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In an unexpected development, the Indian government has supposedly agreed to restrict compulsory licenses that allow generic drug makers to make low-cost versions of brand-name medicines, according to documents filed by two business groups with the US Trade Representative’s Office.

The disclosure represents a potentially significant victory for global drug makers, which have complained that successive Indian governments have favored India’s domestic pharmaceutical industry at their expense. Compulsory licenses allow generic companies to manufacture copycat drugs without the consent of the brand-name drug maker that owns the patent.

“Industry continues to be concerned by the potential threat of compulsory licensing,” the US Chamber of Commerce wrote to the US Trade Rep, which each April issues a report that features a Priority Watch list of countries singled out for failing to protect and enforce patent rights. India is a perennial.


“While the Government of India has privately reassured industry that it would not use compulsory licenses for commercial purposes, a public commitment to forego using compulsory licensing for commercial purposes would enhance legal certainty for innovative industries,” the chamber wrote. Nearly identical language was used by the US-India Business Council in its own comments.

Both groups submitted their remarks to the US Trade Rep early last month in hopes of influencing the Priority Watch list. We asked the Indian commerce ministry for comment, but have not received a reply.


Global drug makers have long accused India of upholding laws and issuing court rulings that make it easier for their generic rivals to sell lower-cost, copycat versions of their medicines. Many of the generic drug makers based in India, in fact, are among the world’s largest suppliers of copycat medicines.

Consumer groups, however, argue the pharmaceutical industry unfairly pressures India to tighten its policies over competitive fears and has convinced Washington to argue its case. They also note that the right for a government to issue compulsory licenses was memorialized in a World Trade Organization agreement known as Trade-Related Aspects of Intellectual Property Rights, or TRIPS.

A country may cite a health emergency as a reason for issuing a license and, over the past decade, several countries have done so. Besides India, Thailand has taken this step, and late last month, a Colombian government committee recommended that a compulsory license should be issued for the Gleevec cancer treatment sold by Novartis.

“If such an agreement in fact exists, this is extremely troubling news, and the terms of the agreement should be made public, and subject to the outrage that it deserves,” wrote Knowledge Ecology International, an advocacy group that focuses on access issues, in comments filed last week to the US Trade Rep. “This sort of pressure is basically a declaration of war on poor cancer patients, where most of the compulsory licenses have been targeted lately.”

One expert on the Indian market cautioned, however, that the statements from the business groups may not be revelatory. Vince Suneja, chief executive of TwoFour Insight Group, a consulting firm that works with Indian drug makers, noted there are two scenarios under which the government may issue a compulsory license, and it’s not clear if any substantive change is actually being proposed.

Under one scenario, the central government can issue a license for a national emergency, but this would not have any commercial application. In the other scenario, a license may be issued by the Indian Patent Office in response to affordability and patient access. Suneja suggested the possibility that the government may be referring to the first scenario, which would not constitute a change in policy.

The Indian government has been reviewing its intellectual property policy, an outgrowth of a high-level working group that was formed with US officials in October 2014, shortly after Indian Prime Minister Narendra Modi took office. Yet just weeks later, the Indian Supreme Court rejected a bid by Bayer to block the government from allowing a generic version of a cancer drug from being sold.

Two months ago, however, the Indian Patent Office rejected an application from a domestic company, Lee Pharma, that sought a compulsory license to make a generic version of Onglyza, a diabetes pill sold by AstraZeneca. At the time, analysts cautioned that the rejection may have reflected a weak case that Lee made for obtaining a license as much as any political backdrop.

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