April 27, 2016 – The United States Trade Representative’s (USTR) 2016 “Special 301 Report” was released yesterday. Many countries – including India – are targeted and put on a ‘Priority Watch List’ for using legal tools to protect generic competition and access to affordable medicines. The USTR’s press release and the 2016 301 Report is available at http://tinyurl.com/jdmlbw7 and https://ustr.gov/sites/default/files/USTR-2016-Special-301-Report.pdf
Many US industries, in particular the pharmaceutical industry, use the report to condemn and pressure governments which employ intellectual property (IP) systems that do not match intellectual property laws and practices in the United States.
This 301 report comes amidst growing criticism in the U.S. itself of an ever-upward spiraling of drug prices for products protected by lengthy IP monopolies, which threaten people’s access to treatment and the sustainability of health services. Current US intellectual property laws enable drug makers to charge exorbitant prices for medicines, such as Gilead Sciences, which charge up to US$1,000 a pill for new hepatitis C drug sofosbuvir.
India remains on the Priority Watch List, and continues to be singled out for what the USTR considers to be inadequate protection of intellectual property for its pharmaceutical industry. Over the past two years, pressure has been built up on the agency that administers IP laws and policy — the Department of Industrial Policy & Promotion (DIPP) to ensure stringent IP enforcement, fast track examination of patent claims of its companies and a moratorium on compulsory licensing. There has also been intense US scrutiny of the Indian judiciary of its handling of patent disputes including its decisions on patentability (Novartis vs. Union of India), compulsory licensing (Bayer Corporation vs. Union of India) and finally on any failure to secure injunctions to shut down generic competition.
The 301 Report clearly attacks section 3(d) of the Indian Patent Act and the fact that through the application of a stricter patentability standard a number of evergreening claims have been denied patent protection.
Yet India’s laws and policies vis-a-vis IP, promote generic competition and limit abusive pharmaceutical industry practices, including patent ‘evergreening’, are entirely compliant with WTO trade rules, and these actions save lives.
India—the world’s principal producer and supplier of quality generic medicines, including for US-funded treatment programs like PEPFAR that support antiretroviral treatment in developing countries. Indian generic companies supply affordable, life-saving medicines used to treat communicable and non-communicable diseases in many developing countries; these medicines are essential to continue scaling up treatment programs. For example, two thirds of all the drugs MSF purchases to treat HIV, TB and malaria in our medical humanitarian operations are generic medicines made in India.
It’s clear India will keep facing intense pressure to undermine its role as ‘pharmacy of the developing world’. In June 2015 MSF launched a campaign using #HandsOffOurMeds, to urge Indian Prime Minister Narendra Modi to stand strong in the face of intensifying pressure from the United States to change India’s laws and policies in ways that would severely restrict the country’s ability to produce affordable medicines, upon which millions of people around the world rely. For more, visit handsoff.msf.org.
On 25th April 2016, Minister Nirmala Sitharaman, Commerce & Industry, issued the following statement regarding the US Trade 301 Watch List Report in response to a parliamentary question on the issue:
“The Special 301 Report issued by the United States under their Trade Act of 1974 is a unilateral measure to create pressure on countries to enhance IPR protection beyond the TRIPS agreement. Under the WTO regime, any dispute between two countries needs to be referred to the Dispute Settlement Body of the WTO and unilateral actions are not tenable under this regime. Special 301 which is an extra territorial application of the domestic law of a country is inconsistent with the established norms of the WTO. The government is committed to fully utilizing all the flexibilities provided under the TRIPS agreement to protect domestic pharmaceutical sector from pressure exerted by the foreign countries.”
Other recent disconcerting developments concerning IPR in India negatively impacting access to medicine:
– Last month the Indian media revealed that a US industry lobby group – the US India Business Council (USIBC) and US Chamber of Commerce – has received verbal, private assurances from Indian officials that it will not grant compulsory licences on medicines – overriding a patent to allow for the marketing of affordable generic versions – in the future. The U.S. pharmaceutical industry seemed confident that it has successfully created a chilling effect on Indian authorities who will not process any more CLs on their patented blockbuster medicines.The Indian government quickly issued a clarification that it has the freedom to grant compulsory licences and to determine the grounds upon which such licences are granted. Not surprisingly the 301 Report states – “the United States also continues to monitor India’s application of its compulsory licensing law”, making it clear that it will keep pressurizing India against CLs.
– Indian patent office is in process of amending the patent rules – under pressure from industry and law firms – to introduce fast track patent examination, which will undermine the ability which will undermine the efforts of public interest organisations and patient groups to file pre-grant oppositions against the grant of ‘evergreening’ patent claims on medicines. The patent system is not transparent enough and it takes years to do a patent landscape to identify multiple patent applications on each drug including the ones that seek to attempt patent term extensions through ever greening.
– The draft national IP policy pending before the cabinet may include proposals that are detrimental to access to medicines and reforming the biomedical innovation system to meet the needs of developing countries.
– The USIBC, a group that also receives funding from pharmaceutical companies, has revealed in its 2016 submission to the US Trade Representative that it had conducted training for India’s patent examiners, a move that compromises the independence of the patent examination system which was designed with the social objective of stopping drug giants from indulging in ‘evergreening’. Evergreening covers simple changes in the chemistry or formulation of existing pharmaceutical products – a lucrative game for the pharmaceutical business, but also a deadly one for patients: preventing generic competition for these medicines.
– The IPR Working Group, established by President Obama and Prime Minister Modi, operates under the United States-India Trade Policy Forum. Establishing such bilateral Working Groups is part of the US strategy. They are troubling, they are a form of continuous negotiations and pressure as it allows closed door discussions on key issues which in practice could lead to the increase of enforcement and other TRIPS Plus provisions or their application in a way that suits foreign right holders rather than local conditions and as such is an attempt to limit the policy space of developing countries including India. The 301 Report on page 52 clearly states – “The United States continues to press India in our bilateral dialogues, including through the IPR Working Group, to address the concerns identified in this Report”.
– With the passage of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill in December 2015, IP cases including disputes on pharmaceutical patents have been moved to commercial courts. These specialized commercial courts can narrow a judge’s view and could undermine the critical role the judiciary can play in the future to protect the constitutional right to life, and in particular establishing a balance between the enforcement of private IP rights with the need to implement safeguards in the patent law that protect generic competition.