Should I Stay Or Should I Go?
Global pharma firms, dismayed by recent intellectual property decisions in India, are awaiting a landmark court ruling next week that could have severe implications on their ability to sell branded medicines in the country.
Heavily utilising the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement in recent years as an aid to supply modern medicines to the poorest sections of their population, the Indian government has effectively created a feud between its generic-pharmaceutical industry and international drugmakers. The future of the TRIPS agreement has been the subject of some debate this month as the World Trade Organization (WTO) has postponed a decision on a deadline extension but, nevertheless, the spate of rulings over the past year restricting drug patents in India has been a concern for research-based companies vying for a profitable place in the emerging market.
The latest battle concerns the legitimacy of Novartis' cancer treatment Glivec (or Gleevec) patent in the country. The Swiss pharma giant has been fighting since 2006 to win a patent for the ground-breaking drug, which treats chronic myeloid leukemia and some gastrointestinal cancers. So far Indian authorities have refused to recognise Glivec as a new medicine (as it is an amended version of a known compound) and thereby have refused patent protection for the drug. This decision is consistent with domestic patent law but conflicts with US patent law and so the Basel-based company appealed, the case found its way to the Supreme Court and a decision is due 1stApril 2013.
Ominously for the impending Glivec case, and the future of Big Pharma’s growth in the country, the industry has suffered a number of setbacks in way of patent pressure over the last decade. In 2006, local generic drugmakers Natco and GM Pharma successfully contested AstraZeneca (AZ)’s patent protection in India for its lung-cancer drug Iressa – a decision upheld in November 2012 by the country’s Intellectual Property Appellate Board. And one of at least four international companies that have had their patents weakened, revoked or rejected in India in the past year, cheaper copies of Bayer AG's cancer drug Nexavar from Natco were approved for sale through the compulsory licensing system.
Because of the price pressure in Europe, larger drug companies have been looking to expand into – and profit from – emerging markets such as India. But the increasingly bitter disputes reveal that these lesser developed regions are not so easily tapped into as originally expected. According to aid groups and doctors working in the region, however, these controversial steps are required to put sophisticated and crucial drugs into the hands of Indians who could not otherwise afford them. In almost every patent dispute, India has held affordability as the main reason to allow domestic pharma to release generic versions of patented medicines – a worthwhile effort in a country where nearly 40% of the population lives on less than $1.25 a day.
Yet, the Western drugmakers believe the country is – not only failing to recognise medical innovation but – abusing international law and allowing domestic companies to profit from products discovered at Big Pharma’s expense. And their bottom line is really hurting. Generic versions of Glivec, for example, cost about $2,500 for a year's supply in India, in stark contrast with almost $70,000 in the United States where only the branded version is sold. Furthermore, there is a fear that India’s efforts – despite indicationsthat the country may be looking to revise its compulsory licensing tactics – may encourage other countries, such as China and Indonesia, to make cheaper versions of medicines under patent protection.
But Big Pharma still remain reluctant to ignore the potential in Indiaand are continuing to invest in the country despite the harsh governmental decisions laid down in favour of domestic generic companies. American industry groups this month have demanded that the US increase pressure on India for policy reform but, for the moment, the marketwaits with bated breath for the Supreme Court ruling next Monday, a tipping point that could determine Big Pharma’s staying power in the country.