This article has been written by Ms. Aarshiya Punera, an IInd year student at Law Centre-II, Faculty of Law, University of Delhi.
ABSTRACT
Indian Pharmaceutical Industry is the top producer and exporter of generic medicines and low-cost effective vaccines in the world. We supply 60% of the WHO’s demand for DPT (Diphtheria Pertussis Tetanus), BCG, and measles vaccines. During the COVID-19 pandemic, India emerged as a global harbinger of relief when it provided medicines and vaccines to nations abroad through its “Vaccine Maitri” program. Despite such heavy production, accessibility and affordability of medicines and various essential life-saving drugs remain a clear and visible challenge in the country.
This article aims to analyse the delicate balance between providing affordable medicines to all and protecting the Intellectual property rights, specifically patent rights of the drugmakers. The opposition from the drugmakers and the policies of the government presently in force to ameliorate the drug affordability issues are also discussed in brief.
Keywords: Affordable medicines, Patents, Drugmakers, Opposition, Intellectual Property rights
GENERAL OVERVIEW OF THE INDIAN PHARMACEUTICAL INDUSTRY
India is one of the leading markets in the global pharmacy sector. The annual report (2022-2023) of the Pharmaceuticals Department of the Government of India cites that India globally is the third-largest producer of pharmaceuticals by volume.1 The industry is expanding more than ever. The turnover for the year 2021-2022 was Rs. 3,44,125 crores [USD 42.34 Bn]. There has been a mushrooming of various pharma and healthcare startups in Tier-1 and Tier-2 cities alike. Both startups and established companies are involved in extensive research for new drug development and collaborations with big global pharma giants.
The Indian government is equally supportive of growth in this sector. The setting up of an exclusive Department of Pharmaceuticals in 2008 with the vision “to ensure availability, affordability, and accessibility of drugs and medical devices in the country”2 stands as a witness to the fact.
Launching a National Policy on Research and Development and Innovation in Pharma-MedTech Sector in September 20233, setting up of NIPERs (National Institute of Pharmaceutical Education and Research) across the country, running five central government schemes to promote drug accessibility to poor and deprived, approving a scheme for creation of “Bulk-Drug Parks” to improve the domestic manufacturing abilities and decrease dependency on foreign production and setting up “Startup India” portal for legal and entrepreneurship advice to startups are many of the few initiatives taken by the Government.
THE CHALLENGE TO PROVIDE AFFORDABLE MEDICINES
The large population of India has always been seen as a liability. Effective investments in humans in the form of education and healthcare measures can transform this so-called liability into a valuable human resource. Therefore, healthcare has always been a top priority for a developing country like ours.
The basic factor to measure the effective healthcare system of a country is to see if the people have three A’s (availability, affordability, and access) to medicines and life-saving drugs. A developing country like ours spends a substantial portion of its annual budget on drugs and healthcare. Despite this, the availability of drugs to all and the presence of low-quality non-effective drugs remains a looming problem.4
Good Health is the fundamental right of every individual and the World Health Organization’s (WHO) Alma-Ata Declaration of Public Health aims to fulfil the goal. Medicines are an essential component in improving the worldwide health landscape. They increase longevity, promote health, decrease the cost of treatments, promote the well-being of the whole economy, and are easy to administer. Therefore, the government seeks to promote access to drugs to all.
WHY ARE BRANDED DRUGS COSTLY?
The Pharmaceutical Industry at present is engaged in extensive R&D and collaborations. Clinical trials and tests demand a huge amount of working capital, right from raw material to money. Above this, the final product is patented by the companies to prohibit its competitors from making, using, or selling the same formulation in the market. Filing for a patent is in itself monetarily exhausting. Thus, making a branded drug requires undergoing adequate standard tests and securing the right to manufacture the final product. These factors involve the use of money which the manufacturers seek to recoup while selling the product in the market.
The following factors mainly affect the cost of the branded drugs:
Production cost: Developing a new drug requires investments in the form of working capital (raw material, chemical solutions, and money) and fixed capital (laboratories and equipment). Any drug thus made has to be tested before it is authorized for human use. This exhausting process of research and development and trial and final approval is both time and money-consuming. The majority of the drugs don’t even move past the clinical trial stage. The Pharma companies thus try to recoup the production cost by earning a margin with the sale of their product.
Patents: A new drug is patented by the manufacturer to prohibit rival companies from making, using, and selling the drug. This involves filing for a patent, engaging a legal expert and patent agent, and paying the requisite fee. Thus, increasing the production cost of the branded drug.
Incentives: The profit-making margin involved in the selling of a branded drug acts as an incentive for drug makers to engage in the tedious process of R&D, patent filing clinical trials, and approvals. If there is no incentive, the discovery of new drugs will reach a dead end.
Generic drugs have more competition and lower prices: Patent disables other rival pharma companies to make the branded drugs for the period for which the patent is in force. Generic drugs on the other hand are available in abundance and therefore due to the high competition, the price of these medicines is kept low.
Demand for branded drugs: Not every Brand-made drug has a generic counterpart, which is why there is a higher demand for certain branded drugs.
HOW DO IP RIGHTS INFLUENCE DRUG PRICING?
The pricing of a drug and its relation to the Intellectual Property right of the drug maker is based on the simple principle of economics which is demand and supply.
Successful patented drugs enjoy a market monopoly for the term of the patent. During this period, they are the sole manufacturer of the drug. Any rival pharma company is prohibited from making, selling, and using the patented drug. Thus, the supply of the patented product is from one source i.e., the patent owner which naturally increases the value of the drug against the greater number of people who need the drug. Additionally, the patent owner in order to recoup the cost invested in drug development and various working capital prices the drug accordingly.
