A Thin Red Line ...

Developing nations - once ignored & considered to be closed economies, but now the biggest area of growth for most multinational corporations- have always had a strangely dichotomous relationship with the industrial powerhouses of the west. Cheap labour, abundant resources, large talent pools, have all spurred on the R&D investment & outsourcing by major pharmaceutical firms. Even though the generic, CRO & API scene is thriving in many Asian & east European countries, big pharma is still very reluctant to launch their new drugs here. Perhaps where this is most prominent is India - where most multinational pharma companies have held back from launching new products since 1995 for fear of them being immediately copied & manufactured by the generic mafia.

India has had a booming, cost effective generic industry since the 1970's when the government decided to amend its patent act to exclude pharmaceutical products from patent protection. This action catapulted India from a country importing most of its medicines at some of the highest prices in the world to a country that was self-reliant in producing life-saving medicines. India has been and remains the producer of choice for medications in most developing countries, producing medicines of assured quality that meet all international standards, at the lowest costs and highest volumes. Self sufficiency did come at a price though, and for India this meant sustaining a closed economy void of any foreign investment.

On Jan 1, 2005, India finally opened its doors to the world by becoming a member of the WTO. This also meant embracing the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. TRIPS required WTO member states to grant patents on all classes of products (including medicines), to provide protections for a minimum of 20 years, and to allow patent rights to be satisfied either by importing the drug or by producing the drug domestically. India was now required to start collecting drug patent applications filed between 1995 and 2005 and to amend its patent law by Jan. 1, 2005. Despite these new requirements, the TRIPS agreement allowed the continuing production of pre-1995 drugs and several "transitional" years to become TRIPS-compliant. It also contained important allowances enabling access to lower-priced medicines. These included rights to issue compulsory licenses (involuntary rights to the process and product with payment of a reasonable royalty) and rights to parallel import (unrestricted rights to buy patented medicines previously produced and sold elsewhere at a lower cost).

The new Patents (Amendment) Act of 2005, attempts to balance the interests of the domestic industry while trying to entice big pharma to increase their capital investment in the subcontinent. No small feat for a nation known for notoriously one sided policy making. Intense lobbying & political pressures mean that the new Act does leave some loopholes that have social activists up in arms. Some of the main points of contention are:

1. Instead of limiting patent protection to "new chemical entities," the act creates rights to patent certain new uses, formulations, delivery systems, combinations of existing products, and minor variations of existing chemical entities.

2. The act makes no changes to the procedurally laborious and inefficient compulsory licensing scheme.

3. The act fails to specify guidelines for setting modest royalty rates (2-4 percent) for compulsory licenses and, except in a government-declared emergency, it requires applicants for compulsory licenses to wait three-years before applying.

4. The act grants 'patent-like' rights for patent applications between the publication and approval of the patent deterring generic entry even in cases where the patent application may later be denied.

Plans to enforce 5 year data exclusivity for clinical trial information are also on the table even though this is not required by TRIPS. This TRIPS-plus exclusivity would prevent a generic producer and the drug regulatory authority from relying on previously submitted data. The generic producer would be required to duplicate costly, time-consuming and possibly unethical clinical trials to prove what is already a matter of record.

India's policy makers now find themselves in an unparalled situation. Do they continue to champion the effort to provide low cost, effective medication for the millions of poverty ridden individuals or should they risk the countries rich generic heritage in their pursuit of becoming an economic powerhouse? The government is being increasingly vocal in trying to allay big pharma's fears and are pushing the agenda of greater investment. However, the numerous opposition avenues being utilised by the domestic companies & activists are clearly retroactive. GSK has had to withdraw its patent applications for the antiretrovirals Combivir, Abacavir & Trizivir, and Novartis lost its landmark case against section 3d of the Indian Act in 2006. Perhaps more importantly India has set a precedent for other developing nations. Thailand is working swiftly towards an efficient compulsory licensing system & the Phillipines is also modeling its strict patent standards to be in line with that of India's.

The million dollar question is: With the increasingly westernized population (in terms of disease profiles) & burgeoning middle class in these developing economies, how much longer can big pharma afford to stay out of these markets? With drying pipelines, patent clocks ticking down, & increasingly negative publicity perhaps embracing compulsory licensing and forming north-south networks isnt such a bad idea?