India must steer a middle path on generic drugs

By Robert Radtke

Financial Times

Published: March 24 2005

India is on the brink of a new era, emerging as a global economic powerhouse while positioning itself as a regional player. But its bright future could be jeopardised by new rules to regulate generic drugs critical to treating HIV, after stormy parliamentary debates culminated on Wednesday in controversial amendments to patent law.

The country was obliged to tighten its patent laws from January 1 this year under a decade-old agreement with the World Trade Organisation. Now, under new rules on generic drug production, India will have to steer a judicious course between conforming to the WTO's patent regime and acting responsibly as the world's largest supplier of generic Aids drugs.

India is the world's fourth-largest producer of medicines by volume and has the third largest drug research and development workforce. It also has the largest HIV-positive population of any country after South Africa, with more than 5m Indians infected. Much, therefore, is riding on India's newly launched public service campaigns and government efforts to slow the spread of HIV.

Until now, India operated under a system that issued patents for the process of manufacturing drugs, not for the drug itself. The system helped the biotechnology industry flourish and India became the world's largest exporter of generic drugs, serving patients in 200 countries. Indian generic production of anti-retrovirals (ARVs) for the treatment of HIV has driven down prices and made these life-saving drugs available worldwide.

Under the newly enacted system, India will issue patents for drugs developed after it signed the Trade Related Intellectual Property Rights agreement in 1994. In this category are recently developed ARV combination drugs central to many HIV treatment programmes. Patent protection may encourage spending on R&D and help economic growth but negative consequences, in both economic and human terms, are potentially catastrophic.

If India is no longer allowed to produce key low-cost generics, patients in many countries will be unable to afford treatment. Competition that drives down generic drugs prices would disappear. While prices will rise, accessibility will decrease and many will die.

India's government asserts that the Patents Bill will not prevent Indian drug makers from supplying generic Aids drugs to developing nations. But experts and activists around the world are sceptical. Doctors Without Borders, the medical aid group, said half the 700,000 patients receiving ARVs in developing countries relied on Indian makers, and that the Patents Bill could restrict or even cut off supply. Oxfam says the new bill gives more rights to patent holders at the expense of generic drug manufacturers. Aids action groups around the world, meanwhile, have appealed to India to reject or substantially amend the bill.

The Indian parliament did add amendments to the bill to allay some of these concerns, including exemptions of certain key drugs from patent protection after a waiting period. But the devil is in the details: will the mechanisms afforded the public for challenging the granting of patents be effective? Will the royalties generic makers pay on patented drugs be nominal or prohibitive? Which vital generic drugs will be excluded from new restrictions, and what will be the effect on prices of critical new Aids drugs that supplant current ones in treatment regimes?

The guide to resolving these difficulties must be the imperative to contain the Aids epidemic. Krisana Kraisintu, a Thai pioneer in regional drug production, noted that local manufacturing of essential drugs "provides a win-win solution to all involveds". Her work in Thailand proves that local production of generics is the only way to ensure access to life-saving drugs and reconcile the interests of pharmaceutical companies with public health needs.

India wishes to project an image of leadership in Asia, and has a rightful claim to the role. Its economic strength and fast-growing middle class are part of the reason the pharmaceutical industry is anxious to preserve market advantages. Restricting generic production of Aids drugs would mar that image and threaten India's emergence as a global power. The government must find a way to exert continued leadership in combatting Aids under the new patent regime in order to make good on its "pro-poor, pro-equity" stance - not only for its own sake, but for the long-term health and stability of Asia, Africa and the world at large.

The writer is senior vice-president for programmes at the Asia Society; these are his personal views