Impact of TRIPS in India

Impact of TRIPS in India Impact of TRIPS in India An Access to Medicines Perspective Prabodh Malhotra © Prabodh Malhotra 2010 Foreword © Shovan Ray 2010 Softcover reprint of the hardcover 1st edition 2010 978-0-230-27278-1 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2010 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-32348-7 ISBN 978-0-230-29074-7 (eBook) DOI 10.1057/9780230290747 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Malhotra, Prabodh, 1951– Impact of TRIPS in India : an access to medicines perspective / Prabodh Malhotra. p. ; cm. Includes bibliographical references. ISBN 978-1-349-32348-7 1. Pharmaceutical industry—India. 2. Pharmaceutical policy—India. 3. Health services accessibility—India. 4. Agreement on Trade-Related Aspects of Intellectual Property Rights (1994) I. Title. [DNLM: 1. Agreement on Trade-Related Aspects of Intellectual Property Rights (1994) 2. Drug Industry—India. 3. Health Services Accessibility—India. 4. International Cooperation—India. 5. Patents as Topic—legislation & jurisprudence—India. QV 736] HD9672.I52M35 2010 338.4761510954—dc22 2010027535 10987654321 19 18 17 16 15 14 13 12 11 10 Transferred to Digital Printing in 2011 Dedicated to my late parents Krishna Vati and Sham Lal Malhotra Contents List of Tables xii List of Figures xiv List of Boxes xv Abbreviations xvi Foreword xviii Acknowledgements xx 1 Introduction 1 1.1 Introduction and background 1 1.2 Key issues and key questions 3 1.3 Organisation of the book 5 Part I Influence of Global Forces on Access to Medicines 2 The WTO and the TRIPS Agreement 9 2.1 Introduction 9 2.2 Patents and innovation 11 2.2.1 The case for protection of intellectual property rights 13 2.2.2 The case against protection of intellectual property rights for medicines 16 2.3 The TRIPS agreement 19 2.3.1 The role of TRIPS in the pharmaceutical industry 20 2.3.2 Flexibilities under TRIPS 21 2.3.3 Protection of submitted data 26 2.3.4 Other Articles of importance 28 2.4 Conclusions 30 vii viii Contents 3 The Global Pharmaceutical Industry and Developing New Drugs 32 3.1 Introduction 32 3.2 The industry structure 33 3.2.1 Pharmaceutical sales, companies, and profits 34 3.2.2 Major pharmaceutical markets, pharmaceutical spending, and generics 37 3.3 Developing new drugs 42 3.3.1 The process of drug development 43 3.3.2 Development time 44 3.3.3 Development costs 46 3.3.4 Direction of pharmaceutical research 51 3.4 Conclusions 52 Part II Access to Medicines in India 4 Development of India’s Pharmaceutical Industry 57 4.1 Introduction and background 57 4.2 Growth of the India pharmaceutical industry 58 4.2.1 The significance of the small pharmaceutical firms 59 4.3 Exports and imports 61 4.3.1 TRIPS, India’s pharmaceutical exports, and access to medicines 63 4.3.2 Imports 68 4.4 Foreign direct investment 68 4.5 Emerging business models in the pharmaceutical sector 72 4.6 Conclusions 78 5 TRIPS and the Indian Patents Regime 80 5.1 Introduction 80 5.2 Impact of regime change on pharmaceutical industry 81 5.3 The post TRIPS patents regime 85 5.4 Provisions to oppose patents 90 5.4.1 Rising litigations 91 5.5 Uncertainties and ambiguities 99 5.5.1 Access to medicines and the new patent regime 103 Contents ix 5.6 Pharmaceutical innovation 104 5.6.1 The role of government in innovation 108 5.7 Conclusions 109 6 Price Controls and Drug Affordability in India: Policy Options 111 6.1 Introduction 111 6.2 Drug price controls in India 112 6.2.1 DPCO – 1995 113 6.2.2 Pre-1970 Price controls 114 6.2.3 DPCO – 1970 114 6.2.4 DPCO – 1979 115 6.2.5 DPCO – 1987 116 6.2.6 DPCO – 2004 (proposed but not yet enacted) 116 6.3 Continuing search for alternatives 117 6.3.1 Trade margins 119 6.4 Market behaviour 120 