The idea of a better ordered world is one in which medical discoveries will be
free of patents and there will be no profiteering from life and death.
- Indira Gandhi
All over the world patents provide the patent holder a legal right to prevent
others from using, making copies, or selling new inventions for a stipulated
period of time and these conditions are subject to a certain number of
exceptions. The TRIPS Agreement stipulates that it must be possible for all
inventions to be protected by a patent for 20 years, whether for a product (such
as medicine) or a process (a method of producing an ingredient for a medicine).
TRIPS agreement (The Agreement on Trade Related Aspect of Intellectual Property
Rights) performs the difficult task of striking a balance between the public and
private rights. The current patent regime is shifting its focal point to the
private rights. In practice, patents are place above the collective welfare of
society. Patents on pharmaceutical products have adversely affected industrially
developing and least developed countries, hampering their ability to formulate
appropriate public health policies that would enable their ailing citizen to
The aim of this paper is to analyze the importance of generic drug industry in
the developing and least developed nations. The author through this paper tries
to shed some light upon the difficulties faced by the people in third world
nations due to the rigorous patent regime.
Human Health V. Patent Law
Internationally, world trade organization (WTO) and Trade-Related Aspects of
Intellectual Property Rights (TRIPS) Agreement govern the patent protection. The
primary aim behind the patent system is to stimulate innovation through a social
Now, TRIPS agreement does not lay down the uniform international law but
instead, it provides for guidelines for the member nations to follow. These
guidelines are nothing but are minimum standards, which are to be adhered to by
the member nations of the WTO. Developed countries have already implemented
their policies on patents as per this regime but the timelines were fixed for
developing and least-developed nations as 2005 and 2016 respectively. [ii]
In India, all drugs before 2005 were generics as there was product patents for
medicines and pharmaceuticals. Now, India became fully TRIPS compliant in 2005
through the introduction of pharmaceutical patents, with legislation that
included safeguards to protect public health.
A life free from diseases and good health is the foremost human right. Right to
life, a fundamental right granted to every citizen by the constitution, can only
be achieved in full sense if the citizens are leading a life, which is free from
diseases. In this perspective, drugs and medicines play an important role. So,
it becomes extremely important in this sense to examine the impact of TRIPS
agreement on India with respect to the right to life guaranteed under Article 21
of Indian constitution read along with article 14. Hence, patent laws; national
policies regarding drugs and public health laws are densely inter-related. [iii]
The then prime minister of India, Indira Gandhi explained the above mentioned
issue in her own words at the world health assembly in Geneva on may 6, 1981.
“Affluent societies are spending vast sums of money understandably on the
search for new products and processes to alleviate suffering and to prolong
life. In the process, the drug manufacture has become a powerful industry.”
On patent systems, she said that ‘'her idea of a better ordered world is one in
which medical discoveries would be free of patents and there would be no
profiteering from life or death.''[iv]
The main agenda and the resolution, which was taken up by several countries, was
global strategy on health for all. It is clear from the technological
advancements that science and tech have now tackled many areas involving health
problems. However, despite this development the problem of providing paper
healthcare is still yet to be achieved.
Why Generic Over Patented Drugs
The biggest question which arises in these times is that why diseases like AIDS
are considered as unstoppable killers in places like sub-Saharan Africa but not
in western countries. Why is it so? The answer to this is the non-availability
of anti-retroviral medications (ARVs). These ARVs are not available in the
poorer countries of the world.
The reason for the same is the exorbitant high
cost of the drugs. However, the same drugs, which are easily available in the
western countries, have been found to effectively curtail the disease and have
prevented a number of deaths. So, in this case, generic drugs address to this
problem by providing the masses of the poorer countries with the means of
accessing essential medicines.
The problem with patents
Large multi national corporations such as Novartis, glaxo-smith kline etc are
allowed to operate on the principle of profits over people. Now, this allowance
comes from the currently over protective patent regime[v]. This patenting regime
allows a select few companies to have the monopoly over life saving drugs for a
period, which is not less than 20 years. By doing this companies are able to
achieve high profits by controlling the price of the drug.
Unfortunately, it is disturbing to see that profits are favored over people. The
profits over the high priced drugs are enjoyed by a select few companies
whereas, such prices on life saving drugs on the other hand have devastating
effects on the masses of the poorer nations who cannot afford to purchase these
drugs. This all can accorded to the patent regime, which was devised in the
western countries and somewhat imposed on the developing and the least developed
What are generic drugs?
