ETHICAL ISSUES FACED BY THE INDIAN PHARMACEUTICAL INDUSTRY

ARTICLE FROM:

DEBASHIS CHAND
associate-UBS Hyd
India signed GATT (General agreement on Trade & Tariffs) including Trips (Trade Related Intellectual Property Rights) on 15th April 1994. This was indeed a turning point for Indian Pharmaceutical Industry.

This included:

1. A patent term of 20 years from the date of filing.

2. Recognition of Product Patents.

3. Importance of a product to be acceptation on working a Patent.

4. Compulsory licensing to be confined to special circumference like emergency or abuse of Patent Rights.

Let me first give a brief analysis of the Indian Pharma Industry before going to the issue-

· R&D expenditure of Indian Pharmaceutical Organization is still among the lowest in the world

· The cost of manufacturing, conducting clinical trial, and research are lower in India than US and other developed countries.

· Greatest asset or strength for the industry lies in the abundant human capital, with India having large number of scientists having specialization in fields like microbiology,genomics,etc. Any pharmaceutical industry needs employee from the field of Organic chemistry, Biochemistry, Pharmacology, Analytical Chemistry. With a very well developed and diverse education system, India produces students who can meet these requirements of Indian Pharmaceutical Industry.

· Indian software prowness is a definite asset that will help pharma industry to develop new drugs in near future.

· Availability of funds is a major weakness for the pharma industry, with drugs requiring significant investment with no or little guarantee of success.

· Due to very low barrier to entry, Indian Pharma Industry is highly fragmented with about 300 large manufacturing units and about 18,000 small units spreads across the country.

Now the issue regarding the intellectual property rights and challenges faced by the pharmaceutical industry-

- First direct consequence is that the TRIPS agreement has a clause for product patent, which is more stringent than the process patent, as now products which are patented cannot be manufactured, even by using a different process. It is a major setback, as most manufacturers used to do reverse engineering to manufacture many crucial drugs, but with the agreement, now they cant.

- The public outrage over the high prices of life saving medicines has also raised public awareness on the problem of access to medicines and the role of patents in increasing the prices of medicines.

- The obligation under TRIPS to implement high standards of intellectual property protection, including the 20-year protection for patent rights and the obligation to recognize product and process patents, will effectively eliminate competition from generic pharmaceutical producers and allow for increased prices of medicines beyond the reach of even more patients in the developing countries.

- The use of patents is an deliberate act by big pharmaceutical companies in developed countries who can afford huge investments in R&D , to retain their competitive edge .

- Patent protection is justified by the incentive for creative activity, innovation and research and development. This is seriously questionable as the tradeoff in this case comes with life or death consequences.

- With the very high cost of many drugs, access to medicines would become very difficult to majority of people in the developing countries.

- The bulk manufacturing of drugs in developing countries, by reverse engineering would come to a standstill.

- The two clause of compulsory licensing and parallel imports, that gives right to country to overlook the patent and manufacture the drug without holder’s consent comes with serious restrictions and is disturbingly manipulated by the heavyweights in the pharmaceutical industry in the developed countries.

Finally I want to conclude by saying, that the TRIPS agreement is seriously inclined towards private interests rather than the public interests, which should have been other way around. We cannot afford to take chances in this industry as the negative consequences is far more worse for this industry resulting in human losses, rather than only financial losses. This also shows the grim picture of how very few multinational companies acting in their vested interests can cause such public harm and ignore their responsibilities not only to the society but also to the mankind.

The situation calls for amendment of the TRIPS Agreement so as to ensure a proper balance between the protection of private rights and corporate interests, and the promotion of public interests that is public health.