In the last few months, there have been regular reporting by The Hindu on the Issue of Indian Pharmaceutical Industry- one of the leading Indian industry sectors being subjected to several regulations by the US. This possess the potential to affect negatively the growing Indian Pharma sector in long term. And if that happens the world will be deprived of many life saving, cheap generic drugs.
What are generic drugs?
1. Generic drugs are the pharmaceutical products identical hence interchangeable with innovative products.
2. They are produced without licence from the innovator company and are marketed after the expiry of the patent (normally 20 years) and other such exclusive rights.
3. Generic drugs are produced and marketed under approved name and not any brand name (name given and authorised to use only by the producer). For example, paracetamol is a chemical with pain-killing properties. The same chemical is sold as pain-killer under many brand name as well simply as ‘Paracetamol’- a generic pain-killer.
Comparison of generic and brand name drugs:
1. Very often the brand name drugs during patent period are priced very high, not only to ensure maximum profitability but also to offset the loss incurred by the company in R&D, production, marketing of some other drugs.
2. Generic drugs are cheaper than the brand name drugs only because the R&D cost is not involved. It is estimated that development and testing of new drugs costs as much as $800mn.
3. Also as the production and marketing of the generic drug is open for all companies, the competition may cause further depreciation of price.
4. The laws (as in the US) may require that the appearance of the generic drug cannot be same as the brand name version, but that does not in any way changes the chemical composition and hence the effectiveness of the generic drug.
5. Pharma companies are alleged of malpractices such as ‘ever greening’ (simple changes in the drugs without or with very little effects targeted only on renewing patent).
Generic drugs and the global perception:
1. Due to their affordability, generic drugs are playing life-saving role in low and middle income countries.
2. The market share of the patented drugs has been on gradual decline.
3. Countries like South Africa, Brazil, China, India and a large number of developing countries are trying to reduce their public health expenditure and increase the access to medication for the citizens for fighting diseases like HIV/AIDS, hepatitis, diabetes and cancer.
4. Even the developed countries like the US and Japan are also promoting the use of generic drugs.
5. It is only when the promotion of the generic drugs comes in the way of the patented drugs that the conflicts among the countries on the pretext of intellectual property right begin.
Pharmaceutical Industry and India:
1. Till recently, in the absence of big Indian pharma player like Dr Reddy’s, Ranbaxy, Cipla, Lupin, Zydus Cadila etc. Indian pharma market was dominated by foreign MNCs and their subsidiaries in India.
2. But the expertise of the Indian pharma industries in reverse-engineering made a leading player in the global pharma market, especially the generic drug. (Fire in the Blood, a film on African HIV positives and the significant role played by Indian generic ARV is a testimony to this; the Frontline issue of November 2013 had an article on it).
3. Now the Indian pharma industry is the 3rd largest in terms of volume.
4. India is among the top 5 emerging pharma market.
5. India produces generically more than 90% of the ARV drugs (Anti Retro-Viral, for HIV positive patients) consumed in the low and middle-income countries.
6. Bio-pharma is the largest contributor to India’s pharma industry.
Issues of the Pharma Industry in India:
1. But the tax on the MRP of drugs in India is as high as 16%.
2. This forces the foreign companies to cut their outsourcing to India.
3. Also the companies are shifting their plants to the tax-free stares of Himachal, Uttarakhand, Jharkhand, J&K.
4. R&D budgets of the major Indian pharma companies are around 5-10%. Interestingly, the R&D budget of Pfizer, a western pharma major is at times more than the combined revenue of the Indian pharma.
5. Lack of infrastructure, required level of expertise also creates bottleneck in pharma R&D.
India and Patent:
1. Of the total 1.2bn plus population of India only 15% are covered by any health insurance.
2. The portion of patented drugs in India’s total annual drug sale is below 10%.
3. Promotion of the drug manufacturing in India dates back to 1960s. The Patent Act 1970 was a milestone for the pharma industry.
4. However, the economic reforms of 1991 not only de-licensed many sectors but also reduced the patent period to 5-7 years for other sectors related to the pharma industry.
5. In 2005, India enacted new patent laws complying with TRIPS that required it to recognise all product and process patents for 20 years and also those filed since 1995.
6. SC in 2012 rejected the plea for patent in India of the cancer drug Gleevec by the Swiss company Novartis in its landmark judgement.
7. India’s decision to give its first ever compulsory licence to Natco. Ltd in 2012 to produce generic cancer drug reduced the monthly cost of the patient from $5,000 to $196- a 97% reduction. Natco will have to pay a part of the generic price to the patent holder Bayer AG- a German pharmaceutical company.
8. A Compulsory Licence (CL) allows a generic drug maker to make a patented medicine on payment of a royalty without consent of the patent holder. Government generally gives CL when it finds a medicine unaffordable.
India and USA issues:
1. The pharmaceutical industry in the USA is pressurising the US government to put India in the ‘Priority Foreign Country’ list which currently includes only Ukraine.
2. This is the worst designation referring to the worst violation of intellectual property rights and invokes serious trade sanctions.
3. India is already listed as a Priority Watch list country along with six other countries by the USA.
4. Global Intellectual Property Centre (GIPC) of the US Chamber of Commerce, Pharmaceutical Research and Manufacturers of America (PhARMA) and some other trade bodies demanded US Trade Representative (USTR) to reduce India’s designation and to raise the issue with the Indian government.
5. US International Trade Commission (USITC) has started investigating the Indian trade and investment policies.
6. USITC sought in this regard appointment with several Indian officials from different ministries including the deputy chairperson of the Planning Commission but India refused to such appointments.
7. Indian Commerce Ministry has repeatedly said that Indian IPR policy is well in accordance of the TRIPS. Under corporate pressure US government is asking from India ‘TRIPS+’.
8. India also alleges the US of practising trade protectionism and of obstructing work visas of the Indian nationals.
9. Meanwhile, the Indian pharma companies in the US are also subjected to several regulating actions by the US Food and Drugs Administration (USFDA).
10. Indian pharma company Ranbaxy has to shut down 4 of its production unit after USFDA notices on the ground of manufacturing standards.
11. Two plants of Workhardt is also being put under import alert.
12. Indian commerce ministry is likely to discuss the issue and to present a paper to the USFDA on the issue.
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