Sharma favours compulsory drug licences to cut costs

Written by Ronojoy Banerjee | Ronojoy Banerjee | Updated: Aug 25 2010, 06:31am hrs
In what could be construed as policy shift towards generic drugs, the commerce and industry ministry has proposed a broadening of the ambit of a key provision in the Patents Act to sidestep patents when needed. It wants to revisit 100% FDI in pharmaceuticals and wants to know whether

it is necessary to make it mandatory for all patent holders to manufacture patented products in India for their rights to remain valid. The ministry also raised concern over the trend of Indias robust generic drug companies becoming easy takeover targets of foreign firms.

In a discussion paper unveiled on Tuesday, the ministry expressed concern over unaffordable life-saving drugs which are mostly imported to most of Indians and the countrys over-dependence on China for drug intermediates. The ministry also raised queries on how to effectively use the compulsory licensing (CL) provision in the Patents Act to address the issue. Apart from proposing to reinforce CL, the ministry has also ascertained in the paper whether the CLs be issued on the basis of competition lawthat is, when pharma companies form cartels to jack up prices or abuse their dominant position to throttle competition.

CL is a proviso under which a government can allow third parties (other than itself and the patent-holder) to produce and market a patented product or process without the consent of the patent holder. It has never been used by India due to lack of clear guidelines on when and how to do that. Countries which have invoked CL include the US, Canada, UK, Thailand, Brazil and South Africa.

The ministry has sought guidelines on using CL and wants to know if existing grounds for issuing CL is sufficient to meet all circumstances and exigencies.

Commerce and industry minister Anand Sharma on Monday wrote to health minister Ghulam Nabi Azad voicing concerns over the high cost of drugs used in the treatment of life-threatening diseases and ways to reduce their prices. He suggested CL be brought in to cut their prices. FE has a copy of the letter.

As per the Patents Act, CL can be invoked only when there is a national emergency or extreme urgency or for public non-commercial use of the drug.

Sharma wrote to Azad: I am writing to draw your attention to the acquisitions of Indian pharmaceutical companies by foreign MNCs in the recent past which has led to the articulation of public concerns on its impact on the availability of low-cost medicines. In four years, six Indian companies have been acquired by MNCs, notably Ranbaxy Laboratories by Daiichi Sankyo and Piramal Heathcare by Abbott.

Once such a large number of companies are taken over by foreign players, the risk is that these MNCs are going to push their patented drugs into India making them unaffordable for a bulk of the population, a government official who did not wish to be identified told FE.

Pegylated Interferon, a critical patented drug to treat Hepatitis C costs up to Rs 14,700 per injection. A patient suffering from the disease requires this injection 48 times, which will cost him more than Rs 7 lakh, the official said.

The government has warned that it could approach CCI against a group of drug companies which is believed to have formed a cartel and fixing prices of drugs.

It has also recommended shifting the current 100% FDI in pharmaceutical drugs from the automatic route to the government route which would require FIPB nod.

The official said that apart from the high cost of life-saving drugs, the government was also wary of the high import content from China and the manner in which Indian pharmaceutical companies were being easily taken over by large MNCs. We have found that more than 40% of drug ingredients are imported from China. The two primary issues here are the quality of such ingredients and the extreme dependency we have on them, he said.

The discussion paper also noted that invoking a conditional CL was not against WTOs agreement on TRIPS. There is no restriction (under TRIPS) that such measures should be taken only to address public health concerns. The grounds under which a CL can be issued are not stipulated, the paper said.

One big concern for the government is that drug consumption in the country is growing at a negative pace, which can only mean critical drugs are not available for the people, said the official. He said that around 65% of the Indian population lacks access to essential medicines.

As per CMIE data, while imports have grown at almost 30% from Rs 6,712 crore in 2007-08 to Rs 8,617 crore in 2008-09, domestic drug consumption during the same period dipped 3% to Rs 44,579 crore from Rs 45,953 crore. About 20-25 lakh cancer patients in India spend roughly Rs 25,000 each on an average on medicines. The paper noted that medicines worth Rs 5,000 crore are required annually for this purpose, but only drugs worth Rs 150 crore is available in the market.