India needs to resist pressure from big drug firms and their backers to change patent laws

India’s intellectual property model is under attack not because it has failed, but because it has succeeded – in balancing private profits with public health.

Often called the “pharmacy of the developing world”, India has long exported high-quality, low-cost generic medicines to the rest of the globe. Its progressive patent system has facilitated a model of local production and entrepreneurship that has allowed India’s generic drugs industry to contribute to improved access to lifesaving drugs across the world, especially HIV medicines. Generic drugs, which are effectively a bioequivalent form of an original branded drug that has gone off patent, represent the vast majority of medicines consumed each year.

Just as India’s generic industry begins to expand this model to more sophisticated medicines and richer markets, its government is entertaining policies that will restrict this growth by introducing unnecessarily stringent intellectual property barriers that effectively hand big pharmaceutical companies the power to keep Indian firms on a tight leash. These intellectual property barriers can reach beyond patent terms, as they also extend to the granting of proprietary status to the clinical trial data on which drug approval and generic entry depends. These provisions address a concept known as data exclusivity.

Furthermore, through so-called “patent linkage” rules that prohibit marketing approval of a drug until patent disputes are fully resolved, developed countries hope to give their pharmaceutical firms additional tools, via patent litigation and appeals, to block generic competition.

Under attack for success

Through formal and informal trade negotiations with developed countries, India is being put under pressure to “reform” its rules. However, India’s current intellectual property model is under attack not because it has failed, but because it has succeeded. This success is viewed as a threat by multinational pharmaceutical corporations, who see generics as eroding the profits of blockbuster drugs. The threat is real: India’s generic-led pharmaceutical exports to the US have increased almost ten-fold in the past decade. With more FDA-registered facilities than any other country outside the US, this trend is expected to continue.

However, the generic drug industry threatens big pharma’s hold on the global market, notably in the lucrative arena of so-called specialty drugs. As a pillar of the global generic industry, India has been facing relentless international pressure, especially from governments that act on behalf of their pharmaceutical industries. This is particularly significant for new cancer drugs that India is capable of producing at low costs and that big pharma prices exorbitantly, and is thus desperate to keep under its control.

The commerce minister of India was in Malaysia in mid-July for a ministerial meeting to negotiate a trade agreement with south-east Asian countries, Australia, South Korea, New Zealand, China and Japan. Leaked texts of the draft intellectual property chapter revealed proposed IP provisions such as patent term extensions, data exclusivity conditions, lowering of patentability criteria and stricter enforcement mechanisms (i.e. increasingly punitive) for intellectual property rights. If accepted, these provisions would further extend the monopoly powers of the multinational pharma companies.

Massive profits

Compulsory licences are a WTO-approved provision that allows governments to give licences to a generic manufacturer to produce a specific drug, without the consent of the patent holder. The generic firm, in turn, must pay a fixed royalty to the patent holder from each sale. These licences are issued in order to address public health emergencies, which include but are not limited to cases of prohibitive drug prices and chronic drug supply shortages. In 2012, amidst considerable controversy, the Indian patent office granted a compulsory licence for the generic production of the cancer drug, sorafenib, whose brand name is Nexavar.

Originally developed by Onyx Pharmaceuticals, Bayer acquired the patent rights for this drug and now markets it. Based on Onyx’s own figures, the drug’s R&D costs were recovered in its first year of sales. In 2012 alone, Nexavar brought in more than $1 billion in revenue worldwide, which is more than five times the drug’s cost of development. At the time the compulsory licence was issued, the Indian market’s price for Bayer’s lifesaving drug was $5,626 per month, a price so exorbitant that only 200 patients in India obtained the drug in 2011. Since the grant of the compulsory licence and the subsequent entry of an Indian generic form of the drug, the price fell to just $108 per month.

While India is a major consumer of drugs by volume, its expenditures account for a relatively small share of the global market’s revenue. By contrast, US drug expenditures account for approximately one-third of the world’s pharmaceutical revenues. In fact, if the US health sector were measured as its own economy, it would be the fifth-largest economy in the world, an amount equivalent to one-and-a-half times the size of the entire Indian economy. In short, the US provides the fat on which the global pharmaceutical sector feeds.

One of 2014’s blockbusters, a new hepatitis C drug called sofosbuvir (brand name: Sovaldi) illustrates this point. Gram for gram, it costs 67 times the price of gold. A 12-week treatment course totals $84,000 for 84 pills; however, each $1,000 pill costs less than $2 to manufacture.

The multinational corporate pharmaceutical industry often attempts to exploit R&D overheads to justify these prices, but the figures rarely add up. This case is no exception. The entire private development of sofosbuvir cost a maximum of a few hundred million dollars, confirmed via tax filings. Compare this with what Gilead Sciences, which acquired the drug during the final stages of clinical trials, made more than $10 billion dollars in revenue in the first year alone.