Basically, generic drugs are the identical or bioequivalent to a brand name drug
in dosage form, safety, strength, route of administration, quality, performance
characteristics and intended use'[vi]. Hence, generic drugs are an identical
chemical copy of a branded product and usually being sold after the patent gets
expired on the original product[vii].
These generic drugs are much cheaper in
price than the original branded drugs. According to a study, it has been found
that the prices of generic drugs average to the 1-5 percent of the prices of
patented products in the poorer nations of the world.[viii]
The benefits of generic drugs
Although, it is acknowledged that there are numerous factors that affect the
availability of medicines in a nation but, for this paper the focus will be on
how decisions taken in developed nations for example, the prevailing IP regime,
greatly affects and hinders the access to generic medicines which are affordable
in the poorer nations of the world.
Generic drugs make use of expired patent products; therefore, there is an
obvious advantage of generic drugs over patented branded drugs. The advantage
comes from the fact the fact that the prices of generic drugs are much lower
than patented ones and this is because the generic drug manufacturers do not
have to spend large sums of money in the research and development of that
For example, in a report it was submitted that GSK spends
$500 million in the research and development of major drugs over the period of
13 years. So, it is obvious that there is no pressure on the generic drug
manufactures as compared to the branded manufactures such as GSK as the generic
manufactures does not have to recoup with the financial costs incurred in the
R&D of the particular drug. Hence, generic companies lower down the prices of
life saving drugs and makes an affordable difference between life and death[ix]
To conclude, there are some obvious benefits of generic drugs over the patented
ones. Firstly, generic drugs are much cheaper in price than the patented drugs
as a result they are much more accessible to the masses of the developing and
least-developed nations. Secondly, generic drugs help in breaking the monopolies
which are created in the benefit of the patented drug manufacturers[x]. Thirdly,
the generic drug benefits economy of a nation as they lower the national
spending on drug prescription. Lastly, generic drugs serve as a benchmark for
low prices by creating competition in the market and with the same amount of
money spent almost twice the number of patients can be treated in that
Arguments against generic drugs
The most frivolous contention that the MNCs make regarding generic drugs is that
the generic drugs are not providing with the same standards of quality, which
the companies are offering with the patented drugs. This is the most predominant
argument made by the MNCs against the generic drug manufacturers. The MNCs have
at various times tried to attach the stigma with generic drugs by calling these
drugs as second-class medicines.[xii]
Another, argument which is purported by these MNCs id that these generic drugs
are not identical or same to their drugs and therefore incorrect usage of them
could a more resistant strain of disease. Hence, causing more harm than good.
The idea behind this argument was that third world nations comprise of
uneducated people who can not stick to the dosages of medicine on time as
compared to people in first world nations. This is a completely frivolous
argument and supposedly if it were true, then it would definitely mean that
people in these third world nations couldn't also use patented medications as
In short, MNCs generally discourage generic medicines as these are seen as a
threat to their profits. [xiii]
The Legislative Barriers
The WTO TRIPS Agreement
Several agreements were signed by the member nations when they joined WTO and
agreed to amend their national laws in conformity with the international trade
rules. Now, the implementation of these rules introduces a huge threat to
accessibility of generic drugs in poor nations.
One reason for this can be found under article 27 which states:
27 (1) ‘Subject to the provisions of paragraphs 2 and 3, 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....'[xiv]
Following this article, article 28 (1) (a) states that a product patent confers
on its owner the exclusive right to prevent third parties from making, using,
offering for sale, selling or importing for these purposes the product. This
means that as well as imposing twenty year patents on all new products, TRIPS
effectively abolishes the right to manufacture generic medicines using the
non-infringing patent process method. [xv]
The year 2005 marked the greatest impact of the TRIPS agreement on the
developing nations. Now, the patents were to be given on products. This is an
area of concern for various countries especially India. Countries like India
will have to comply with the Guidelines of TRIPS agreement and this have a
negative consequence. The consequence will be an obvious one and that is, the
future of generic drug industry will be hampered across the globe and people who
couldn't afford the high prices of patented medication will suffer the consequences[xvi]
It has also been remarked at various times that the guidelines in TRIPS
agreement have less to do with free trade and more to do with the lobbying of
the powerful European and American pharmaceutical industries.
