On Friday, February 5, 2016, the last date for the making written submissions before the US Trade Representative (USTR), the Indian Pharmaceutical Alliance (IPA) made a representation. This is important as India has so far averted any downgrade under the Special 301 even though the USTR has kept India on a list of countries that present concerns regarding IPR laws.
There is pressure by some sections within the US to downgrade India from 'watch list' to 'Priority foreign country'. Such a downgrade could have trade impact for India as it would mean imports from such countries (that are downgraded) into the US do not enjoy trade preferences.
In what seems a clear pitch to allay concerns among sections of the US pharma over India's IPR regime, the submission by IPA (which, according to it, has 20 leading pharma companies that collectively make for 60 per cent of the country's pharmaceutical exports and related services) has the arguments broadly laid out under three buckets. First, it points to increased collaboration between Indian and US companies. Second, the attempts made in India to remove the procedural hurdles; and finally, it shares data that it says, "suggests that the gulf between the US and Indian patent regime may not be as wide as perceived in terms of outcomes for patentees." Referring to some of the long-standing grievances of some of the US companies in relation to India's intellectual Property Rights regime, it says: "These are mainly the compulsory licensing provision in Section 84 and the prohibition on grant of patents to new forms of known substances without therapeutic benefit in Section 3(d) of the Patents Act. American innovator companies are also concerned by the alleged lack of data exclusivity. India's stance is that the current patent regime is fully TRIPs compliant and strikes the appropriate balance between the grant of monopoly patent rights and public health imperatives."
It urges the USTR to take note of some of the new developments, especially those relating to increased collaboration between US and Indian pharma companies that augur well for American pharmaceutical industry to accelerate its growth in India and the developing world. For instance, in terms of collaborations, it points to the August 2015 deal between Amgen Inc. and Dr. Reddy's Laboratories to enter into a strategic collaboration to market and distribute three Amgen medicines in India in the areas of oncology and cardiology. Under the terms of the collaboration, Dr. Reddy's shall perform a full range of regulatory and commercial services to seek approval and launch KyprolisTM (carfilzomib), BlincytoTM (blinatumomab) and Repatha (evolocumab) in India. Again in August 2015, Gilead Sciences Inc. announced additional licensing agreements with Indian companies to manufacture generic hepatitis C medicines for 101 developing countries. The total number of licensing agreements now stands at eleven, up from the seven it had announced on 15 September 2014 for the manufacture and distribution of sofosbuvir (SovaldiTM) and the investigational single tablet regimen of ledipasvir/sofosbuvir (HarvoniTM) for distribution in 91 developing countries, expanding access to affordable medication to more than 100 million people living with Hepatitis C, representing 54 per cent of the total global infected population. Or the case in May-June 2015, where AstraZeneca (whose subsidiary is incorporated in the US) entered into co-marketing deals with Indian companies through their Indian subsidiary. Under this structure, AstraZeneca will continue marketing their products with their global brand names in India, but Indian companies will also launch their own brands of the same drugs under licence. Giving other examples, it says: "The instances above evidence the multiple ways in which individual corporations are collaborating with Indian enterprises to increase their access to the Indian market, and in at least one instance, to the markets of the developing world. The licensing agreement of Sun Pharma with Merck is of particular significance as it is an instance of an Indian company acquiring worldwide rights and funding the development of a significant drug candidate." Then, sharing data on sales growth of foreign and Indian pharma companies in India, it gives the following details (table 1) where it shows that while the growth rate of foreign companies in India continues to be lower than Indian companies. However, it has accelerated sharply in 2015 and the gap is closing:
The IPA submission also talks of the job creation that Indian companies have been doing in the US, says "apart from commercial and marketing jobs, the Indian pharmaceutical industry is making investments in manufacturing and research facilities in the US and providing employment for skilled technical staff." And points out examples like those of Sun Pharma having nine manufacturing facilities through its subsidiaries - three in New Jersey, two in Massachusetts and one each in Pennsylvania, Tennessee, Illinois and Michigan as well as a research centre in New York. Similarly, Dr. Reddy's having two manufacturing sites through its subsidiaries - one in Louisiana and the other in Tennessee. Apart from other companies like Wockhardt and Lupin.
This argument is made to convey that the net impact on employment in the pharmaceutical industry in the US on account of India's IPR regime is negligible, "if at all there is one. We urge the USTR to take this into consideration while assessing the adequacy of IP protection in India for pharmaceuticals," it says.
Also, in a bid to clear the backlog with the patent office, it says while the backlog of patent applications is a matter of concern, the government of India had announced an ambitious plan in July 2013 to recruit 500 patent and design examiners in five years to reduce application pendency from 3-5 years to one year. "Action has been taken since then and the number of patents examined has increased sharply from 2013-14, though it is yet to be reflected in disposals (which is the aggregate of patent grants, rejections and abandonments)."
In conclusion, it says: "We submit that there has been considerable progress on the intellectual property front in the last year. The Patent Office continues to be strengthened to facilitate the efficient grant of patents. Judicial enforcement of patent rights have been strengthened with many injunctions restraining infringement being granted, even before it has occurred. There is reason to believe that apprehensions relating to abusive opposition procedures, incorrect application of 'hindsight' analysis to invalidate patents, compulsory licensing and the consequences of Section 3(d) have been significantly allayed."
Pointing out that on the "only two other substantive issues of possible concern to some in the US pharmaceutical industry that appear to remain: data exclusivity and 'patent linkage', it says, it has "previously made extensive submissions in the past detailing the basis for India's stance against data exclusivity."
Also, it says: "At the same time, there is a noticeable increase in fair and equitable access to the Indian market for the US pharmaceutical industry, as evidenced by the spurt in rate of revenue growth of foreign companies in India in 2015 and the instances of licensing and co-marketing deals that are being struck between US and Indian enterprises for new and innovative medicines. Both these trends - the strengthening of protection of IPR in India and accelerating the momentum of commercial engagement between the US and Indian pharmaceutical industry - call for building consensus on the issues that remain. Data-driven analysis and debate, rather than other means, appears to us to be the preferable approach."