Furthermore, it is a classic case of the value of publicly financed research being transferred to private hands, via the 1980 Bayh-Dole Act. This law allows universities to patent discoveries made with the nearly $30 billion dollars in medical research grants allocated each year by the US government, and subsequently to license these patents exclusively to a pharma company.

Increasingly, such late-stage acquisitions of innovation are becoming the rule rather than the exception. Even when drug majors acquire patent rights at the early stages of development, i.e. prior to clinical trials, it is becoming common practice for them to outsource both the running of clinical trials and the manufacturing process itself. Notably, the contracted work is often carried out in the developing world. Given the questions raised by big pharma about the quality of the developing world’s pharmaceutical products, this practice generates no shortage of ironies.

Money power

Specialty drugs such as sofosbuvir represent just one in 100 prescriptions in the US and yet, they account for 30% of drug sales. These drugs are the pharmaceutical sector’s equivalent to Wall Street’s “1%”. The enormous revenue generated from these drugs is collected by a handful of firms, which, in turn, leverage a part their profits to fund an army of lobbyists.

In contrast with India’s generics-driven approach, this Western model has failed to yield a balance between corporate profits and concerns of public health. Mobilised by the massive influence of the corporate world’s soft-power techniques, notably through campaign contributions and what is known as the “revolving door” between government and industry, governments of rich countries have consistently bullied governments that have advocated patent policies that seek to maintain an equilibrium between intellectual property and access to affordable medicines.

Unfortunately, a gulf in financial power consistently tips this balance in the interests of multinational corporations and against public health considerations. Consider the following: between the 1997 launch of Pfizer’s Lipitor and its expiration in 2012, this blockbuster anti-cholesterol drug brought in more revenue than what Pakistan and Bangladesh combined spent on all health care over that period. In other words, one drug was able to leverage more financial clout than 300 million people (the average population of the two countries in this period).

This example should hit particularly close to home for Indians, not just geographically but financially as well. Currently, medicines account for 60% to 80% of total household health expenditures in India. Most of those expenditures are financed out of pocket, as opposed to payments via insurance. And while Indians spend 3% of GDP on private health care, the private sector's emphasis on treatment, as opposed to prevention, can lead to inefficient distortions for any health system.

India must decide

Meanwhile, India’s dismal public health expenditure accounts for just 1% of GDP. One may expect that if India’s economy grows, these figures will rise in relative and absolute terms in the coming decade.

However, a growth in financial resources will not necessarily translate to growth in resources for public health. Regulatory barriers that are currently under consideration by the Indian ministry of health would, if implemented, expand the monopoly power that gives big pharma the ability to simply keep prices high, or raise them further, as wealth increases.

Increased prices would cancel out gains from economic growth, effectively draining the ministry’s treasury at whatever rate it happens to fill. Notably, expanded IP barriers are just one of the tools that big pharma employs in its pursuit of monopoly control over markets.

Furthermore, it is important to keep in mind that every dollar extracted by IP-enabled monopolies on unnecessarily expensive medicines will be a dollar not spent on nutrition, education or infrastructure; it would also be a dollar that is likely flowing out of India. If that’s not enough, it’s a dollar you will one day be asked to pay for yourself or for your loved ones — assuming that you are among the fortunate ones that can afford the overpriced medicines in question. If not, the price of limited access could be your life.

Big pharma is attempting to coerce India to relinquish its strict patentability criteria and restrict compulsory licences that are critical in providing access to affordable medicines across the developing world. One should be clear: every stage of the development of India’s generic industry, including the issuance of a compulsory licence, has been in accordance with its obligations under international law. While India has been careful to provide a legal environment for competition’s free hand to build a generics industry, acceptance of the proposals, as highlighted above, would effectively tie its own hands. In both industrial and health spheres, India stands to lose from adopting policies designed by – and for – multinational pharmaceutical companies.

Chase Perfect is working this summer with the Access Campaign of Medecins sans Frontieres. He is temporarily based in New Delhi.

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Top picks, best deals and all that you need to know for the Amazon Great Indian Festival

We’ve done the hard work so you can get right to what you want amongst the 40,000+ offers across 4 days.

