Healthy Skepticism Library item: 1576
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: Journal Article
Dabade G.
Of patents, licences and drug prices
Deccan Herald 2005 May 10;
Full text:
If drug prices have to remain within the reach of the people, TRIPS will have to be removed from the WTO agenda
The most frequently asked question by a common man is whether drug prices will go up as a consequence of the Patent Act changes made by the government recently. There is also the question of the fate of the Indian drug industry which hangs perilously on Compulsory Licensing.
Drugs that have been in the market till 1995 would in no way be affected. Drugs that have been introduced during the period 1995 to 2005 are all pending as patent applications. It is estimated that there are around 3,000 applications. If the Patent Office grants patent rights to any of these applications, then the price of the drug concerned will increase by 10 per cent or more.
This is because any person other than the patentee, if wishing to manufacture it, will have to pay royalty. This has been seen to happen in the case of the anti-cancer drug called Glivec which was granted the right to a Swiss multinational company Novartis, leading to a ten fold increase in its price, thus causing misery to thousands of patients.
The new amendment made to the Patents Act is clear that such Indian companies which are already producing these drugs can continue to produce them, after paying a royalty even if the drug is patented.
Hardest hit
But the most important and hardest hit will be the drugs that have been introduced after 2005 and if patented would definitely lead to monopoly by a drug company. And with monopoly granted and with no competition the drug company would increase the price of the drug. Let it not be assumed that price will increase by a few rupees – it would be exorbitant.
Rough estimates suggest that prices will increase at least by 15 to 20 times. A cancer drug that now costs Rs 9000-Rs 12,000 may shoot up to Rs 1.20 lakh. Anti-retroviral drugs for HIV patients may jump from Rs 7000 to nearly Rs two lakh for a one-year course. With the field of biotechnology growing leaps and bounds, it is hoped that in future many new drugs would be in the market. In fact this is what would help the multinational drug companies to reap huge profits. The earlier abilities of the Indian drug companies to quickly produce these drugs have been taken away.
As for Compulsory Licensing, for it to be effective, the procedures for granting such licences need to be made simple and effective. But unfortunately this has not happened in the amendment. The procedure has been made cumbersome. The entire process is excessively legalistic and provides the patentees (mostly multinational) the opportunity to buy time through litigation. The huge legal expenses involved in fighting the multinational drug companies holding the patents may dissuade the generic drug companies from applying for licences in the first place.
These are not mere theoretical possibilities. This is precisely what happened in India under the 1911 Patent Act (then known as Patent and Design Act 1911). It may be relevant to recollect that hardly any Compulsory Licences were granted during this period because the procedures were made terribly cumbersome. Hence the experience under the Patent Act of 1911 would be a rough guide to what is likely to happen in India unless something is done.
Two things need to be noted here. Firstly, most developed countries, like the UK, the USA and Canada, have used Compulsory Licensing extensively. And now they are advising developing countries not to use them! Secondly, nothing in the WTO agreement prevents India from making the compulsory licensing procedure simple and straightforward.
Doha declaration
The Doha declaration of WTO has made it amply clear. The US government when it used a Compulsory Licence when it faced threat from anthrax, did not face a single internal or external act of opposition. The Government use will ultimately depend on how such international business pressures are tackled. So eventually it all depends upon political will.
In the 18th century, Britain enforced the trade tax system on its colonies in America. This sought to ensure that the colonies would serve as a source of raw materials as well as markets for British manufactured products. The American colonies hit back at the powerful British interests and encouraged domestic production by home-spun textiles.
Again to rescue the British East India Company and its huge assets, tea duty was introduced, which triggered the Boston Tea Party and set in motion developments that brought independence and gave birth to the United States. Nearly 150 years later Gandhi in India hit at the British through the home-spun khadi movement. The efforts of the rich countries in trying to pressurise poor countries through the agenda of TRIPS will perhaps in the long term be a repetition of the same folly with the same consequences.
But for this to happen just “political will” would not be enough and what would be needed would be “people’s will”. Will that happen? And for that to happen, TRIPS has to be removed as an agenda from the WTO.
