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 An Indian government committee is reviewing patented
drugs of foreign firms to see if so-called compulsory licenses,
which in effect break exclusivity rights, can be issued for some of
them to bring down costs, two senior government officials told
Reuters.
The drugs that are part of the review process are used for treating
cancer, diabetes, hepatitis and HIV, said the sources, declining to
give details. No timeline has been given for completion of the
review process.
Emerging markets, from South Africa to China and India, are battling
to bring down healthcare costs and boost access to drugs to treat
diseases such as cancer, HIV/AIDS and hepatitis.
Western drugmakers, including Pfizer Inc, Novartis AG, Roche Holding
AG and Sanofi SA, covet a bigger share of the fast-growing drugs
market in India.
But they have been frustrated by a series of decisions on patents
and pricing, as part of New Delhi's push to increase access to
life-saving treatments where only 15 percent of 1.2 billion people
are covered by health insurance.
India is currently on the U.S. government's Priority Watch List — countries whose practices on protecting intellectual property
Washington believes should be monitored closely.
The U.S. industry trade group Pharmaceutical Research and
Manufacturers of America (PhRMA) believes Washington should take a
tougher line by downgrading it to a Priority Foreign Country, a
classification for the worst offenders, which may trigger possible
actions, sources said.
"The multinational companies are exploring all options — from paring
their investments in the country to forcing the U.S. to take some
actions," said a source in New Delhi, who is directly involved in
the situation.
"Companies feel something should be done at the earliest to check
the violations of their intellectual property in the country. They
want government-to-government pressure to change things," he said.
All the sources declined to be named due to sensitivity of the
matter. A PhRMA representative declined to comment.
If India gets relegated by the United States to Priority Foreign
Country level, it will join Ukraine as the second country in that
segment. Countries in the Priority Watch List include China,
Indonesia, Pakistan, Russia, Thailand and Argentina.
"PhRMA makes submissions to the U.S. government every year on trade
issues but this year they really want to ratchet up the pressure on
India," said one executive with a multinational drug company.
PhRMA is currently drawing up a submission to the U.S. government
ahead of a Friday deadline for filing concerns about countries to be
included in the so-called Special 301 Report, which is prepared
annually by the Office of the United States Trade Representative.
POLITICALLY SENSITIVE
Making medicines cheaper is a politically sensitive issue in India
where many patented drugs are too costly for most people, 40 percent
of whom earn less than $1.25 a day, and where patented drugs account
for under 10 percent of total drug sales.
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Picking a fight with an emerging economy like India, where millions
of people cannot afford basic healthcare, will not be easy and
without risks. The industry has recently run into fierce controversy in South
Africa for taking on Pretoria over its plans to overhaul patent laws
to favor cheaper generic drugs, leading some executives to urge a
softer approach.
"I don't believe there is any need for any kind of more assertive
stance. This is a situation where constructive engagement is the way
forward," GlaxoSmithKline Plc Chief Executive Andrew Witty told
Reuters.
With sales of patented drugs in Western countries slowing,
emerging markets are a vital growth driver for companies. India,
however, has so far failed to be much of a money-spinner for the
world's top pharmaceutical companies.
India's $14 billion-a-year drugs market — driven these days by
chronic diseases, such as diabetes, as well as infections — is
expected to be worth $22-32 billion by 2017, which would rank it as
the 11th largest globally, according to IMS Health.
"Any obstruction or action by the U.S. government can have a very
adverse impact on the trade relations between the two countries,"
said D.H. Pai Panandiker, president of New Delhi-based RPG
Foundation, an economic think-tank.
"So, both sides will be cautious, but to protect their own interests
they won't hesitate to take actions under the WTO (World Trade
Organisation) provisions."
In 2012, India issued its first ever compulsory license to
domestic drugmaker Natco Pharma Ltd on a kidney and liver cancer
drug, Nexavar, patented by Germany's Bayer AG, in a move that it had
said endangered pharmaceutical research.
AstraZeneca Plc last month decided to shut its R&D center in
Bangalore citing broader global business strategy. Some analysts
expect a few other global drugmakers to pare R&D spending given the
uncertainty about the patent regime.
"If the authorities are going haywire and looking to grant
compulsory licenses lock, stock and barrel, in that event you will
lose the credibility in India as a system," Meet Hariani, managing
partner at Mumbai-based law firm Hariani & Co, said.
"You are going to see much more litigation on this issue. People are
going to be unwilling to introduce new drugs in the market," he
said. "You can't expect to get a new drug at a price of an aspirin."
(Additional reporting by Bill Berkrot in
New York; editing by Jeremy Laurence)
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