Monday, July 08, 2019

TRIPS Agreement: India Stuck in a Transition Mode?

By Meenakshy Menon,
(Image source: The Hindu)

The post TRIPS (Trade Related Aspects of Intellectual Property Rights) Indian economy was thought to have lesser investments and an “anti-competitive effect in the market”. However, an increased amount of investments in Research and Development sector and the entry of a number of pharmaceutical companies into the market in the recent years have proven these predictions wrong. The TRIPS agreement consists of the trade-related aspects of intellectual property rights (IPRs) and aims to protect and enforce the IPRs. It also aims to ensure that it does not become a barrier in international trade. The agreement came into existence via the Punta Del Este Declaration during the 8th round of multilateral trade agreements in Uruguay in 1995.

When the topic of India and TRIPS agreement comes together, the discussion mostly takes a unilateral turn focusing on one sector specifically; the patents for the drugs in the pharmaceutical industry. During the negotiations, just like any other developing country, India did not want IPRs to be included in the GATT treaty due to the detrimental effect that it might have on the economy. In India, there was a shift in the patent regime that granted only process patents of seven years duration compared to the one that provides patents to the product. During the negotiations, it was decided that the countries that did not have a product patent regime as of 1 January 1995 would have an additional five years along with the general transition period of 5 years, which also included India. So the question is did India completely transition into the product patent regime in the 10 years that was given to it?

The interesting factor about India’s pharmaceutical industry is that the generic drug industry has helped people in the country as well as in other developing countries in treating life-threatening diseases. This was possible because of the process patent regime and the widespread use of compulsory licensing. Process patent, in one way or the other, was suited for India for its large population and the amount of people who work in the manufacturing industries. Nevertheless, the shift in the patent regime was inevitable due to the country’s obligation to comply with the TRIPS agreement. This shift also resulted in the mailbox provision and the exclusive marketing rights (EMRs) provision. The developing countries which did not have a patent regime were supposed to use a pipeline system called the “mailbox provision” that will accept patent applications and grant five years of EMRs for the product. Yet, these provisions along with the compulsory licensing system are some of the notable loopholes in the system.

There have been cases of misuse of the EMRs by competitors and foreign pharmaceutical companies reaping benefits by selling or distributing the product which already has a patent in another country. Patents are filed by these companies anticipating that they would get both the market approval and patent in a specific country. Nevertheless, even if the products are not granted patents, these companies take leverage of the EMRs grant to get a market in that specific country. Second loophole is the usage of compulsory licensing for the manufacture of generic drugs or the ‘copied’ versions of the brand name. As per the agreement, compulsory licensing is used during a national security or health crisis, but there are countries like India that are taking leverage of the system. India uses compulsory licensing since the health of the people of the country and millions of those who come from foreign countries to avail medical treatments is dependent on its pharmaceutical industry.

One of the questions that pop up in one's mind regarding the current geopolitical situation and the TRIPS agreement is whether India will be affected by the US-China trade war. A plausible answer to this is that India cannot afford to have a conflict with China or the US taking into account the future consequences that it might lead to and the power these countries hold. So what India can do is to balance its relationship with both the countries and also take China into account as a competitor, since there is a commonality in the manufacturing capabilities of India and China.

Furthermore, the TRIPS agreement is one of the areas that India takes its strong stance. In the WTO meeting in 2016, the defence minister had said that India aims to provide impetus to its generic drug industry, which will only be possible through the continued issue of compulsory licenses. India’s other policy on the implementation of the provisions of the TRIPS agreement is setting up of a venture capital fund to promote more startups. In order to make a mark in the global investment markets, India must have a stronger IPR regime. For this, India could provide duty-free quota for drugs that cure life-threatening diseases. Moreover, a 100 per cent FDI in the field of pharmaceuticals would also increase the innovation in the country. Proper guidelines for the regulation of compulsory licensing and EMRs should be included to prevent the loopholes, which is also imperative for India to
transition completely into the product patent regime. Finally, India should not get isolated from the global market domain, and therefore must keep its national laws in harmony with the International Treaties.

If at all, a day comes when allopathic medicines are unaffordable to the people at the grassroots level, then the potential of Ayurveda can be explored. For this, the Indian Patents Act must be amended such that it allows patents for Ayurvedic medicines. But India is still stuck in a contradictory bubble where it has to ensure public health and at the same time need to comply with the international rules and regulations.

(Meenakshy Menon is Research Intern at CPPR-Centre for Strategic Studies. Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research)

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