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Standing up to patent bullying

“Under the Indian law, compulsory licenses can be granted on several grounds including ensuring availability to the public at reasonable price, meeting the demand for the patented product, and tackling national public health emergencies.”

The Modi government must stop engaging U.S. bureaucrats as patent consultants and instead showcase the Indian patent statute as an exemplar for a balanced regime

Earlier this month, the media reported that India “privately” assured the United States that it will not issue any more compulsory licenses. This report was reminiscent of a theory propounded by psychologist Lenore E. Walker in 1979 on abusive patterns in relationships.
Four stages of abuse

“Under the Indian law, compulsory licenses can be granted on several grounds including ensuring availability to the public at reasonable price, meeting the demand for the patented product, and tackling national public health emergencies.”

Walker studied abuse in family situations and outlined an important model detailing four stages of abuse. Had the U.S. and India been human beings, this would have been a classic case of household abuse. The first stage documented by Dr. Walker is tension-building where there is strain in the relationship and one partner tries to dominate the situation. Indeed, the U.S. has successfully dominated the discussions simply by citing India every single year, most often unfairly, to take control of the situation. For years, the Pharmaceutical Research and Manufacturers of America (PhRMA) has pounded India using the Office of the United States Trade Representative (USTR), an administrative body, as its chosen mechanism to repeatedly criticise India and unfairly escalate issues on a yearly basis. The preaching from the PhRMA filtered through the USTR’s pressure tactic has been in complete disregard of the impact on India’s sovereignty and public health. The issuance of notices by USTR for submissions by industry followed by the dramatisation to convene public hearings expecting sovereign nations to justify their positions to the U.S. administrative body are all acts leading towards escalation of tensions. In fact, the USTR process is a documented attempt to dominate and direct other countries’ trade postures. The process allows the U.S. to unilaterally exert pressure indirectly to amend laws or cease fair implementation of local laws although the U.S. has agreed to multilaterally resolve all disputes. Importantly, the legality of such unilateral Special 301 process of the USTR is, at best, shaky under the World Trade Organisation’s (WTO) jurisprudence. Yet, it allows the U.S. to cite the USTR’s Special 301 process to take control of the dialogue — this forms Dr. Walker’s second stage of the abusive cycle (the incident itself).

The announcement from India, though, landed the country into the third stage. Dr. Walker terms this as the honeymoon stage wherein the abused feels confused and may mistakenly feel responsible. India is in classic third stage, with Prime Minister Narendra Modi attempting to pacify President Barack Obama by instituting a committee to create a National Intellectual Property Rights policy long after the statutes were amended to become compliant with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Now, the “private” announcement to not implement an important flexibility — compulsory license — established as a safeguard to protect public health firmly posits India into the end of the third stage of abuse. The fourth stage, according to Dr. Walker, is a phase of relative calm and peace, which we hope India will enjoy.

If there is a cautionary note here, it is that reconciliation never ends the cycle of abuse. Assuredly, neither PhRMA nor the USTR will relent or retract from this pattern until India economically harms itself by instituting TRIPS and other measures leaving the Indian generic industry on a suicidal path. After all, abuse is a pattern of control that one party exercises over the other to force actions or inactions that cause some form of harm to the abused.
Compulsory license

Meanwhile, the Modi government needs to appreciate that compulsory license is an important flexibility that countries negotiated as part of their membership with the WTO. India has one of the most sophisticated compulsory licensing provisions which is fully compliant with the TRIPS agreement. Under the Indian law, compulsory licenses can be granted on several grounds including satisfying the reasonable requirements of the public with respect to the patented invention, ensuring availability to the public at reasonable price, meeting the demand for the patented product, and tackling national public health emergencies. The step India took when it compulsorily licensed the Bayer drug, Nexavar, which was originally priced approximately at $4,700 per month and beyond the reach of even the top 20 per cent of Indians, was bold. It showcased India’s confidence that its patent statute has been carefully engineered to accommodate India’s national objectives within the scope of the flexibilities accorded under the TRIPS agreement.
Patenting, a concern in the U.S.

Further, the Modi government will do well to appreciate that even in the U.S., patenting and its effect on unrealistic drug pricing has become a major concern. For example, in 2015, Senate Finance Committee Ranking Member Ron Wyden and senior committee member Chuck Grassley sought public comments on the high price of Sovaldi, a Gilead drug, and its impact on the U.S. health care system. In 2016, several Democratic members of the House reportedly urged government agencies to consider diluting or diminishing the exclusive rights of drug companies. Recently, a survey from the Kaiser Family Foundation reported that 77 per cent of the American public picked the increasing prices of drugs for HIV, hepatitis, mental illness and cancer as their foremost health concern. Given such realities, India needs to confidently showcase how it handled Bayer’s unrealistically high pricing of Nexavar using Section 84 of the patent statute (compulsory licenses).

Importantly, compulsory licensing forms a part of a larger package of flexibilities that India negotiated with the support of other G-77 and African countries in the Doha Development Round. These are valuable concessions that India cannot afford to forget or renege from. The burden is on this government to ensure that its work is not seen as resulting in losing the ground that previous governments had gained on the subject. In any event, it is best for the Modi government to stop engaging U.S. bureaucrats as patent consultants and instead showcase the Indian patent statute as an exemplar for a balanced patent regime to the rest of the developing world.

(Srividhya Ragavan is Professor of Law, Texas A&M University School of Law.)