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Tuesday, October 15, 2019
Chandra Mohan is an economics and business commentator.
Oct 22 2015 (IPS) - Reflecting President Barack Obama’s pivot to Asia, the US, Japan and 10 other Pacific Rim nations have inked a Trans-Pacific Partnership (TPP) agreement. This is the largest mega free trade agreement (FTA) in two decades and represents 40 per cent of the global economy.
This pact puts tremendous pressure on the European Union to conclude its Transatlantic Trade and Investment Partnership with the US. China, too, will seek to hasten the Regional Comprehensive Economic Partnership. With the Wold Trade Organization (WTO) unable to conclude the Doha Round, India’s policy makers feel that it is in the country’s interest to be part of at least one of these mega FTAs that reflect the new global architecture for trade.
What are India’s gains if it joins the TPP? According to economic theory, the trade creation after joining this grouping will benefit India as its exports go up manifold. Cheaper imports, in turn, lower inflation. There will also be much greater Indian participation in US and Japanese supply chains in the Indo-Pacific region. Larger export markets would bring economies of scale to textile and other manufacturing firms. But there will be an adverse impact on the demand for its products if it does not join. Vietnam thus will gain at India’s expense in garment exports as it enjoys duty free access to the US while India faces duties of 14-30 per cent.
But TPP is less about trade and more to do with stricter intellectual property rights (IPRs), labour, environment standards and investor-state dispute settlement. Its IPR regime is Big Pharma-driven with provisions that adversely affect the availability of affordable medicines in the developing world. In fact, it would be disastrous for public health in India. The proviso to grant patents to “new uses of a known product” is fraught with grave implications as it may lead to ever-greening of patents. Similarly, the special treatment extended to pharmaceutical patents, placing them in a preferred category compared to other technologies, by patent term adjustment for regulatory delays, also will lead to a longer term for patents, argued TC James, consultant with the think-tank RIS at a recent panel discussion on TPP.
This trade pact thus will bring in new handicaps for India’s pharmaceutical industry, which are mostly generics, from getting marketing approvals. A case in point is the data exclusivity provisions for test data of biologics – which are grown from live cells – for five to eight years. These constitute a major barrier for the entry of cheaper generic versions, or biosimilars, in which India has a proven world-class capability. US law protects data collected during the development of biologics for 12 years. Pressure from Australia and others ensured that this was brought down to five years but this could go up to eight years.
In the fine-print of Article QQ.E.20, Big Pharma ensured that market exclusivity for biologics is provided either through at least eight years of data protection, or at least five years of data protection with other measures to “deliver a comparable outcome in the market,” As the latter option is problematical, market exclusivity will inevitably extend further by another three years. This means a longer period when monopoly pricing can be exercised by Big Pharma that will raise the price of drugs and take them out of reach for many people in India and even in the 12-menber grouping, for that matter.
India will thus seriously compromise its public health objectives if it chooses to join TPP. It has a well-established legal framework for IPRs and its courts have been active in enforcing this regime, exemplified by the denial of a patent for an anti-cancer drug to a foreign drug major in 2013 as it did not meet the criteria of inventiveness in India’s Patent Act. Such judicial activism has also been manifested in the award of a compulsory licence for the local manufacture of an anti-cancer drug due to the unaffordable prices charged by the global pharma giant that held the patent.
Not surprisingly, Big Pharma has for long been up in arms against India’s IPRs and has sought to pressurize the country to dilute some of the rigours of its legislation for drug patents. The United States Trade Representative has listed India under the Priority Watch list for the enforcement of its patent legislation, especially for drugs even though it is Agreement on Trade Related Aspects of Intellectual Property Right-compliant. What better opportunity to make amends under the guise of joining TPP. Compulsory licensing thus is a no-no. So is Section 3(d) of India’s Patent Act, which raises the bar for what is inventive to be granted a patent. These flexibilities provided by WTO’s TRIPS agreement are bound to clash with TPP that has low inventiveness thresholds to be granted patent protection.
India must not buckle under such pressures to weaken its IPR legislation. According to its national policy on IPRs, the right to health is an integral part of the right to life enshrined in the Constitution of India. India is committed to providing its citizens access to affordable medicines, quality healthcare and innovative products and services. The Patents Act as amended in 2005 protects innovation in pharmaceuticals and provides for measures to safeguard public health. India should continue to use the flexibilities available under TRIPS agreement and not compromise on the patent linkage and patent term extensions sought by TPP.
Nonetheless, India shouldn’t desist from efforts to engage with Big Pharma if it entails win-win outcomes that ensure affordable drugs to its people. The US drug major Gilead Sciences Inc introduced tiered pricing, whereby it charges lower prices in India compared to prices in the US. Gilead and nine Indian companies entered into a partnership based on effective IPR protection and licensing to produce an affordable version of a drug for Hepatitis C. India thus has access to patented products at affordable prices while ensuring a decent return for the innovating company. Can’t other US drug majors be persuaded to follow Gilead’s example? India does not need to join the 12-member grouping for such outcomes that further its public health objectives.
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