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Guest post by: Kaviraj Singh Become an Author

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The major concern that the social and economic costs of introducing pharmaceutical patents are likely to outweigh the benefits in the case of most developing countries suggests a cautious approach to intellectual property protection in the area of pharmaceuticals. On the other side, there is also evidence that the patent system has a detrimental impact on pharmaceutical prices, particularly if the product itself is protectable.

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) introduced intellectual property rules into the multilateral trading system for the first time. The World Trade Organization (WTO) is the only most powerful legislative and judicial body which makes an economic relationship between trade and nations with its “free trade” agenda.

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is a treaty administered by the World Trade Organization (WTO) which sets down minimum standards for forms of intellectual property (IP) regulation that was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) treaty in 1994. The new WTO regime effectively outlawed the generic production of new medicines

It was made mandatory by the WTO for its developing nations to fully abide by their IP laws and enforcement practices with the agreement on TRIPS by no later than 1st January 2005. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade. For the least-developed countries (LDCs) the transition period will remain in force for pharmaceutical patents and data protection at least until 2016 under Article 66.1 of TRIPS under paragraph 7 of the Doha Declaration.

Further, Article 27 of the TRIPS Agreement harmonizes the subject matter of patent in a broad manner which clearly states that the patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

Under article 28 (1) (a) of TRIPS, there are exclusive rights for product patents to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product.

Overall, the TRIPS Agreement will have a substantial impact on intellectual property regimes in developing countries. Although, under the TRIPS Agreement member countries are bound to provide such protection, yet certain compensatory measures and schemes are taken in the hands to avoid the negative impact of monopolization of product patents especially in health and pharmaceutical sectors. Such measures as per the TRIPS are as follows:

• Transition periods
• Compulsory Licensing
• Public, non-commercial use of patents
• Parallel imports
• Exceptions to patent rights
• Exceptions from patentability; and
• Limits on data protection

India as a member of WTO, tried to make its patent legislation TRIPS compliant by bringing into force the Patents (Amendment) Act 2005 w.e.f. 1st January, 2005 which provided for product patents – a long debated issue globally and nationally.

Making the patent legislation in compliance with the TRIPS would put India in the row of nations having strong patent legislation. Salient features of the Patents (Amendment) Act 2005 related to product patents:

a) Extension of product patent protection to products in sectors of drugs, foods and chemical.
b) Term for protection of product patent shall be for 20 years.
c) Introduction of a provision for enabling grant of compulsory license for export of medicines to countries which have insufficient or no manufacturing capacity; provided such importing country has either granted a compulsory license for import or by notification or otherwise allowed importation of the patented pharmaceutical products from India (in accordance with the Doha Declaration on TRIPS and Public Health)
d) A new provision has been introduced that provides that the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant, shall not be patentable.

These amendments have been made with the intention to make India drug and pharma industries competitive at par with multinational companies. The generic drugs would have a limitation and the MNCs would enjoy monopolistic rights, however there is a silver lining in this concept that it would attract contract R&D and therefore MNCs would prefer to open their R&D centers in India.

The major concern arising out of these amendments is increased prices of drugs thus creating problems for the poor. Resolving such a problem would not be easy but other regulatory mechanisms could be put in place to control the drug prices. Indian government can make use of price controls, its bargaining power as a large purchaser, and compulsory licenses in the meantime to ensure that the process does not proceed more quickly than is desirable.

Indian pharmaceutical firms may also suffer with the lack of Indian jobs. This fear is by no means far-fetched, but there are lots of reasons to have a faith that Indian industry would be able to compete with global players. Such as an educated, well-trained scientific workforce that is a backbone of current successful Indian Pharmaceutical industry. Moreover, by passing such reforms that would encourage the development of venture capital, India's government can make certain that funding will be available for the country's nascent biotechnology industry, an industry that holds the promise of making significant contributions to India's economic growth and public health needs.

Taking into account social benefits only is compromising with economic stand. For making the nation strong, the approach should be for socio-economic development.

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