It doesn't take an expert to see that MNCs fear the competition offered by
generic drug manufacturers as the generic drugs outmatch the price of patented
drugs. However, from the current patent regime it can be seen that it is not the
welfare of the people that is being maximized but in turn the fulcrum is
shifting towards the profits of the MNCs.
Compulsory licensing as a tool to combat product patents
The legal basis for compulsory licensing is found under Article 31 TRIPS, which
allows for WTO member states to: ‘use the subject matter of a patent without the
authorization of the right holder, including use by the government or third
parties authorized by the government'[xvii]
This article plays as an escape hatch to the strict patent regime. Under this
article, governments can grant compulsory licenses to a manufacture to
manufacture a certain drug with the patent holders consent. However, there are
certain barriers to the same. The most primary hindrance being the politicizing
or lobbying of MNCs against the generic drug industry. So, the developed nations
bully the third world nations in not granting these licenses.
Regulatory Framework In India
Before TRIPS Agreement
Since the adaptation of commitments under the agreement on Trade Related Aspects
of Intellectual property Rights, The focal point of intellectual property regime
adopted by India has been on the ability of the nation to provide medical access
to its citizens at affordable prices. The position of India and it's
pharmaceutical industry has been unique amongst the other developing nations.
The reason for this uniqueness is the existence of the huge generic
pharmaceutical industry, which has been able to cater the needs of the people at
prices, which were found to be lowest in the world. The credit for this
development is owed to Patents Act of India which was enacted in 1970[xviii].
There are two main provisions of this act that facilitated the process. Firstly,
the introduction of a process patent regime for chemicals and secondly, the
shortening of the life of patents granted for pharmaceuticals. [xix]
The objective of the Patents Act 1970 was to accelerate the development of an
indigenous Pharmaceutical industry which could make sure that the public of
India was sufficiently catered with drugs at low cost.
During the British colonial rule, India used to recognize the western style of
product patent protection for medicines and drugs. However, the Patents Act of
1970 replaced this regime of product patenting. Now, product-patents were
disregarded and this act paved way for process patenting. This process patenting
allowed the Indian pharma companies to copy foreign patents or say to produce
drugs which were reverse engineered without paying a license fee.
The impact of the same was that now there was enough competence in the domestic
markets to produce identical generic drugs at low prices legally within India.
The Act protected process patents for 7 years instead of the usual 15 years
needed to develop and test new drugs.
Indian Patent (Amendment) Act, 2005
(In consensus with TRIPS Agreement)
On March 23, 2005, the Indian Parliament passed the Patent (Amendment) Bill
2005. This was the third amendment to the Patent Act of 1970. This 2005 act was
in alignment with the requirements and guidelines set forth by the WTO and TRIPS
Agreement. Since the inception of this new act there have been serious concerns
regarding the impact of the act on the domestic generic pharmaceutical industry.
The concerns were whether the industry will be able to continue its work of
providing generic medicines at affordable prices.
In order to meet its TRIPs obligations, India amended its patent law on March
22, 2005, reintroduced Western style “product” patents for pharmaceuticals and
abolished its “process” patents law. This ended the protection that companies
enjoyed in India and directed the companies that they must pay reasonable
royalty for the selling of copycat drugs to the foreign patent holders within a
stipulated period of time. The amendment made reverse engineering or copying of
patented drugs illegal after January 1, 1995.
Now, the act only provides for two types of generic drugs in the Indian market.
First are the off-patent generic drugs and second are the generic drugs, which
were patented before 1995.
