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The Pharmaceutical Industry in India and the Current Situation of Intellectual Property Protection
[Author] Hu Yunhong, Doctor of Laws, Professor and Master Tutor of National Judges College. The article was first published in China Trial News Semi-Monthly - Issue 321.
The issue of medicine in every country is directly related to national health and national health security. In India, most of the nationals belong to the low income class and are not covered by health insurance. Medical expenses incurred due to illness or injury and loss of income can deal a heavy blow to the life of an ordinary person.
The Government of India hopes to reduce such risks through measures such as free treatment in public health institutions and the creation of health insurance targeted at the poorer sections of the population. However, in India, the enrollment of health insurance is about 25% of the total population, and the equipment and service quality of the public medical institutions are extremely low, which makes people stay away from them. Therefore, the Indian government has been able to significantly reduce the national consumption of medicines by lowering the prices of medicines and increasing the production of generic medicines.
Thanks to the Indian government's price restrictions on medicines, India has become one of the countries in the world where you can buy the cheapest medicines. since 1979, the Indian government has issued the Drug Price Control Order, which imposes price caps on all types of medicines, and about 90% of the medicines used in the country are under price control (in recent years, this percentage has been on a declining trend). Intense competition among Indian pharmaceutical companies has also contributed greatly to the suppression of drug prices. The Government of India has also utilized the market competition mechanism to indirectly reduce drug prices.
Phenomena
Specifically, a generic drug is not a pirated infringement of a licensed drug; it is a generic product that is identical to the trade name drug in terms of dosage, safety and efficacy, quality, action and indications.
India's huge domestic market, unique patent system, cheap labor and many technical talents make its generic drug industry booming. Generic drugs are the most important part of the Indian pharmaceutical industry, with 60,000 generic brands in 60 therapeutic categories, accounting for 20% of the global supply, known as the "pharmacy of the world". India supplies medicines to 180 countries and is the 4th largest exporter in the world. According to the International Government Benchmarking Association, in 2020, among the top 5 countries in the world in terms of penetration of generic drugs, India will rank first with 97% penetration rate; among the top 15 generic drug companies in the world, 7 companies belong to India. Why is India's generic drug industry developing so rapidly? How did India become the "pharmacy of the world"?
Around 1970, the Indian government set up five state-owned pharmaceutical companies, the then Prime Minister Indira Gandhi on the Indian Patent Act was amended, the drug patents are divided into product patents and method patents, and only granted the drug method patents and not granted its product patents. This enabled many local Indian drug companies to obtain generic manufacturing licenses in large numbers to produce cheaper generic versions of their drugs.
Since product patents on drugs were not recognized in India until 2005, the product initially marketed may not be that of the patentee, which is what sets it apart from developed countries. Even for generic drugs, pharmaceutical companies use their own unique product names for marketing.
In India, since approval of biosimilars generally does not require Phase I and Phase II clinical trials, but at least Phase III clinicals involving 100 patients, and there is no explicit time limit for approval of biosimilars, this significantly reduces the cost of development of biosimilars.In June 2012, India introduced regulations on biosimilar medicines, which give data from clinical trials previously conducted in foreign countries recognized.
Legislation
The Patents Act 1970 has two important features: firstly, it recognizes two forms of patents, i.e., product patents and method patents; secondly, products such as pharmaceuticals, food products and agrochemicals are not patentable in their own right, and patents are granted only for the method process of the said products.
In November 2001, the WTO (World Trade Organization) held its Fourth Ministerial Conference in Doha to begin negotiations on public health issues, with plans to reach agreement on the implementation of a compulsory licensing system for patented medicines and to address the public health crisis in developing country members.
Around the turn of the 21st century, global pharmaceutical patents were mostly concentrated in the hands of 3-5 developed countries. Individual countries, led by India, believe that if the WTO implements a one-size-fits-all policy on the introduction of a patent system for medicines, many countries may face the situation of having no medicines available, which is extremely unfair to developing countries.
India therefore opposed the WTO's linkage of trade issues with intellectual property rights. Through difficult negotiations, India has secured the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the TRIPS Agreement) and the Doha Declaration on TRIPS and Public Health (hereinafter referred to as the Doha Declaration), which are beneficial to India's development.
The specific provisions of the Doha Declaration are as follows: 1. Contracting parties have the right to grant compulsory licenses and to determine the grounds for granting compulsory licenses; 2. Contracting parties have the right to determine what constitutes a "national emergency or other extreme urgency"; 3. Parties have the right to determine what constitutes a "national emergency or other circumstances of extreme urgency", such as public health crises caused by pandemics such as AIDS, malaria, etc.; 3. Parties have the right to construct their own "exhaustion" regimes, subject to most-favored-nation and national treatment clauses; 4. Developed countries should facilitate and encourage the transfer of technology from their enterprises to LDCs. The provision of patent protection by LDCs for pharmaceuticals could be delayed until 2016.
Earlier, in order to harmonize Indian patent law with the relevant provisions of the TRIPS Agreement, India first amended the Indian Patents Act 1970 in 1999.
As per the TRIPS provisions, India should have accepted patent applications for pharmaceuticals, agrochemicals and food products from January 1, 2005 at the latest.The 1999 amendment provided for India's obligations during the ten-year transition period from January 1, 1995 to January 1, 2005 onwards. Provisions for processing of patent applications for pharmaceuticals, agrochemicals and food products. Pursuant to the amendments, during the transition period, India has set up a mailbox system to start collecting patent applications for pharmaceuticals, agrochemicals and food products (to be processed from January 1, 2005 only). The amended Indian Patents Act also provides transitional arrangements for the right to sell patents for the sale and distribution of the above products in the Indian market.
