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The Bitter Pills

India’s FTAs pip generic drugs production

The Bitter Pills
AFP (From Outlook, June 27, 2011)
The Bitter Pills

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  • Generic drugs from India play a major role as antiretroviral drugs across the developing world
  • A 2010 study says 80% of the medicines used by donor-funded programmes to treat people with HIV were sourced from India
  • It’s cut down treatment costs drastically, from $10,000 to $80
  • Stronger IP regimes may hamper production of generics


The right of pharma firms in developing countries to manufacture cheap generic drugs was endorsed at a special UN session on HIV/AIDS in New York. A declaration issued at the end of the meeting on June 10 committed member-countries to ensuring access to affordable antiretroviral drugs, most of which are produced in India. This was, of course, strongly opposed by the developed countries, which are arguing for a stricter intellectual property regime.

Arguing for a freer IP regime, Union health minister Ghulam Nabi Azad said at the meet “that considerations of commerce and profitability cannot be used to erect artificial barriers between life and death”. The UN session also urged the full use of flexibilities under the Trade-Related Aspects of Intellectual Property Rights (TRIPS), an international IP agreement. These flexibilities allow states to put public healthcare interest above IP.

But there are other threats lined up for the Indian pharma industry as countries negotiating FTAs with the country, especially those from the EU, argue for stronger IP protection norms that go beyond the TRIPS regime.

While one of the key terms of trips is a 20-year patent term on medicines, the EU has asked for a further extension that would help drug developers recover lost revenue due to delays in marketing approvals. Another controversial clause is the one on ‘data exclusivity’ in the India-EU FTA. It aims at copyrighting data from clinical trials, data that is now used by pharma companies here to secure marketing approval for their cheaper versions. If copyrighted, Indian manufacturers will have to conduct their own clinical trials, which can cost millions of dollars, to secure approval for their drugs.

Listing other concerns, Leena Menghaney of Doctors Without Borders, says, “In case of infringement allegations, there are prescriptive IP enforcement clauses in the FTA that ask courts in India to ensure cessation of production of the generic drug even if it affects the right to life of Indian citizens.” In another contentious chapter on investments, IP rights have been interpreted as a form of investment in addition to more tangible ones like factories. In case the present investment rules go through, a foreign pharma company can sue the Indian government for millions if it feels its investments have been threatened by a government action. “And they can sue not in our courts but in private arbitration panels under the World Bank and the UN Commission on International Trade Law,” she adds.

Other than the EU, another FTA is being negotiated with a European bloc that comprises Switzerland, Norway, Iceland and Liechtenstein. Campaigners also feel that the anti-counterfeiting trade agreement (ACTA), a multilateral agreement currently under negotiation, threatens the production of generics. While an ACTA goal is putting a stop to fake drugs production, many still fear that cheap generics could also be labelled as ‘fake’ and their international trade curtailed by stricter border checking measures. In recent years, there have been around 20 detentions of legitimate generic medicines transiting through EU ports on suspicion of being fakes.

Ironically, the EU has repeatedly stressed that it is committed to promoting access to medicines in the developing world, pointing to its funding of healthcare programmes there. Yet, as the Indian government finalises its FTAs, many across the world will be keeping a close watch on how this tussle over essential medicines unfolds.

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