FTA: India fights back over its generics

Indian Trade Minister Anand Sharma did not mince his words in early July: India will accept no further tightening of patent protection regulations for medicines in the proposed Free Trade Agreement (FTA) with the European Union (EU). It specifically rejects the data exclusivity being sought by pharmaceutical companies in drug approval processes. Instead, India will ensure that the high-quality generic drugs it produces continue to be accessible for all countries.

Initially the EU seemed to have capitulated. But in a spectacular turnaround, it now seems determined to stand firmly by its position.

Data Exclusivity – patent protection all over again

The term data exclusivity refers to the results of clinical trials and other data submitted by companies when applying for marketing approval for a drug. Exclusivity means that for a period of 5 years (USA) to 10 years (EU) third parties may not use the data to seek approval of a generic product. Plainly stated, data exclusivity prevents generic drugs from being approved during this period, or it delays them and makes them considerably more expensive because the clinical tests must be repeated. This applies even to drugs that are not patented in the country concerned.
For people in developing countries most of whom cannot afford the expensive original products, data exclusivity therefore jeopardizes health care. This is why the UN Special Rapporteur on the Right to Health, Anand Grover, as well as many health organizations, have expressly urged the EU to drop its demand, especially since it goes beyond the existing rules of the World Trade Organization (WTO) on intellectual property.
The UN programme on HIV/AIDS (UNAIDS) too has welcomed India’s refusal, pointing out that India produces some 85 per cent of first line anti-retroviral drugs and that the cost of this therapy has fallen from USD 15,000 originally to USD 86 per person per year. Indian civil society has also hailed their government’s decision as a success. For years, networks such as «People living with HIV/AIDS» have been militating in that country against restrictions on generic drug production.

Swiss pharmaceutical companies want more

Despite what seemed to be an important victory for the opponents of data exclusivity – the matter is not yet settled. The FTA that India is currently negotiating with the European Free Trade Association (EFTA) could yet prove to be a loophole. In matters of patent protection, Switzerland plays a leading role in EFTA and is insisting on further-reaching concessions. EFTA partner Norway has withdrawn from the dossier as it considers Switzerland's demands too excessive. EU Trade Commissioner Karel De Gucht had already made clear that the EU wished to enjoy the same advantages being extended to any other of India's contracting partners.

It is yet to be seen whether Switzerland, which has been granting patents on pharmaceutical and chemical products only since 1978, is prepared to waive data exclusivity in the agreement with India, or whether it would rather see the talks fail. What is clear is that India is a much tougher partner than Colombia or Peru. Switzerland did manage to include data exclusivity in its FTAs with those countries. Scienceindustries – the Swiss association of chemical, pharmaceutical and biotech companies – has in any case already announced that it does not want an agreement at all costs. The Swiss daily newspaper NZZ (10/29/2011) quoted the association’s Director Beat Moser as follows: «A free trade agreement without extensive dismantling of tariffs on industrial goods and without improved intellectual property protection is an economically bad agreement and should not be signed.»

Significant cost factor

According to the World Health Organization (WHO), data exclusivity takes all of 15 years after entry into force to be fully reflected in the prices of medicaments. In 2007 Oxfam studied the impact in Jordan of the five-year data exclusivity in its FTA with the United States. The prices of medicaments there have risen by 20 per cent since 2001. For some 80 per cent of the drugs introduced into that market by 21 multinationals between 2000 and 2006, the exclusivity provisions prevented the parallel introduction of cheaper generic products. Sick people in Jordan had to pay two to ten times more for new drugs than patients in Egypt, which has its own drug production industry, writes Oxfam.

A similar study for Colombia  found that the 5-year data exclusivity in its FTA with the USA would lead to an additional USD 675 million per year in spending on medicaments nationwide by 2020. By 2030, Colombians would even be spending an additional USD 989 million per year. The alternative for Colombians would be to reduce their consumption of medicaments by 30 per cent by 2020 and a colossal 47 per cent by 2030.

Isolda Agazzi, Alliance Sud

India: Pharmacy of the South

For a long time in India it was only possible to patent manufacturing processes but no end products in the pharmaceutical sector. The country was thus able to build up its own pharmaceutical industry, which was concentrated mainly on generic products. This earned the subcontinent the epithet «pharmacy of the South».

The subcontinent had also long spearheaded the resistance of developing countries to the WTO agreement on intellectual property rights (TRIPS). It foresees 20 years of patent protection for medicaments. Low and middle-income countries, of which India is one, were granted a transitional period of 10 years to apply the provisions of the agreement (the poorest countries until 2016). India acceded to the Trips Agreement in 1995. But it made good use of the exceptional provisions and has become the world's largest manufacturer of generic products.

Data exclusivity (see article above) does not apply in the WTO. The TRIPS agreement allows manufacturers to register generic products without having to repeat the clinical trials. India produces generic products worth EUR 15 billion annually, half of which is exported to developing countries. Some 70 to 80 per cent of AIDS drugs bought by UNICEF, the Global Fund to Fight AIDS, Tuberculosis and Malaria and Médecins sans frontières (Doctors without borders) come from Indian factories.

Isolda Agazzi, Alliance Sud

Article published in: Alliance Sud News No. 70, Winter 2011/12