`No need to patent small changes'

Interview with Dilip G. Shah, secretary-general, Indian Pharmaceutical Alliance.

WHEN the Patents (Amendment) Bill was under debate in March 2005, concerns were raised in Parliament about what type of pharmaceutical products should be eligible for patent in India and the country's obligations under the World Trade Organisation (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). A technical experts group headed by R.A. Mashelkar was set up to examine whether India could limit patents to new chemical entities (NCEs). The report it submitted was voluntarily withdrawn in February on the grounds of technical inaccuracies and plagiarism. The issue remains unresolved.

For the Indian pharmaceutical industry, there is much at stake. The IPA is an association of 12 large research-based national companies. Together they hold 30 per cent of the domestic market, account for one-third of exports, and contribute 90 per cent of research and development spending. D.G. Shah has 40 years of experience in the industry, 30 of which were spent working for Pfizer India. As well as heading the IPA, he is currently co-chairman of the Federation of Indian Chambers of Commerce and Industry's committee on pharmaceuticals and the chief executive officer of Vision Consulting.

Shah spoke to Frontline on what type of pharmaceutical products should be eligible for patent in India, innovation in the Indian pharmaceutical industry and the Mashelkar report. Excerpts from the interview conducted in Mumbai:

How do we define new chemical entity?

New chemical entity is not defined either in TRIPS or in Indian law, not even in the United States patent law. Only the [U.S.] Food and Drug Administration [FDA] has defined NCE. Besides, nowhere else is there a definition of NCE. This makes it clear that each country has the freedom to define in its own law what it considers to be a new chemical entity. This [FDA definition] is a good definition, which very clearly says that for any new inventive drugs you can submit a patent and any derivatives [with small changes in form, usage] are not eligible. It's a negative definition.

When it comes to patenting small changes to known drugs, how can we distinguish between incremental innovation and evergreening, that is, extending the life of patent for changes that do not involve an inventive step?

Currently, India allows patents [on derivatives] for incremental innovations in which the efficacy has significantly increased. But if one is making a tablet of a product and then develops a paediatric dosage by way of a serum, this is not innovation because any person skilled in chemistry knows how to make that.... Cipla developed a triple therapy antiretroviral. There was no invention or innovation on that. If we permit this sort of patenting, that's evergreening. Or take usage - a drug which was used for epilepsy was granted a [second] patent for obesity. Do we want such new uses to be patented?

What is at stake for the Indian industry and India in general when considering patents on small changes?

Our position is this. We don't need such patents in India. Now if the U.S. industry and the U.S. government think that they should protect such "inventions" and that this encourages innovation, fine. But we believe that patents granted for such devices, for such "inventions", would derail innovation and would be detrimental to the progress of science. People [in the industry] would focus only on these low-hanging fruits, which are low risk and high reward. This is why we have section 3(d) of the Indian patent law on incremental innovation. If everyone can patent small changes, why would anyone go in for high-end research? There, the fruits are at the top, where risk is high and rewards are uncertain. If we want medical science to progress, that is what should be the bar.

From a public health point of view, the moment you grant provision for such liberal patenting there are never-ending patents. For Zidovudine, one of the antiretrovirals, the first patent was filed in 1964 and the last patent is still to expire, in 2018, because they keep the patents going. PhRMA [Pharmaceutical Research and Manufacturers of America] has a list of Indian pharmaceutical products, which it says infringe on its intellectual property [products patented in 1969]. Those patents should have expired in 1989, but PhRMA still wants these patents to be kept alive. This is what in [the name of] public health the government has to consider. Is India in a position to allow such patenting and if we are, what would be its impact on public health? We have seen the [high] prices of medicines, which are off-patent but still have a single source of supply. Patents will ensure that there is only a single source of supply and that this sort of pricing takes place.

This also has to be seen in a business perspective. The biggest ever challenge to "big pharma" has come from the Indian pharmaceutical industry.... After TRIPS companies started seriously looking at the regulated market [in the U.S. and the European Union] and we took the battle to their home ground. Between Ranbaxy and Dr. Reddy's about 50 paragraph (4) challenges were filed in the U.S. - the highest coming from any one country besides their domestic generic companies.... Now it is not just the domestic market. The Indian generic industry has reached the rest of the world. The issue [for multinationals] is how to contain the Indian industry.

Almost half of what we produce today is for export and half is for domestic [consumption]. By 2010, as much as 71 per cent of our production will be for exports and 29 per cent will be for the domestic market. Now that would give us almost 30 per cent of the global generic market for both APIs [active pharmaceutical ingredients] and finished dosage forms. So it is a big challenge. It is also a big opportunity for the Indian industry and for the Government of India. Because what we have seen is that in each decade - 1980s, 1990s and 2000s - our exports have increased tenfold. In 1990, the Indian industry's exports of medicines came to only $178 million.