The Great Indian Festival (21st-24th September) by Amazon is back and it’s more tempting than ever. This edition will cater to everyone, with offers on a range of products from electronics, home appliances, apparel for men and women, personal care, toys, pet products, gourmet foods, gardening accessories and more. With such overwhelming choice of products and a dozen types of offers, it’s not the easiest to find the best deals in time to buy before your find gets sold out. You need a strategy to make sure you avail the best deals. Here’s your guide on how to make the most out of the Great Indian Festival:

Make use of the Amazon trio – Amazon Prime, Amazon Pay and Amazon app

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Big discounts and top picks

The Great Indian Festival is especially a bonanza for those looking to buy electronics and home appliances. Consumers can enjoy a minimum of 25% off on washing machines, 20% off on refrigerators and 20% off on microwaves, besides deals on other appliances. Expect up to 40% off on TVs, along with No-Cost EMI and up to Rs 20,000 off on exchange.

Home Appliances

Our top picks for washing machines are Haier 5.8 Kg Fully Automatic Top Loading at 32% off, and Bosch Fully Automatic Front Loading 6 Kg and 7 Kg, both available at 27% discount. Morphy Richards 20 L Microwave Oven will be available at a discount of 38%.

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There are big savings to be made on UV water purifiers as well (up to 35% off), while several 5-star ACs from big brands will be available at greater than 30% discount. Our top pick is the Carrier 1.5 Ton 5-star split AC at 32% off.

Also those looking to upgrade their TV to a smart one can get Rs. 20,000 off by exchanging it for the Sony Bravia 108cm Android TV.

Personal Electronics

There’s good news for Apple fans. The Apple MacBook Air 13.3-inch Laptop 2017 will be available at Rs 55,990, while the iPad will be available at 20% off. Laptops from Lenovo, Dell and HP will be available in the discount range of 20% to 26%. Top deals are Lenovo Tab3 and Yoga Tab at 41% to 38% off. Apple fans wishing to upgrade to the latest in wearable technology can enjoy Rs 8,000 off on the Apple Watch series 2 smartwatch.

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Power banks always come in handy. Check out the Lenovo 13000 mAh power bank at 30% off.

Home printers are a good investment for frequent flyers and those with kids at home. The discounted prices of home printers at the festival means you will never worry about boarding passes and ID documents again. The HP Deskjet basic printer will be available for Rs 1,579 at 40% off and multi-function (printer/ scanner/ Wi-Fi enabled) printers from HP Deskjet and Canon will also available at 33% off.

The sale is a great time to buy Amazon’s native products. Kindle E-readers and Fire TV Stick will be on sale with offers worth Rs 5,000 and Rs 1,000 respectively.

The Amazon Fire Stick
The Amazon Fire Stick

For those of you who have a bottomless collection of movies, music and photos, there is up to 60% off on hard drives and other storage devices. Our top picks are Rs 15,000 and Rs 12,000 off on Seagate Slim 5TB and 4TB hard drives respectively, available from 8.00am to 4.00pm on 21st September.

The sale will see great discounts of up to 60% off on headphones and speakers from the top brands. The 40% off on Bose QC 25 Headphones is our favourite. Top deals are on Logitech speakers with Logitech Z506 Surround Sound 5.1 multimedia Speakers at 60% off and the super compact JBL Go Portable Speaker at 56% off!

Other noteworthy deals

Cameras (up to 55% off) and camera accessories such as tripods, flash lights etc. are available at a good discount. Home surveillance cameras too will be cheaper. These include bullet cameras, dome cameras, simulated cameras, spy cameras and trail and game cameras.

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Interesting finds

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Small shopping

If you have children, the festival is good time to stock up on gifts for Diwali, Christmas, return gifts etc. On offer are gaming gadgets such as Xbox, dough sets, Touching Tom Cat, Barbies, classic board games such as Life and more. There are also some products that you don’t really need, but kind of do too, such as smartphone and tablet holders, magnetic car mounts for smartphones and mobile charging station wall stands. If you’re looking for enhanced functionality in daily life, do take a look at the Amazon Basics page. On it you’ll find USB cables, kitchen shears, HDMI cables, notebooks, travel cases and other useful things you don’t realise you need.

Check-out process and payment options

Amazon is also offering an entire ecosystem to make shopping more convenient and hassle-free. For the festival duration, Amazon is offering No-Cost EMIs (zero interest EMIs) on consumer durables, appliances and smartphones, plus exchange schemes and easy installation services in 65 cities. HDFC card holders can avail additional 10% cashback on HDFC credit and debit cards. Customers will also get to “Buy Now and Pay in 2018” with HDFC Credit Cards, as the bank offers a 3 Month EMI Holiday during the days of the sale. Use Amazon Pay balance for fast and easy checkouts, quicker refunds and a secured shopping experience.

Sales are fun and with The Great Indian Festival offering big deals on big brands, it definitely calls for at least window shopping. There’s so much more than the above categories, like minimum 50% off on American Tourister luggage! To start the treasure hunt, click here.

This article was produced by the Scroll marketing team on behalf of Amazon.in and not by the Scroll editorial team.