6.4.1 Price reductions under the voluntary agreement 121 6.4.2 Examining changes to drug prices (2005–08) 123 6.5 Price control models 126 6.6 Conclusions 130 7 Health Insurance in India 131 7.1 Introduction 131 7.2 The Indian approach to health insurance 131 7.2.1 Private health insurance in India 135 7.3 Patient co-payments 137 7.4 Conclusions 140 8 Broadening Access to Medicines and Healthcare in India 141 8.1 Introduction 141 8.2 Providing access to medicines in India 144 8.2.1 Developing the IndiaHealth model 145 8.2.2 The proposed model 146 8.2.3 Implementing the IndiaHealth model 147 8.2.4 Comparing out-of-pocket expenditure 155 8.2.5 Benefits of the proposed model 159 x Contents 8.2.6 Costing the IndiaHealth programme 161 8.2.7 Funding the IndiaHealth programme 168 8.3 Conclusions 171 Part III Global Perspective 9 Is TRIPS Appropriate for Developing Countries? 175 9.1 Introduction 175 9.2 Patents in developed countries 176 9.2.1 Introduction of pharmaceutical product patents 177 9.3 Costs and benefits of TRIPS 180 9.3.1 Costs and benefits to developing countries 180 9.3.2 Implications for developed countries 183 9.3.3 Further implications for developing countries 184 9.3.4 Recent investigations of protection of pharmaceutical patents 192 9.4 Conclusions 200 10 Which Way Ahead? 201 10.1 Introduction 201 10.2 Alternative models 201 10.2.1 Differential pricing 202 10.2.2 Differential patenting 203 10.2.3 Donating drugs 204 10.2.4 Orphan Drug Act as a model 205 10.2.5 Incremental value based rewards 206 10.2.6 Advance purchase commitments 207 10.2.7 Public–Private Partnerships (PPPs) 207 10.2.8 Open access 208 10.2.9 Health Impact Fund 210 10.2.10 Minimum patenting 211 10.3 Conclusions 212 11 Final Conclusions 214 11.1 Introduction 214 11.2 Answering specific questions 216 11.2.1 How does the regime change impact on India’s pharmaceutical exports, particularly exports of the low-cost imitations of patented drugs to the poor countries? 216 Contents xi 11.2.2 What is the effect of TRIPS on foreign direct investment (FDI) into the Indian pharmaceutical industry? 217 11.2.3 How is the business model of domestic firms changing after TRIPS? 218 11.2.4 What impact does the regime change have on the innovative activities within the Indian pharmaceutical industry? 218 11.2.5 How effective have the price controls in India been in providing access to medicines until now and what form of price controls is India likely to have in future? 219 11.2.6 How can India extend access to medicines to its entire population? 220 11.2.7 Is the TRIPS Agreement fair to developing countries? 222 Appendix A 225 Appendix B 238 Appendix C 272 Appendix D 279 Notes 286 References 289 Index 314 List of Tables 3.1 Blockbuster drugs and sales (2000–06) 35 4.1 Estimates of manufacturing units 1969–70 to 2004 58 4.2 Exports of India’s pharmaceutical industry (Rs. Million) (1999–00 to 2006–07) 63 4.3 Drugs and pharmaceuticals with patent expiry in 2000 or beyond 66 4.4 FDI into the Indian pharmaceutical sector in Rs. million (1975–2000) 70 4.5 Selected foreign acquisitions by India pharma 77 5.1 Major differences in the pre- and post-TRIPS Patents Act 86 5.2 Development of drugs by select Indian firms (2006–07) 106 6.1 Drug price controls in India at a glance 112 6.2 Summary examination of claimed price reductions (2008) 122 6.3 Price changes during two study periods 124 7.1 PBS Safety Net thresholds from 1 January 2010 139 8.1 Entitlements of IndiaHealth cards at a glance 150 8.2 Calculating current health and medicine expenditure (Rs.) in 2005–06 156 8.3 Annual expenditure on medicines under current and proposed models 158 8.4 Estimates of out-of-pocket medicine expenditure (Rs.

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