopolists argue that they need to recoup their research and development (R&D) costs, for which they have already received tax benefits, and foundation funds. Until these supposed costs are recouped, the poor and the ill must literally hold their breath. Medicine will be available, but not for the poor.

On May 6, 1981, Indira Gandhi declared India's policy when she said her "idea of a better world is one in which medical discoveries would be free from patent and there will be no profiteering from life and death." What happened to this policy? How did India – a champion of the world's poor and a major supplier of cheap medicine – miss the wood for the trees? Contrary to its own policy and interests, the capitulation took place between 1987 and 1994 when the World Trade Organisation (WTO) treaty was negotiated. Records in Parliament will show that time and again, this issue was bypassed. In December 1993, a Rajya Sabha Committee headed by I.K. Gujral viewed with concern the "grave impact of the proposed patent ... on the drug prices in the country" and warned that the "primacy of public interests for the right of patent holders should be ensured." Public discussion was thwarted. The confidential report of the Arjun Singh Committee in the early 1990s remained confidential. As members of the National Working Group on Patent Laws, we continually exposed the impending consequences.

When the WTO came into effect, India did not seriously contest America's threats. From 1995 to 2004, a large number of foreign companies filed anticipatory claims under the 'mail box' procedure, which will flower into full-fledged patents on January 1, 2005. After the Left and the BJP thwarted earlier attempts to do so, the First Patents Amendment Act was passed in 1999, followed by the Second Amendment Act in 2002. A political promise was made that further amendments on social concerns would be incorporated in future. None of the ameliorative amendments was included in the Third Amendment Bill of 2003, which is now being rushed through without change or discussion. The WTO and the U.S. want the law passed before January 1, 2005 under the implicit threat of WTO retaliation for non-compliance.

It is obvious that monopolies – patent or otherwise – have no place in a free trade treaty. But the U.S. is keen on defending the market of its drug companies in ways India was not willing to defend its poor. Economists such as Jagdish Bhagwati, Dani Rodrick and Michael Finger who support the WTO are coming round to question whether the TRIPS (Trade Related Intellectual Property Rights) treaty should be in the WTO. By rushing to comply with the TRIPS deadline, India is turning its own international law upside down.

India follows the incorporation theory. A treaty does not become law until enacted by Parliament. By giving greater credence to WTO deadlines than democracy, India is prepared to jeopardise its sovereignty. The WTO is not the only treaty that India has to comply with. It is also a signatory to the Universal Declaration of Human Rights (1948), the Civil and Political and Economic and Social Rights Covenants (1966) and a host of others. The Supreme Court decisions culminating in and following Vishaka's case (1997) have directly imported many human rights into the life and liberty provisions of Article 21, including the right to health. The WTO cannot over-ride these obligations.

The proposed Third Patents amendment should not be rushed through Parliament without making a serious effort to deal with issues of health, food and technology thoroughly. The Doha Declaration in 2001 specifically indicated that the WTO and TRIPS agreement "can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicine for all ... and enable access to existing medicines and research and development into new medicines." The HIV-AIDS phenomenon illustrates the problem which is not limited to it. AIDS has spread to 40 million victims throughout the world. Africa has been hit the hardest. It has spread to all the 31 provinces of China and all over India. It is not just a truckers' disease but has spread to homes. Countries such as Costa Rica and Venezuela have made it the Government's duty to supply medicine for AIDS. In my view, such a duty exists in India too.

The proposals that contend for inclusion in the Third Patents Amendment have been lucidly stated in the Fourth Peoples' Commission Report of October 2004. The Commission was headed by Mr. Gujral, of which I was also privileged to be a member. The broad argument rests on the fact that India's Patents Act, 1970 was a model legislation which segregated health, food and agriculture for special treatment by granting a restrictive process patent for such patents. Even if a product patent is now granted for such items, the public interest should not be defeated. So far, no amendment has undermined the principles in Section 83 of the Patents Act 1970 which secure the public interest and abjure purely commercial uses of patents. The rest of the Act must not subvert these purposes – especially after Doha. Articles 7 and 8 of TRIPS enlarge the possibilities for the public interest, health and the transfer of technology.

The Third Patents Amendment is being rushed as an unnecessary fait accompli. Certain minimal proposals need discussion and incorporation. Firstly, India needs to follow China's example whereby if a patent monopolist does not respond to production on reasonable commercial terms within a stipulated period, a compulsory licence to manufacture will be granted in India. Secondly, following the lead of other countries, the royalty should not be more than four per cent. It cannot be overlooked that such a royalty would inure to the monopolist patent holder without investing a rupee.

Thirdly, although a manufacturing licence will be 'predominantly' for India's domestic market, it is necessary to permit exports to other markets of those least developed and developing nations with insufficient or no capacity to manufacture drugs. The Government's proposal necessitating a compulsory licence for export to such nations plays back into the hands of the patent holders. Helping other nations in this way has to be in addition to any provisions for parallel imports into a country with the permission of the patent holder or authorised licensee. Third world countries can only access cheap medicine from countries such as India – short of paying exorbitant monopoly prices.

Fourthly, there is a tendency to downplay the importance of inventiveness so that all kinds of medical formulations are given patents. Without an equal emphasis on novelty, inventive step and industrial application, too many spurious patented drug monopolies will be created.

Fifthly, the mail box that has been opened since 1995, and recognised in 1999 in our legislation, should not be an invitation to indiscriminate recognition. India must permit pre-grant opposition so that spurious applications with doubtful antecedents can be rigorously scrutinised.

Sixthly, where an Indian has commenced substantial production on a mail box patent, he cannot be asked to arbitrarily stop production on January 1, 2005 but must be permitted to continue – even if subject to limited conditions. Seventhly, the entire debate on patentable subject matter should not be pre-empted since TRIPS discussions concerning micro-organisms are still incomplete. No less, combination drugs and compounds are neither inventive nor worthy of protection; and are a fraud on the concept of patentability.

By rushing through the Third Patents Amendment without proper parliamentary scrutiny, India is short changing its post-Doha obligations to both its own and the world's poor. It is also putting its sovereignty, status, prestige and obligations at risk. Parliament should not rush through the Third Patents Amendment Bill, but deliberate on it through the full committee process – not an ordinance. Medicine without social justice is unacceptable. Patents are not a gift for drug companies to exercise power without responsibility.