Prime Minister Narendra Modi is in the United States. As part of the agenda for the visit, both countries will unfold their wishlist for the other.
Chief on the list will be the US Trade Representative’s (USTR’s) requirement that India wind back parts of its posture on patents. India’s patent reforms have long bothered the US, causing the latter to take an uncharacteristic and sometimes, an unwarranted interest.
In every one of the USTR watchlists, India has featured as a ‘priority’ country, a status bestowed on countries whose trade laws are considered a barrier to US trade. This year, India was red-flagged as a ‘Priority Foreign Country,’ a special status designated for the intellectual property pariahs of the world.
The USTR was most irked this year by a compulsory licence that India issued for Nexavar, useful to treat kidney and liver cancer, over which Bayer held a patent.
Bayer initially priced Nexavar at approximately $4,700 per month, which was five times higher than the median annual income in India.
With 20,000 patients suffering from liver cancer and another 9,000 patients with kidney cancer, India’s efforts to compulsorily license Bayer’s patent and force it to provide a licence to the technology at a reduced price was done in a year when the company recorded a profit of over $678 million.
Members of the pharmaceutical association decried the Indian Supreme Court judgment that denied patent protection for Novartis’ patent on Glivec, a drug to treat certain forms of leukemia.
Interestingly, that same year, the US Supreme Court overturned the decisions of the Federal Circuit in five out of the six patent disputes that it considered. Similarly, the invalidation rate of patents at the US Patent Trial and Appeal Board is close to 90%.
The USTR fiasco incorrectly shows India as being anti-innovation.
India has demonstrated its commitment to innovation by instituting massive changes to further intellectual property in full conformity with the world trade agreements.
The sophistication of a patent system is not in the number of patents issued. It is in the quality of patents. Ensuring a high bar to allow quality patents is an integral ingredient for balancing innovation with access.
Instituting policies that preserve access to medication is important for a developing country like India with a high poverty index.
Appreciating India’s commitment to intellectual property, Gilead has licensed its technology to generic drug companies in India and South Africa for a 5% royalty with the right to export to 91 low-income countries.
The interest to enter into voluntary licences showcases a sense of responsibility which innovative pharmaceutical companies should embrace instead of decrying compulsory licences, especially considering that compulsory licensing is a delineated right under the trade laws for use by poorer nations.
India’s position on patents is a trend-setter because its effectuates different models, including a different pricing structure for poorer markets, or price control, which is prevalent in Europe to promote innovation while enabling access.
The importance of the innovation complex and the role of access within that paradigm are much emphasised by the Ebola era, which is characterising the current times.
It underlines the reach of public health crises and poses potent threats to the global economy. Modi’s visit should reinforce that as a working democracy India is capable of establishing policies within the scope of its trade commitments and socio-economic constraints.
(Srividhya Ragavan is professor of law, University of Oklahoma College of Law, and Raj Dave is partner, Pillsbury Winthrop Shaw Pittman LLP. The views expressed by authors are personal.)