Inter Press Service - October 24, 2001
Ranjit Devraj

"India's thriving drug industry has provided a good example of how drugs can be produced cheaply and profitably for local markets when unburdened by exhorbitant licensing fees," said Mira Shiva, an expert on pharmaceutical drugs with the Voluntary Health Association of India (VHAI).

Ironically, it was the United States that took India to the World Trade Organisation (WTO) dispute settlement tribunal -- and in 1999 it compelled India to begin working on legislation to introduce product patents and allow foreign patent holders exclusive marketing rights (EMRs) in the meantime.

Thus began the process of reversing policies that India has pursued since 1970, which systematically weakened intellectual property protection to ensure cheap and ready availability of a host of drugs, some of which are even smuggled into neighbouring countries like Pakistan.

India's policies fostered the growth of its legendary, privately-owned pharmaceutical industry that employs more than half a million people. This also ensured that drug prices remained strictly under government control.

Over time, Indian pharmaceutical companies developed the strategy of developing production capabilities by selling locally and then moving aggressively into global markets the minute patents expired.

When India's Ranbaxy Laboratories offered to supply 20 million ciprofloxacin tablets to the United States to fight anthrax at "very attractive" rates by mid-December, the offer ran up against patents held by the German drug giant Bayer Corp. in the United States -- valid until December 2003.

Bayer's patent may prevent the United States from refusing to accept a controversial outright gift of a million dollars worth of ciprofloxacin offered by Indian Foreign Minister Jaswant Singh to help the tide it over immediate shortages.

U.S. lawmakers have been calling for a lifting of Bayer's patent restrictions --ciprofloxacin is the generic name for Bayer's Cipro -- given the detection of anthrax spores in different parts of the United States and the huge rise in purchases of anthrax antidote there.

On Tuesday, U.S. health officials said the cost of one ciprofloxacin was now about 1.83 dollars a pill but that they were not going to pay that much for it under the situation.

Ranbaxy and its rival Cipla firm here have been eyeing the market for ciprofloxacin in the United States, where a billion dollars worth of the drug was sold last year at around five U.S. dollars per 500 tablets.

Indian generic versions are available locally at around 12 cents per 500 tablets.

One way out for the United States is the compulsory licensing route allowed under the Trade Related Intellectual Property Rights (TRIPS), which enables World Trade Organisation (WTO) members to allow cheap local manufacture in the public interest.

But compulsory licensing -- especially previous efforts in developing countries -- has often been resisted by powerful drug transnational corporations (TNCs).

These firm include those based in the United States that have been demanding higher levels of patent protection than that provided under TRIPS.

The International Federation of Pharmaceutical Manufacturers Associations (IFPMA) opposes compulsory licensing, arguing that it would constrict incentives for research and development and slow down the search for new and better drugs.

According to Shiva, the IFPMA is over-reacting given the sheer size of the global pharmaceutical market and its 400 billion dollar annual turnover, in which the developing countries have a small and negligible share.

She complains that even with the anthrax crisis on, the United States was not interested in changing the global patent regime that is unfair to poor people in developing countries. The United States is only interested in solving the specific case of ciprofloxacin shortages, she alleges.

Added Amit Sen Gupta, an expert on pharmaceutical drugs with the independent Delhi Science Forum: "The fact is that it is finally dawning on everyone that even developed countries need cheap drugs in times of crisis."

Sen Gupta said the argument of the IFPMA that compulsory licensing destroys incentives for research and development was specious in as much as this is happening in areas which had little relevance to the problems of developing countries.

"Take the case of tuberculosis where no new drug has been developed for the last 30 years -- although this situation may change now that there is a resurgence of the disease in developed countries," Sen Gupta said.

A 1996 World Health Organisation (WHO) report says that of the 56 billion dollars spent on health-related research and development worldwide, only 0.2 percent gets spent on pneumonia, diarrhoeal diseases and tuberculosis -- which together represent 18 percent of the global disease burden.

Sen Gupta also referred to the case of "orphan drugs" which were discovered to be effective against diseases in tropical and developing countries, but could not be manufactured because there were no profits to be had for the TNCs.

According to Yusuf Hamied, chairman of the Mumbai-based Cipla company which created a sensation earlier this year by offering anti-HIV cocktails at a fraction of prevailing global prices, the anthrax crisis carries its own lessons for India.

"India is yet to put its patent policy in place and it should now move to prevent exclusive and monopolistic practices in where food and health issues are concerned. We should not surrender to TRIPS and new patents laws should follow national interests," Hamied said.

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