The tug of war continues. Even as the Indian Pharmaceutical Alliance, the domestic drug industry lobby group, has appealed to the US Trade Representative to remove India from its Priority Watch List – the latter includes countries that are alleged violators of US patent laws – Pharmaceutical Research and Manufacturers of America (PhRMA), in its submission, has requested the USTR to continue to keep India on the Priority Watch List in the 2017 Special 301 Report, reports The Pharma Letter’s India correspondent.
Published annually, the Special 301 Report reviews intellectual property protection and enforcement abroad and identifies challenges facing America’s innovative and creative industries.
The Priority Watch List comprises countries that have lenient patent laws affecting the interests of US drug companies. Last year, the USTR’s Special 301 Review placed India on the Priority Watch List, expressing concern over certain provisions in India’s patent regime including provisions related to pre-and post-grant challenges, irregularities in the application of Section 3(d), use of compulsory licenses and failure to ensure data exclusivity.
In its current submission, PhRMA has urged the USTR to protect American innovators abroad, arguing that ‘protecting the intellectual capital of the innovative biopharmaceutical industry is vitally important for the continued medical breakthroughs that are saving the lives of patients all around the world’.
PhRMA’s submission claims the environment on the ground remains challenging in India, even as it focuses on the most urgent barriers and threats in 18 countries (including India) that are significant and increasingly important markets for medicines invented, developed and manufactured in the USA.
The USA is India’s largest exporting partner by country and has been so for the last decade, according to the recent annual report of the Pharmaceuticals Export Promotion Council of India (Pharmexcil). During 2015-16, exports to USA grew over 27% and have contributed over 32% to the total. Around 55% of India’s exports are to highly regulated markets.
Giving an overview of India’s accreditations, Pharmexcil has said 605 sites (bulk drugs + formulations) were registered with the US Food and Drug Administration as of April 15, 2015. DMFs (Drug Master Files) amounting to 238 were filed with the US FDA as of March 31, 2015, while total number of DMF’s (Type II Active) filed from India were 3,820 as of December 31, 2015. With regards to Abbreviated New Drug Applications (ANDAs), 3,470 were filed as on February 2016.
However, drug exports to the UK continued to decline for the fourth straight month. Drug exports to the UK fell by 3.7% in December 2016.
Among the key areas of concern for the US pharma sector in India are unpredictable IP environment, high tariffs and taxes on drugs, as well as patent problems.
PhRMA has pointed out that patent backlogs are a challenge around the world, but a few countries tend to stand out for persistently long delays. In Brazil and Thailand, for example, PhRMA’s note states, it can take 10 years or more to secure a patent on a new medicine.
The submission adds: ‘Thailand approved a patent application filed by one PhRMA member six weeks before the patent expired. The situation is only somewhat better in markets like India, where it takes an average of six years to secure a patent.’ However, the note adds that, in 2015, India granted one patent based on an application filed 19 years ago.
Stating that effective early resolution mechanisms were needed in China, India, Russia and other countries, “where innovators are not notified of marketing approval applications filed for potentially infringing products and generally are unable to secure provisional enforcement measures,” PhRMA’s note states that in terms of compulsory licensing, some governments, including India and Indonesia, allow local companies to make, use, sell or import particular patented medicines without the consent of the patent holder.
It goes on to add: “Unfortunately, some countries appear to be using compulsory licenses to promote the local production of medicines at the expense of manufacturers and jobs in the United States and elsewhere. In 2013, for example, India’s Intellectual Property Appellate Board affirmed a compulsory license for a patented oncology medicine, based in part on a finding that the patented medicine was not being manufactured in India.”
Referring to import barriers, the note states a large proportion of medicines distributed around the world are potentially subject to tariffs. “For example, the United States is by far the largest market for Indian generic drug exports, but India’s basic import duties on biopharmaceutical products and active ingredients average about 10%.” It adds that additional duties and assessments can raise the effective import duty to as high as 20% or more.
Mark Grayson, PhRMA’s deputy vice president of public affairs, in a blog post has noted that “many countries fail to value and respect American ideas, brands and inventions.” He pointed out that “medicines developed and manufactured in the United States face a growing array of tariffs, taxes and approval delays in overseas markets – many of them designed to benefit local companies at the expense of innovators and their employers…”
PhRMA’s comments have urged the USTR to address these barriers and ensure America’s trading partners live up to their intellectual property and market access commitments in global, regional and bilateral agreements.
An earlier report by the US Chamber of Commerce’s Global Intellectual Property Center (GIPC) had placed India near the bottom in an international Intellectual Property index by being ranked 43rd out of 45 countries. Only two countries were ranked below India – Pakistan at 44th position and Venezuela at 45th.
The report added: “While the Indian government issued the National Intellectual Property Rights (IPR) Policy in 2016, IP-intensive industries continued to face challenges in the Indian market with regard to the scope of patentability…Section 3(d) of the Indian Patent Act (that prevents ever-greening of patents)…”
Identifying other areas of concern, the report said that overall, India’s National IPR Policy “does not address fundamental weaknesses in India’s IP framework, limited framework for protection of life sciences IP, patentability requirements being outside international standards, lengthy pre-grant opposition proceedings in place”, all of which continue to weaken the enforcement environment for rights holders.
Referring to another of India’s weaknesses, the report said it had “previously used compulsory licensing for commercial and non-emergency situations, (as well as India’s) limited participation in international IP treaties.”
The USA, UK, Germany, Japan, Sweden, France, Switzerland, Singapore, South Korea and Italy completed the top 10 ranks in the GIPC list.