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Commentary

India and the Drug Patent Wars
Roger Bate, AEI Online, 2-7-07

In 2005, India joined the TRIPs treaty, under an agreement requiring that patents be provided for drugs made after 1995. However, under an obscure provision of India's patent law, Novartis' application for a patent for an updated version of its cancer drug Gleevec has been denied and is currently under appeal.

Bate argues that the outcome of Novartis' case may determine the future of pharmaceutical innovation in India's burgeoning pharmaceutical sector.

Novartis is no villain keeping the poor from receiving needed drugs. Rather, Indian patent law is what constricts India's drug market. India's patent hurdles discourage drug companies from operating there, innovating, and working on diseases unique to India. The subcontinent has severe problems with dengue fever and leishmaniasis, yet there is no cure for dengue and no inexpensive cure for leishmaniasis. None of the research on dengue or leishmaniasis is done in India, and no Indian drug company produces the medicines to cure leishmaniasis—a horrid disease known as "Baghdad Boil" by the unfortunate U.S. troops who have contracted it. Ironically, it is Novartis that leads the world in research for a cure for dengue.

The Novartis case is one of principle. It will not affect most Indian patients, for Novartis distributes the drug free to 99 percent of those who need it in India—over 6,000 patients. The remaining 1 percent can probably afford the drug. It is not the majority of patients who are hoping that Novartis loses its court battle but the generic producers of Glivec. For while there is only a small market for drugs to combat CML, copied drugs to combat other diseases like cancer, hypertension, and heart disease are more lucrative.

The outcome of the Glivec case will set a precedent. If Novartis loses the case, the producers of generics will continue to make money, most notably in non–CML medications, but Novartis might reevaluate its commitment to India. If it does, it will send a signal to competitors that India does not welcome foreign drug companies.

Novartis officials did not want to pursue a legal battle in the high court, but it saw no other alternative. Only countries can demand arbitration at the WTO over breaches of the TRIPS agreement, and no country has complained. The U.S. trade representative (USTR) has not issued a statement on whether she would pursue an action against India over section 3(d), but a spokesman said that the USTRís office is "watching the case with interest."

India is at a crossroads, and the Novartis case may determine its direction. It can follow the route it has taken in software engineering, with sensible intellectual–property protection that spurs growth, or it can travel the opposite route with idiosyncratic rules that limit growth and innovation.

We agree with Bate that global pharmaceutical innovation requires strong international protection of intellectual property rights. At the same time, companies have to find innovative ways of licensing their products in the poorest nations, to ensure global access to critical medicines.

For a different perspective on Novartis' case, see this article from the New England Journal of Medicine.



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