Column: Allies at odds

Written by Biswajit Dhar | Updated: Sep 26 2013, 10:01am hrs
After decades of ambivalence, bilateral economic relations between India and the US moved to a distinctly higher plane in the new millennium, after the leaders of the two largest democracies took steps to iron out their differences. Contributing to the bonhomie was the agreement on the Next Steps in Strategic Partnership (NSSP), inked in July 2005 by Prime Minister Manmohan Singh and President George Bush. The US State Department called the initiative an important milestone in the transformation of the relationship between the United States and India.

The conclusion of the nuclear deal took India-US relations several notches higher, the annual US-India Strategic Dialogue initiated in 2009 stands testimony to this fact. The key feature of the dialogue, the fourth edition of which was held in June, is that in addition to issues relating to security, it includes several areas which figure prominently in Indias development priorities such as education, health and agriculture. In the health sector, for instance, the two countries have agreed to cooperate on a wide range of programmes focused on non-communicable diseases, infectious diseases, strengthening health systems and services, and maternal and child health, which are some of the most formidable challenges facing India.

However, this spirit of cooperation introduced by the Strategic Dialogue is almost completely upstaged by the actions that the US Administration has been taking with monotonous regularity, often in conjunction with powerful commercial interests, challenging the core of Indias development priorities. Ironically, some of the areas in which India has been subjected to intense pressure are the ones that figure in the agenda for Strategic Dialogue.

In recent years, India has taken a series of steps to implement the patent laws in a manner that supports availability of medicines at affordable prices. This has been made possible through the inclusion of several instruments in the countrys patents Act that can be used to counter the excessive use of patent monopolies in key sectors like pharmaceuticals. These instruments were introduced through three amendments that helped make the Indian patents Act consistent with the provisions of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO).

Thus, Indias patent laws allow the grant of compulsory licence to any domestic firm to produce a patented product, if the patent owner refuses to bring down the prices of the product and make it affordable to the public at-large. Importantly, WTO members have endorsed the grant of compulsory licences for addressing public health concerns, when they adopted the Doha Declaration of TRIPS Agreement and Public Health in 2001. Alongside, India has introduced strict benchmarks for the grant of patents in India, which includes denial of patents on minor modifications of existing medicines. In other jurisdictions, particularly in US and Europe, pharmaceutical firms have often been successful in extending patent rights over older products by obtaining these rights over minor modifications of older products. By doing so, they have been able to prevent low cost generic producers from entering into the market, thereby maintaining their dominance.

In recent months, the Indian authorities have used both these instruments. The Controller of Patents issued a compulsory licence for an anti-cancer drug that the German firm Bayer AG was selling under the brand name Nexavar (sorafenib tosylate) for R2,80,000 per patient per month. Under the terms of the compulsory licence, Hyderabad-based Natco Pharma Ltd, an Indian generic drug manufacturer, had agreed to sell the medicine at a price as low as R8,800, after paying an agreed royalty to Bayer AG, the patent holder. More significantly, the Supreme Court of India rejected the patent claim by the Swiss firm, Novartis, on another anti-cancer drug, imatinib mesylate (sold under the brand name, Glivec) on the ground that the product in question was merely a re-worked version of an old product.

The US Administration has long been a staunch opponent of Indias attempts to moderate the impact of patent rights on the prices of medicines, and this opposition has assumed quite another dimension after the two cases mentioned above. In its annual investigation of its partners intellectual property laws, the US Trade Representative expressed concern at Indian Supreme Courts decision to reject the patent claim of Novartis and termed the grant of compulsory licence to Natco for producing sorafenib tosylate in India as a troubling precedent. These observations were in keeping with the demand of the dominant pharmaceutical firms that the US Administration must press the Government of India to step back from the policies it had adopted vis--vis pharmaceutical patents. Echoing the same sentiments, 170 members of the US Congress wrote to President Barack Obama in June this year, registering their opposition to the measures that the Indian authorities had taken to protect the interest of patient groups.

As in the case of health, India and the US have rarely agreed on the instruments that must be adopted by international organisations to make agriculture more efficient, and also to address critical concerns of developing countries relating to food security and rural livelihoods. WTOs Agreement on Agriculture (AoA) has been the main forum, which has seen intense negotiations between the US-led advanced countries and the developing country coalitions.

Ever since the implementation of the AoA, developing countries, led by India and Brazil, have argued that high subsidies granted by the advanced countries have distorted global markets resulting in misery to a number of developing and least developed countries. The proponents of this view have maintained that the remedy for this situation is two-fold, one, the advanced countries must agree to reduce and eventually remove their farm subsidies; and, two, developing countries must have the option of using policy instruments for ensuring food security and rural livelihoods. However, the decade-plus Doha Round negotiations have witnessed a virtual stand-off between the US and other advanced countries on the one hand and the developing countries, on the other. In the meanwhile, US farm support has gone up quite substantially (by more than 74% between 2002, when the Doha Round began, and 2010) and developing countries continue to struggle to get the US and other advanced countries agree to the adoption of the instruments that are of vital importance to them.

In the run-up to the Bali Ministerial Conference of the WTO scheduled in December 2013, developing countries led by India have made a pitch for amending some provisions in the AoA that would enable them to implement domestic food aid programmes, like the Food Security Act, more easily. Ironically, the most vocal opponent of the developing country proposal has been the US.

The major concern for India is that its domestic policies are being challenged by its Strategic Dialogue Partner in a number of other areas, which are critical for its future development path. Among these are policies concerning environmental governance, including combating climate change, protection of biodiversity and traditional knowledge and phasing out of ozone depleting substance, hydrofluorocarbons (HFCs).

Given the gamut of issues on which India has to protect its development interests in the face of the challenges from the US, intervention at the highest level seems the most appropriate way of addressing them. Prime Minister Singh's forthcoming US visit therefore assumes importance like no other. Expectations will be high that Dr. Singh is able to persuade the US authorities that the Strategic Dialogue Partnership between the two countries needs to be conducted in an atmosphere of mutual respect for each others development priorities.

The author is the director general, Research and Information System for Developing Countries