Reflections on the U.S. – India Standoff on Generics

Source: Smart Global Health

11 Nov 2014

Last September, newly elected Indian Prime Minister Narendra Modi addressed an enthusiastic, packed house inside Madison Square Garden while a crowd outside protested his role in the 2002 violence against Muslims in his home state of Gujarat. The latter were not the only critics he faced while in the United States. He also met with multinational CEOs unhappy with India’s commercial regulatory environment, including those of pharmaceutical giants Merck and Hospira that have longstanding complaints about India’s application of its patent laws. Modi’s business-friendly election platform has created hopes that he will reverse what multinationals perceive to be an unfair competitive environment in India. For U.S. and European pharmaceutical companies, India’s emergence as the leading supplier of low-cost generic drugs has been particularly galling.

India is the primary supplier of affordable drugs for some of the world’s major public health threats, including HIV/AIDS. Even the U.S. Emergency Plan for AIDS Relief (PEPFAR), which provides life-saving antiretroviral therapies (ARTs) to people in low-income countries, depends on generics produced in India. In 2001 the Indian company Cipla began providing a generic ART combination that reduced the cost of treatment by a whopping 97%, suddenly making access to treatment possible for the majority of the world’s AIDS patients. Similar breakthroughs have followed for other diseases. Recently, Indian pharmaceutical companies produced a generic version of Gleevec, a cancer drug developed by Novartis, for less than one-twentieth of the price. For U.S. and European pharmaceutical companies, these developments are hugely disruptive to the way they do business and, they argue, run afoul of India’s WTO commitments.

At issue for foreign pharma companies is section 3(d) of India’s patent law, which sets a relatively high threshold in defining “new” innovations, making it more difficult to secure patents on new drugs in India. For example, in denying Novartis’ patent on Gleevec, India’s Supreme Court opined that drugs which are simply “updated” and do not represent a major advance over previous versions are not patentable innovations. This standard, an enormous challenge to the basic business model of U.S. and European pharmaceutical companies, has become a central issue between the U.S. and Indian governments, and was a primary theme in the conversations between Modi and the CEOs he met with in September.

Following his U.S. tour, Modi announced the appointment of Arvind Subramanian—formerly with the IMF and the Peterson Institute for International Economics—as his Chief Economic Advisor. Some defenders of India’s patent laws for drugs have raised concerns because Subramanian has vigorously urged the U.S. to initiate WTO disputes against India if it does not change its laws. Others see this as an opportunity for reasonable negotiations on the patent-generics issue which has dogged U.S.-India relations.

One may be sympathetic to the legal and commercial concerns of the U.S. pharmaceutical companies. However, it’s hard to argue with the clear and immediate benefits to global health being delivered by India’s generic drugs industry.

In 2004, I witnessed what it meant to be poor and HIV-positive in India. Lack of access to ARTs made HIV/AIDS an intensely stigmatized disease and dissuaded people from undergoing HIV testing. In many cases, healthcare workers simply refused to treat HIV-positive patients. The lack of access to ARTs had many negative social consequences. When women tested positive during their pregnancy, for example, sometimes their husbands would refuse to be tested and would accuse their wives of promiscuity and blame them for bringing the disease into the family. In some cases women were thrown out of the household and has to resort to sex work for survival, potentially furthering the spread of HIV.

With approximately 2.1 million people living with HIV/AIDS, India has the third largest HIV-positive population worldwide. At the end of 2004, the government rolled out a subsidized ART program that has become a lifeline for over 750,000 patients in India. Since then, the stigma of HIV/AIDS has lessened significantly. More people have come forward for testing, assisting prevention efforts. India’s HIV prevalence rates have been decreasing in recent years. None of this would have been possible without access to subsidized ARTs made possible by the dramatically reduced prices of Indian generics.

In recent months there has been growing outrage among Indians living with HIV/AIDS who report acute shortages and stock-outs of ARTs at government distribution centers, prompting the Lawyer’s Collective to send a legal notice to the Ministry of Family Welfare. India must remain vigilant in providing subsidized ARTs to those in need. This program almost assuredly makes more economic sense than a return to the pre-2004 days of HIV/AIDS escalation and stigma.

Likewise, the lives of the millions of people living with HIV/AIDS globally should be prioritized in efforts to provide affordable treatments. The same goes for the lives of people suffering from other major global health scourges which, like AIDS, are ultimately produced by poverty and inequality. The interests and concerns that U.S. companies have about innovation and competition are legitimate and important. But access to lifesaving drugs for patients in need is crucial. The time is now ripe to find a lasting solution to this seemingly intractable standoff, a solution that is deemed fair to business interests in both the U.S. and India but which keeps the fundamental concerns of global public health at the heart of the matter.

Cecilia Van Hollen, Associate Professor

Dept. of Anthropology, Maxwell School of Citizenship & Public Affairs, Syracuse University; author of Birth in the Age of AIDS: Women, Reproduction and HIV/AIDS in India 

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