At present, nearly 97 percent of all drugs manufactured in India are off patent
and therefore will not be affected by this Act. New provisions such as
compulsory licensing are introduced. According to the amendment, new patent
holders are granted a 20-year monopoly starting on the date the patent was filed
and, without a compulsory license, no generic copies can be sold during the
duration of the patent.[xx]
Problem of Data Exclusivity in Access to Medicine in India
In order to obtain the market approval for a new developed drug, pharmaceutical
companies have to submit test records and clinical data to the national health
authorities. This data, which is submitted to the national health authorities,
is kept confidential. The innovator data is kept confidential for a certain
period of time to protect it against its unfair commercial use. Thus, such
confidentiality of data bars the generic manufacturers from such innovator data
for a stipulated period of time.[xxi]
The data exclusivity provided by US and EU Nations is for five and eleven years
respectively. Companies usually seek this data exclusivity in order exploit
their monopoly in a country. Such companies exploit their monopoly even though
they don't have any patents on that particular product in the country. Hence,
such data exclusions have considerable implications for countries like India and
other developing nations. Till now, there are no provisions regarding data
exclusivity in India[xxii]
However, if the country adapts to this system of data exclusivity, then the most
affected strata would be the companies producing generic drugs. Henceforth, such
generic companies will have to do their own safety and efficacy tests. It is
obvious that such tests involve high monetary expenditures and as a result
generic companies will be barred from manufacturing the generic versions of the
drug for period that would easily extend beyond the period of twenty years.
Also, this will also lead to the ineffective use of compulsory licenses given to
the manufacturer of generic drugs. [xxiii]
Supreme Court on: Access to Medicines (Novartis Case)
In the Novartis case, the Indian Supreme Court refused to allow one of the
worlds biggest pharmaceutical industries to patent a drug. The drug was a new
version of a cancer drug. The drug in question was a slight improvement over the
drug Glivec. It was held that such improvements did not amount to innovation.
This decision paved way for Indian generic drug companies to sell cheap copies
of the high priced patented drugs. This decision was held to be a major step
forward and this decision gave more importance to the human health than
patenting of drugs. [xxiv]
F. Hoffman-La Roche Ltd., v. Cipla Ltd. (Delhi High Court)
A similar stance was taken in this case. The court rejected the application of
injunction against the drug manufacturer Cipla for selling the generic versions
of the drug Erlotinib.
The court observed that when there are two competing claims where one being of
private interest and the other being of public welfare, then the fulcrum of the
judicial opinion should be in the favor of public interest. The damage of injury
done in the case of patents can be restituted in monetary terms whereas, damage
done to the public at large can not be equated in terms of anything.
It is just sheer cruelty and in humane behavior. Such damage in non-compensable
and irreparable. Hence, human health should be given more importance than patent
The current patent regime facilitates the monopolization of life drugs by MNCs
and as a result hinders the access to the same by making them unaffordable to
poorer or third world nations of the world. The viable solution to these high
priced patented drugs was the low costing generic drugs, which were produced in
countries like India. They offered an viable alternative to the expensive
patented medication. Hence, curtailing the deaths of millions of people.
However, after 2005, the situation changed. Developing nations like India had to
amend their laws in consonance to the rules mentioned in TRIPS Agreement. There
has been creation of certain artificial barriers by the current IP regime.
Though provisions like compulsory licensing exist but these artificial barriers
have rendered such provision to be futile. The reason for the same is the
lobbying of MNCs against the generic medications.
It should be recognized that there should exist a balance between public health
and innovation. But, it can be seen that the fulcrum is shifting towards
innovation and the larger public interest is being overlooked. If the fulcrum is
shifting towards innovation then it should be kept in mind that innovation and
scientific advancement are done to benefit the human life, and hindering the
accessibility of generic drugs in also hindering the right to life of people.
- Indira Gandhi at the World Health Assembly in 1982.
- Justice V R Krishna Iyer, Human health and patent law, Frontline, Volume
17 – Issue 21, Oct. 14 – 27, 2000.
- Justice V R Krishna Iyer, Human health and patent law, Frontline, Volume 17
– Issue 21, Oct. 14 – 27, 2000.
- Article – ‘Profits over People' AIDS India's National Magazine - http://www.frontlineonnet.com/fl2116/stories/20040813003210400.htm.
- The US Food and Drug Administration Centre for drug evaluation and
research – Office of generic drugs - http://www.fda.gov/cder/ogd/#Introduction
- For example, Paracetamol is the generic form of Panadol® or Tylenol® -
- Generic Drugs: The Solution or the Problem?' William Haddad.
- Generic Medicines: The Solution or the Problem? By William Haddad page 9
- See article ‘How increased competition from generic drugs has affected
prices and returns in the pharmaceutical industry' at http://www.cbo.gov/showdoc.cfm?index=655&sequence=0&from=1
- Tina Rosenberg - The New York Times Magazine 28th January 2001 www.nytimes.com/library/magazine/home/20010128mag-aids.html