Now, a tenfold increase in this decade would mean $20 billion [worth] of exports. That's Rs.90,000 crore. That would mean an incremental investment in our manufacturing sector of Rs.20,000 crore. Now that translates into employment opportunities for educated Indians. This and the infrastructure that would be created are opportunities for this country.

The Mashelkar report concludes that India cannot limit patents to NCEs because it contravenes Article 27 of the TRIPS Agreement. What is the IPA's view?

The group has taken an interpretation of Article 27 without examining its nuances or considering practices followed by other WTO members, such as Canada, or even taking note of the judgment of the WTO dispute settlement panel and appellate body [India-Patent Protection for Pharmaceuticals and Agricultural Chemical Products AB-1997-5, WT/DS50/AB/R, December 19, 1997]. Extensive volumes have been written on interpretations of Articles 27, 7 and 8 and the Doha Declaration on public health.

Two commissions have also examined this. First, the United Kingdom Commission on Intellectual Property Rights [CIPR]. Mashelkar was a member. Second, the WHO set up a commission on the same subject. Mashelkar was also a member. The commissions came to the same conclusion: defining patentability is a flexibility provided in the TRIPS agreement.

The absence of an international patent law has led some countries to seek harmonisation in the terminology of patent law at WIPO since the conclusion of TRIPS. If TRIPS had provided uniform patentability, there should be no need for the U.S., the E.U. and Japan to demand harmonisation.

Instead of examining the technical and legal issues of Article 27, and making use of available evidence, the Mashelkar group developed another [set of] criteria, which is purely political. This committee wasn't set up for that.

What were these criteria?

First, the report says they [the group] want access to affordable medicines. But all it says is that every effort must be made to provide drugs at affordable prices to the people of India. But on how and who will make them [the drugs], there is nothing. You don't need an experts group to make this statement. This is a political statement.

Secondly, the report implies not limiting patents to NCEs would encourage innovation by the Indian industry. But this way you encourage only tweaking of molecules [manufacturing derivatives] instead of real innovation.

Thirdly, the report claims that the Indian industry is capable of only incremental innovation. And, as evidence, Mashelkar cites in his annexure IV of the report, 215 (not 339 as it would appear at first glance) patent applications for incremental innovations. But why are Indian companies doing this? If the U.S. permits it [incremental innovation] and I am going to sell my product in the U.S. I will go by U.S. rules, so I would file applications for the U.S. market for incremental innovation. Concluding from that, that incremental innovation is the only capability of the Indian industry is not true. It's not true for the simple reason that companies do not want to make any claims today on where they stand on the development of a new molecule. They treat it as a trade secret. But we have enough evidence that the Indian industry has the capability for original research. Between 1998 and 2004, there were 60 molecules in the pipeline. Only if you ignore this data will you come to the conclusion that we can only do tweaking of molecules. And by using that argument you will only perpetuate tweaking of molecules. If you block that route, you push companies to go for high-end research.

Fourthly, he says he wants to balance India's obligations under international agreements with the wider public interest. But he is a scientist, that is not his term of reference. He was asked merely to say whether this is TRIPS-compliant or not. Balancing obligations is a political decision.

What is your take on the fact that Mashelkar's conclusions are "borrowed without acknowledgement" from a paper funded by an association of multinationals?

That is not the issue. The issue is of intellectual honesty. If Mashelkar did not agree with what was written in the WHO report, or the U.K. CIPR report [whose committees he was a member of] which stated that "developing countries should not be deprived of the flexibility of defining their own patent systems", why did he not record his dissent? Whether he quotes Shamnad Basheer or Frederick Abbott, that is not the issue.

What action should the government take?

Since Mashelkar has withdrawn the report on his own we have to see what new evidence and analysis he produces. This will create a credibility gap. How is he going to substantiate any changes? Anything that he writes in the second report will be compared with the first. He gave explanations [to journalists] when they asked him why submissions like Frederick Abbott's were not included, that only documents with the Secretariat were used. But all these documents were available with the Secretariat. We submitted some of them. If evidence was available with him earlier, why did he not examine that, analyse it and put it in the report? He has created a very difficult situation for himself and other members of the committee. The government should not let him withdraw this report. Leave it and close this chapter.

Do you think a new committee should be put together?

At this moment I think [we need to] give the present intellectual property rights regime a chance to work.... Let it be implemented and take at least five years to assess, one, its impact on public health, specifically availability and prices of medicines; two, whether patented medicines are brought into this country by the innovators; three, impact on the domestic industry and its ability to export; and four, what sort of R&D [research and development] is taking place and whether the Indian industry has moved to high-end research or not. Then evaluate which direction to take.

Until that time there is no need to keep destabilising or creating uncertainty on the IPR regime. This will not be acceptable to multinationals. So the government has to make a clear statement that we, in India, are taking a calibrated approach to IPR.