HOW IP RIGHTS INFLUENCE DRUG ACCESSIBILITY?
Post TRIPS all the member states are to maintain a minimum standard of legal protection to the intellectual properties globally. This implies a minimum degree of patent protection is common to all member states including India. Providing patents to drugs thus means increasing the cost of the medicine and thus indirectly influencing the public health of the country. In a study it has been found that post TRIPS increased patents on drugs have resulted in monopoly of the drugs in an area, increase in the price of drugs, and more pressure on the governments to make drugs affordable.5
However, to deal with the same certain exceptions are provided under the TRIPS and other WHO-led initiatives that have allowed flexibility in the otherwise rigid patent monopoly of the drugs: Compulsory Licensing, Parallel Importation, and Bolar provisions are a few which are discussed at a later stage.
INDIA’S COMPLIANCE WITH INTERNATIONAL INITIATIVES PROMOTING DRUG ACCESSIBILITY
Alma Ata Declaration on Essential Drugs
The Alma Ata declaration of WHO in 1977 defined the landmark concept of “Essential drugs”. The need for medicines as an important tool to promote public health was realized and the WHO reiterated medicines to be one of the most important tools to achieve public health. This declaration made Primary healthcare a responsibility of the government. The member states committed to include primary healthcare in their national policy.
“Essential Medicines” as defined by WHO:
those drugs that satisfy the healthcare needs of the majority of the population; they should therefore be available at all times in adequate amounts and appropriate dosage forms, at a price the community can afford”6
In India, many state governments have rolled out lists of essential medicines. Tamil Nadu was the first state to do so. The lists get updated regularly.
The Central Government has launched various schemes to provide subsidized medicines to people in the lower strata. One such successful scheme is the Pradhan Mantri Jan Ausadhi Yojana (PMJAY). The objective of the scheme is to provide quality medicines to all sections of society, especially the deprived ones, and to create awareness about generic medicines.
According to the official record at 9182 Pradhan Mantri Bhartiya Janaushadhi Kendras (PMBJKs) are functional across the country at present. These kendras provide approximately 50% cheaper medicines. In some cases, the medicines are available at prices that are 80% to 90% of the market price of branded medicines.7
Doha Declaration on Public Health
In 2001, the WTO members recognized health as a fundamental right of every individual and adopted the Doha Declaration on Public Health. It was held that intellectual property rights about medicines cannot be studied in isolation from the health of the public. The declaration recognized the power of the government to protect public health even at the cost of patent rights. It re-iterates that TRIPS should be ‘interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.8
The fundamental point of the declaration is that it supports and legalizes the flexibilities provided within the TRIPS thus facilitating increased availability and accessibility of drugs in Lower and middle-income countries.
Flexibilities under the TRIPS Agreement of 1995
The general rule under trips to provide a minimum level of protection for intellectual property rights is given flexibility under Article 31 of the TRIPS. Compulsory licensing empowers the government to allow the manufacturing of a generic version of the patented drug by someone other than the patent owner, including itself. The patent owner is in return paid the compensation for the number of drugs produced.
Article 30 includes “Bolar provisions” which allow generic drug manufacturers to use the patented product to get market approval to speed up the rate at which the drug enters the market. Another flexibility is that of Parallel Importation mentioned in Article 6 of the TRIPS agreement. Parallel importation allows the government to obtain the same patented drug from abroad at a cheaper price than the domestic price in its own country, without the permission of the Patent owner.
CONCLUSION
While being a “pharmacy haven” India continues to lack in the public healthcare sector. In recent years through government initiatives like Pradhan Mantri Jan Ausadhi yoijana (PMJAY) and Ayushman Bharat mission relief has been given to the below poverty line members and poorest of the poor. Supplementing these are the international initiatives like the Alma-Ata Declaration and Doha Declaration which confirm the use of flexibility under TRIPS by developing nations including India.
REFERENCES
This report was originally written by and published by the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers. The link for the same is herein:
This report was originally written by and published by the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers. The link for the same is herein:
This article was originally written and published on the PIB Official website. The link for the same is herein:
This article was originally written by Rituparna Maiti, Vikas Bhatia, Biswa Mohan Padhy, and Debasish Hota and published in the Indian Journal of Community medicine. The link for the same is herein:
Essential Medicines: An Indian Perspective – PMC.
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What is the impact of intellectual property rules on access to medicines? A systematic review
This article was originally written by Rituparna Maiti, Vikas Bhatia, Biswa Mohan Padhy, and Debasish Hota and published in the Indian Journal of Community medicine. The link for the same is herein:
Essential Medicines: An Indian Perspective – PMC.
This article was originally written and published on the Press Information Bureau Website. The link for the same is herein:
https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1904884
This article was originally written by Philippe Cullet and published on the ielrc.org website. The link for the same is herein:
The Doha Declaration of the WTO and Access to Medicines
This article was originally written by Raghuraj S Hedge and published on the Firstpost website. The link for the same is herein:
Why branded drugs cost way more than their generic counterparts-India News , Firstpost
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Why Are Generic Medicines Less Expensive?.
This article was originally written and published on the World Trade Organisation website. The link for the same is herein:
This article was originally written and published on the Press Information Bureau Website. The link for the same is herein:
https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1904884
This article was originally written by Aarshiya Punera and published on the aishwaryasandeep.in the website. The link for the same is herein:
https://aishwaryasandeep.in/indias-participation-in-global-initiatives-for-pharmaceuticals/