India will not restrict licenses for making generic drugs

After two weeks of confusion, the Indian government today denied it plans to restrict compulsory licenses to manufacture generic drugs.

In a brief statement, the government press office said reports that the government had “privately assured” business groups that licenses would no longer be issued were “factually incorrect.”

The clarification was made after two prominent business groups earlier this year had filed documents with the US Trade Representative’s Office suggesting the Indian government had agreed to restrict compulsory licenses. These licenses allow generic drug makers to make low-cost versions of brand-name medicines without the consent of the brand-name company holding a patent.

The documents, disclosed earlier this month, appeared to be a potentially significant victory for global drug makers, which complained that successive Indian governments have favored India’s domestic pharmaceutical industry at their expense. The companies regularly accuse 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.

The documents were filed by the US Chamber of Commerce and the US-India Business Council, which hope to convince the US Trade Rep to keep India on its annual Priority Watch list of countries that are singled out for failing to protect and enforce patent rights. As we noted previously, India is a perennial name in what is called the Special 301 report, which is released each April.

Under pressure from the global pharmaceutical industry and the US government, the Indian government has been reviewing its intellectual property policy. In October 2014, a high-level working group was formed with US officials, shortly after Indian Prime Minister Narendra Modi took office and, at the time, vowed that India would be open for business.

However, the impression that the Indian government had given such assurances was condemned by consumer and patient groups. Many generic drug makers based in India are among the world’s largest suppliers of copycat medicines, and these groups worried that any move to restrict licenses would hurt patients who are unable to, otherwise, afford medicines.

These groups argue that 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.

The Indian government, in fact, cited this agreement as its rationale for maintaining its current policy toward compulsory licenses. “Even as (the) government of India is conscious of the need to spur innovation and protect individual rights, it retains the sovereign right to utilize the flexibilities provided in the international intellectual property regime,” the statement said.

One expert on the Indian market was not surprised that the government issued a clarification. Vince Suneja, chief executive of TwoFour Insight Group, a consulting firm that works with Indian drug makers, had told us earlier this month that there are two scenarios under which the government may issue a compulsory license, and it was not clear if any shift in policy was planned.

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 today explained that any government reassurances referred to the first scenario, which would not constitute a change.

Not surprisingly, one consumer activist was relieved.

“The drug companies have embarrassed the Modi regime in their Special 301 filings,” said Jamie Love of Knowledge Ecology International, an advocacy group that focuses on access issues. “Now the Modi administration will have to demonstrate that a compulsory license is still possible, and that’s good news.”

A spokesman for the US-India Business Council declined to comment. We asked the US Chamber of Commerce for any comment and will update you accordingly.