In 2002, India again amended the Indian Patents Act, 1970, to provide for a 20-year period of protection for patents and to provide for compulsory licensing of patents for reasons of public interest, national security, Indian traditions, public health, etc. The Indian Patents Act was also amended to provide for a 20-year period of protection for patents.
On December 26, 2004, India promulgated the Patents (Amendment) Regulations, 2004, which provided for the admission of patent applications from January 1, 2005 for pharmaceuticals, agrochemicals and food products. Since then, Indian patent law has been fully aligned with TRIPS.
Transition
On January 1, 1995, the TRIPS Agreement came into force, dividing WTO member countries into several categories: developed countries were required to provide patent protection for chemicals from January 1, 1996, with a transition period of one year; developing countries were given a transition period of 10 years, with patent protection for chemicals from January 1, 2005; and least-developed countries were given a transition period of 21 years, beginning in 2016 for Implementation. The Indian Patents Act, which came into force in India from January 1, 2005, was also introduced in this context.
The TRIPS Agreement establishes a "mailbox" system for the examination of pharmaceutical patents during the transition period. During the transition period, the patent examining authority of the host country does not prohibit the applicant from filing patent applications, but only puts all applications in a "mailbox" without examining them until the expiration of the transition period and the entry into force of the new patent law, and then opens the "mailbox" and starts to examine the applications on a case-by-case basis. It was not until the expiration of the transition period that the "mailbox" was opened and the examination of each application began. Between January 1, 1995 and December 31, 2004, nearly 7,000 pharmaceutical patents were in India's "mailbox" awaiting examination. The patent application filed by Novartis, a multinational company in the global pharmaceutical and healthcare industry, for the anti-cancer drug Gleevec was the very first "mail" in this "mailbox".
Because the TRIPS Agreement requires the harmonization of intellectual property laws and regulations of all WTO member countries, all WTO member countries should adopt and implement the minimum standards of intellectual property rights. Therefore, many people previously believed that the TRIPS Agreement introduced pharmaceutical product patents will hinder the development of the Indian pharmaceutical industry. However, the Indian pharmaceutical industry has been growing beyond expectations. After India's signing of the TRIPS agreement, Indian pharmaceutical companies have become deeply involved in the global pharmaceutical value chain, joining in the technological upgrading and technology transfer in the global pharmaceutical industry.
The two agreements mentioned above give developing countries such as India a ten-year transition period, reserving much time for the development of local Indian pharmaceutical companies.
"The Struggle"
In 2005, product patent protection for pharmaceutical-related inventions was recognized in principle in India. Subsequently, the Indian Patent Office has granted many pharmaceutical product patents other than patents on methods of making, enabling a large number of foreign originator drugs for diseases such as cancer and hepatitis to be granted patent protection. To obtain a patent in India, an originator drug manufacturer must first face the challenges of the opposition filing system. Some OEMs have been forced to withdraw their patent applications due to opposition filings by non-governmental organizations. Some drugs that have been patented abroad have been invalidated by Indian officials after local drug companies filed opposition petitions, such as the patents on Atazanavir and Bacitracin, which are drugs for the treatment of AIDS.
Even the manufacturers of patented drugs have been engaged in a constant "struggle" with local generic drug companies in India, which have become active in copying and selling patented drugs since 2008, leading to a number of patent infringement lawsuits. This led to a number of patent infringement lawsuits.
In order to curb the sales of generic drugs during the litigation period, the plaintiff, the original drug manufacturer, filed an application with the Indian court for temporary preservation to stop the sales, but the Indian court refused to grant the application.
In 2009, when Bayer, the manufacturer of the original drug, requested the Indian government not to approve the manufacturing license of a generic drug, the Delhi High Court rejected Bayer's request on the basis that "the judgment of approval of the drug is not related to the status of the patent".
Compulsory
If a local Indian pharmaceutical company producing a generic drug loses an infringement lawsuit, it is expected to incur tens of millions of dollars in damages. There may be two reasons why local Indian drug companies are willing to risk entering the market: first, there is a high probability that the patents of the original drug makers will be disabled. This is because Indian patent law sets strict patent elements compared to patent laws in developed countries. This means that even if an invention becomes patentable in other countries, there is a possibility that it will not be patentable in India. Secondly, the existence of compulsory license right. The so-called compulsory licensing right means that the government granting the patent (e.g., the Indian government) grants the right to exploit the patent to a third party (e.g., a generic drug manufacturer) without the permission of the patentee.The TRIPS Agreement recognizes the right of governments to grant compulsory licensing rights for patents, and generally countries also provide in their patent laws that the right may be exercised in the event of public health emergencies or when there are no sales of the patented object product in the country at all. There is no sale of the product that is the subject of the patent in the country, the right of compulsory license can be exercised. On this basis, the Indian Patent Act further provides that the government may also enforce a compulsory license for a product that is the subject of a patent if the product is not available at an appropriate price.
After 2005, although India recognized product patents for pharmaceuticals, it was not easy for patentees to exercise their patent rights. On the one hand, patented drugs, led by some landmark anti-cancer agents, have become the subject of copycat production by local Indian drug companies, and sales of generics are still allowed during patent disputes as well. New uncertainties have arisen as to how the Indian courts will rule in infringement litigation and whether the originator drug manufacturers will be able to obtain compensation for lost profits in infringement litigation. On the other hand, local generic drug manufacturers in India have high hopes that the government will grant them compulsory licenses. This will also further boost the production of generic drug companies in view of the government's provisions related to controlling the price of drugs through the right to enforce compulsory licenses.
Source: China Trial News Semi-Monthly