Compulsory Licenseing And Intellectual Property Rights (IPR) - Indian Perspective

After the United States, European Union (EU) has recently taken the baton of pressurizing India on its adoption of Compulsory Licensing (CL). This was reported by The Hindu quoting a senior EU official as saying,"the extension and wise use of CL in industrial sectors can act as a deterrent for investments, from abroad and within India." These comments were made when India is trying to frame and adopt a new National Intellectual Property Rights (IPR) policy. Similarly, in the past US has also called Indian IPR as a “contagion” of weakening intellectual property.

Before dwelling into the Indian perspective, we need to understand, what is actually meant by IPR?

Intellectual property rights are given to individual or organization that have created something novel and of commercial value and these rights exclude others to manufacture, sell or use products based on their novel idea. World Trade Organisation is the governing body in case of international violations of IPR.

Compulsory Licensing by government allows entities to use the patented technology without obtaining the permission of the patent's owner. According to WTO TRIPS (IPR) agreement CL is allowed under the following conditions- 

1. National Emergencies
2. Other circumstances of extreme urgency
3. Anti competitive practices are fulfilled.

Any Government can use these safeguard measures in special circumstances for the benefit of its people, for example in issues related to health care.India issued compulsory license to an Indian company Natco pharma in 2012 to manufacture cancer drug nexavar and sell it at a very low price. The use of compulsory license by India was done to make a drug accessible to its population which could save many lives. The step taken by government considering the importance of public health was fully compatible with TRIPs and well within the boundaries of its patent laws.The big pharmaceutical companies in USA were not happy with India's decision. The government of US in retaliation ranked India lowest in US chamber of commerce's IP survey 2014.The USA even listed India as "priority country" which is the worst classification given to countries. 

The inaccessibility of important medicines is an immediate health problem. The one compulsory licence issued on Bayer’s product — Nexavar, a medicine used to treat late stage cancers of the kidney and liver — illustrates this.Representatives from Bayer and PhRMA have noted that Bayer was making the drug available at a lower “access price” in India.However, if one converts the full price and access price to US dollars (based on a January 2013 exchange rate) and compares them to the average annual income-by-quintile as reported by the World Bank, the data shows that both prices exceed annual income of even the top 20 per cent of Indian earners.It drives home the point that the current trade dispute between the US and India is about more than bland-sounding global norms regarding patents.

The recent comment by an EU official that CL in manufacturing may slow investment and damage their exports may appear at first glance to be legitimate and fairly convincing argument. However, upon further examination of the argument and juxtaposing it with  the data from previous years, a flaws become evident.

Overall pharmaceutical exports from US increased from $39 million to $225 million during the period 2000-2012 — an increase of 470 per cent.Furthermore, US pharmaceutical exports to India are growing at a faster rate than US pharmaceutical exports to the world as a whole. Moreover, many pharma companies are thriving in India: Abbott, GSK, Gilead, to name just a few. A similar case could be made for EU also.

India is a representative of many developing countries who in the past have used these flexibilities in patent laws for welfare of its people. All eyes are set on WTO, it will decide whether WTO is a guarantor of public welfare or it is a threat for millions of underprivileged people on this planet. And whether or not people in India (and elsewhere) will be able to access important new medicines and other technologies, especially green technologies, as they enter the market.