The indigenous question of patents and pricing

The Economic Times 11 Mar. 08 Tuesday P 17 Delhi

INDIAN drug companies have been faring dismally, as opposed to their counterparts headquarterd in the US and Europe as far as high-end drug discovery is concerned. The situation is not any different in core drug discovery—read invention, of new chemical entities (NCEs) with confirmed commercially relevant therapeutic value and tolerable toxicity.

This is despite recent years’ hype about Indian pharma companies’ licensing out some molecules at clinical and pre-clinical stages of development to foreign drug companies and R&D institutes. Most of these licensing deals have come a cropper because these drug molecules have failed to pass through the later stages of clinical development. The results have almost invariably been abandonment of these molecules by foreign companies which licensed the molecules in.

The government has been supporting the R&D ventures of private pharma companies in some ways. In recent years, publicly funded institutions like CDRI, IICT, CCMB, CBT etc. under the CSIR as well as other premier institutes like NIPER have been partnering with private companies, with greater willingness. These partnerships mostly comprised peripheral research activities but included some new molecule development activities and frontier research (like genomics and stem cells) also.

Fiscal incentive (150% weighted deduction of R&D spend on computing income tax liability) has been another kind of government support. Then there are many schemes which essentially allow pharma companies to avail of public funds for R&D, although these funds have deplorably small sizes when gauged in the context of the colossal funding requirements for core and high-end R&D.

Partly for the dearth of finances, drug majors in India are now focusing on second-rung research activities like new delivery systems. One form of government support for drug R&D has been an assertion in the drug policy that drugs begotten from indigenous R&D would be spared price control for the first five years in the market. Some companies have already benefitted from this measure. However, an issue has now emerged.

The government has now made it clear that it would introduce a system of premarketing negotiation of the prices of patented drugs. What is being said is the government would ensure that prices of medicines that would get patent protection in India would be sold cheaper than their lowest “international price.” Sources say the Canada model, which guarantees the lowest price for a patented drug anywhere in the world, is likely be emulated here. (Of course, purchasing power difference between the two countries would be factored in). The guidelines are being framed.

The issue mentioned above is that wouldn’t the new system be at odds with the present policy of giving five-year exemption from price control for drugs begotten from indigenous R&D?. Why should there be a special intellectual property dispensation for Indian companies? Is such differentiated treatment compatible with the WTO’s TRIPS agreement? Already, the western governments decry Indian patent law for its alleged TRIPS-minus nature. However, a sizeable section of experts across the globe, including those in the WTO’s own World Intellectual Property Organisation disagrees with the western governments’ stance.

These experts extend their allegiance to India’s Patent Act, including the most contentious provision of Section 3(d) which seeks to enhance the standards of patenting.Although India has gained considerable international approbation for its courageous defence of the patent law that is strictly TRIPS-compliant without being TRIPSplus, there is now a concern that the differential treatment for Indian companies would undermine this support base. The contention is that existing incentives like low cost funds and income tax relief are tenable schemes to sour indigenous R&D but not a differential pricing of patented drugs. Anybody listening?

With thanks from The Economic Times
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