Big Pharma and intellectual property: Why is India afraid of compulsory licences?

Towards the end of May, Russia shipped nearly a quarter of a million packs of medicines to India as humanitarian assistance to fight the devastating second wave of the novel coronavirus (COVID-19) pandemic. The packs contained the Russian generic version of Gilead Science Inc’s experimental anti-viral drug remdesivir that is used to treat patients hospitalised with the deadly infection.

The arrival of Remdeform, as the drug is called, highlighted the timidity of New Delhi in using its robust laws to make life-saving drugs accessible and inexpensive. Remdeform is being manufactured in Russia using a compulsory licence (CL), which is a flexibility permitted under the World Trade Organization’s (WTO) strict intellectual property (IP) rules.

These rules, labelled TRIPS — Trade-Related Aspects of IP Rights, allow member-countries to override the rights of the patent holders in the case of a national emergency on health.

In India, remdesivir is manufactured through voluntary licences (VLs) granted by Gilead, the patent holder, to generic-drug manufacturers that are allowed to make and export the drug according to the terms laid down by the originator company. Eight companies hold such licences.

VLs are considered less messy because they are quick and avoid the legal challenges that a CL invariably results in, although these are issued in special circumstances. VLs usually allow the firms to set their own prices even if the export markets are strictly circumscribed. Yet, remdesivir production by the Indian companies was not enough to meet the crisis in April-May as both demand and prices spiralled out of control, forcing India to seek assistance.

Russia said it had to perforce issue a CL in January this year after repeated requests to Gilead for a VL were ignored. One of the reasons cited by the Vladimir Putin government was a shortage of the drug and its steep pricing.

JSC Pharmasyntez has been allowed to override the patents owned by Gilead Sciences and Gilead Pharmasset LLC for one year, but has to pay royalties to the firms. A legal challenge by the US multinational was rejected in May by Russia’s highest court. Gilead describes the CL as “unnecessary and counterproductive”, but Russians may not agree since the generic version costs just one-sixth of the full price.

The Narendra Modi regime, on the other hand, has been extremely reluctant to take on Big Pharma. Even while the pandemic was leaving a trail of death and suffering, the country publicly stated its preference for VLs despite the Supreme Court and Delhi High Court urging it to consider CLs to meet the shortage of remdesivir and other drugs to treat COVID-19.

In affidavits to the court, the government claimed that the main constraint was a shortage of raw materials and essential inputs. It went so far as to state that “it is presumptuous to assume that the patent holder will not agree to more voluntary licences…”

What explains such a determination? Does it flow from the Modi regime’s verbal assurance to the US-India Business Council in 2016 that it would not issue any CL for drugs?

Oddly enough, there has been a surprising turnaround in the US stance. Previously  a rooted opposition to CL to protect corporate interests, Washington has now become a cheerleader for it. Over the past two decades, the US penalised or threatened with reprisals any country using the CL route to meet a public health emergency. Naturally, few dared to do so.

Now, however, Americans and Europeans are singing a different tune. With over 100 countries supporting the India-South proposal at WTO for waiver of TRIPS to ensure more equitable, or at least wider, access to therapies, vaccines and medical equipment to fight the pandemic, the US and the EU are assiduously promoting CLs as the best option in lieu of a full waiver. This, they claim, will overcome the patent blocks hampering the scaling-up of much needed medicines and vaccines.

The EU’s counter-proposal submitted to WTO in early June is rather disingenuous. It maintains that voluntary solutions and public-private cooperation are the most effective way of ensuring equitable access to covid treatments and vaccines. Since such voluntary agreements might not always be possible, “compulsory licensing is an important and perfectly legitimate fallback”.

These are extraordinary somersaults given their track record. India has issued only one CL in the trips era in 2012 when Hyderabad-based Natco Pharma sought one for Bayer AG’s overpriced cancer drug nexavar. It set off a global storm with the US and the EU assailing the action in strong terms. US trade lobbies have continued to portray India as a serial CL offender, although it has not approved any since then. 

The pandemic has changed the perceptions of even diehard protectors of pharma IP rights. From viewing CL as a ploy to undermine monopolistic rights, rich countries are now embracing it as an important tool for accessing therapies and products to fight COVID-19.

Starting early 2020, a dozen countries have amended their IP laws to facilitate speedier issuance of CLs. Among these are several EU members, including economic powerhouse Germany. Other countries were even quicker to issue CLs, the first being Israel. In March 2020, it lost no time in awarding a CL for an HIV-AIDS drug that was being repurposed to treat covid-19 patients, when the patent holder could not provide adequate supplies.

Against this backdrop, India’s diffidence is hard to fathom, specially when its laws on CL are among the most comprehensive and require no tweaking. What happened in April and May when Indians were scrambling for remdesivir was a black mark on functioning VLs. The Supreme Court was forced to remind the Modi government of the various sections of the IP law which facilitated CLs in a public health emergency. If any lesson has to be drawn from this, it is that a CL is superior to a VL.

CLs, for sure, are not the cure for all the challenges that the pandemic has thrown up. The IP landscape has changed dramatically and continues to do so as new products emerge. Patents are not being published and much of the technology remains out of scrutiny, under the guise of trade secrets. This is particularly true of the new mrna vaccines being produced in the US and Europe, whose replication is extremely difficult.

The glory days of India’s generic industry came from its skill in reverse engineering drugs developed from small molecules, basically chemical compounds. Surely remdesivir is not beyond its capabilities? Or is it that the revolutionary spirit of generic-drug makers has long died?

Leading companies, including Cipla Ltd, the stormy petrel of the HIV-AIDS era, are now well ensconced in the VL landscape. Even feisty Natco Pharma, which had recently sought, yet again, a CL for baricitinib has been persuaded to accept a VL instead from the patent holder. Baricitinib is an arthritis drug, now used to treat COVID-19 patients.

The era of CLs is clearly over. All hail VLs.

This was first published in Down To Earth‘s print edition (dated 16-30 June, 2021)

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