This article has been written by Vibhuti Sharmaa.

This article has been published by Rachit Garg.

Introduction

Intellectual property rights have emerged as a product of the invention, creativity, and trade values. Patents are a form of intellectual property that refers to the rights granted to a person for the invention of a product or a process that has some value in the course of commerce. The concept of a patent is not new. There have been countless inventions over the course of history; in fact, inventions are one of the most valuable intellectual property assets for the owner, as it gives them the exclusive right to exclude others or use, sell and distribute those inventions once they get patent protection over it, which lasts for at least 20 years from the date  the patent application was filed.

TRIPS Agreement

The pharmaceutical patent is granted for a pharmaceutical substance which means any new entity involving one or more inventive steps as per Section 2 (ta) of the Indian Patents Act. Before the creation of the TRIPS ( Trade-Related Aspects of Intellectual Property Rights) Agreement the pharmaceutical industry was a highly unregulated industry in respect of patent protection. There existed inequalities in the health status of people, and the medical needs of the people were largely unmet. There existed  only a Process patent that provided protection to pharmaceutical companies but now article 27(1) of the TRIPS agreement extends patent protection to the product as well all fields of technology.

The TRIPS Agreement came into effect on 1 January 1995.  It is an extremely comprehensive multilateral agreement regarding intellectual property rights. The Agreement sets out the minimum standards of protection to be provided by each Member country in their domestic law. The main condition under the TRIPS agreement is that patents shall be available for an inventive step, whether it a product or a process, in all fields of technology provided that the invention meets the criteria for patentability namely- novelty, inventive step and industrial applicability

TRIPS Flexibilities

A patent grants exclusive rights to the innovation which often allows the patent holder to enjoy a monopoly position. In a developing nation like India, where efforts are made to make medicines available to all at reasonable prices, there is a high probability that pharmaceutical companies might take advantage of their patent monopoly by charging high prices and  preventing local manufacturers from making generic versions of the drugs. Therefore, some flexibility was brought into the TRIPS Agreement so that member countries could make room for public interest measures including measures to protect public health to reach their social goals.

Drugs developed under the pharmaceutical industry received patent protection under the TRIPS agreement and their prices were driven up as a result of the monopoly so obtained by the patent holders. This posed a severe challenge for developing nations. For example, in sub-Saharan Africa, over 5 million people suffer from the disease but are still unable to afford the required drugs. b This clearly indicates that the TRIPS agreement was earlier denying these developing countries access to essential medicines. Thus,  to address this issue, The Doha Declaration on TRIPS and Public Health was adopted by members of the World Trade Organization in 2001

Patent

The Doha Declaration came in recognition of the public health problem and the need for TRIPS to be a part of the solution to these health problems. The declaration sought to confirm that TRIPS does not and should not prevent member countries from taking measures to protect public health. The Doha Declaration concluded that TRIPS should be interpreted in a way that would support all members’ right to protect health and promote access to medicine for all.

Compulsory Licencing

The TRIPS Agreement provides flexibility for promoting public health by allowing the nation to issue a compulsory license on certain grounds under Article 31. A compulsory license is a license granted by an administrative body to a third party to exploit an invention without the patent holder’s authorisation. This license is generally referred to as a non-voluntary license connoting the lack of consent by the patent holder. The main aim behind issuing compulsory licensing is the promotion of research and development of new drugs. However, such licenses are subject to payment of reasonable royalty in India. Compulsory licensing allows the licensee to produce a generic copy of the drug to be made available in the local market at a lesser price than that of its competitor on the condition that the owner/manufacturer has made enough efforts to obtain a voluntary license from the patent holder on reasonable terms within a reasonable time.

Compulsory Licensing Of COVID-19 Drugs & Vaccine in India 

There has been an urgent demand for medicines and vaccines in India ever since the emergence of the COVID-19 pandemic in 2019.  We have witnessed an exponential surge in the number of cases but the disbalance in the equilibrium of demand and supply of covid drugs and vaccines has been an issue of concern for the past two years now.

In the last year, India’s crude death rate was around 7.3 per 1000 people of which roughly around 5.07 Lakhs lost their lives due to covid infection. Compulsory licensing of covid drugs and vaccines seem to have emerged as a  boon to meet the inadequacy of supply of the vaccines much more proactively, whereas the government may force vaccine makers to share their intellectual property with other pharmaceutical companies and ensure much faster production of the vaccines.

As far as the legality of compulsory licensing is concerned, there are enough precedents that establish evidence of compulsory licensing of pharmaceutical drugs in India.  In the year 2012, the Indian patent office granted a compulsory license to the Hyderabad-based drugmaker Natco to make and sell a similar version of Bayer’s Nexavar which is an advanced kidney cancer drug. Even in 2000, the country has witnessed pharma based giant Cipla fighting against the Government with regards to compulsory licensing for the Anti-Aids drug so clearly, the law permits it.

Presently, the private sector is a little more reluctant to utilize compulsory licenses even when the government issues them because they are scared of prolonged litigation being broadband by the multinational companies or being refused partnership in the future by them even for contracted manufacture. The public health sector which has been the ideal vehicle for undertaking the compulsory licenses issued by the government has been decimated by years of neglect. Most of those public health sectors are either closed or are near closure so it can be concluded that we have shot ourselves in the foot for not being able to make compulsory licenses work to our advantage.

However, the NITI Ayog in a press statement on 27th May 2021 indicated that India is not planning to issue any compulsory licenses for COVID-19 vaccines and also stated that the active cooperation of the companies that initially produced the vaccine is a must.

Countries like India and South Africa have tabled the resolution in the WTO regarding an International debate on whether patent rights should be suspended not only for vaccines but also for medicines and other equipment to enable many countries to undertake their manufacture appropriately to reduce the global inequities in excess.

Consequences of Compulsory licencing of Pharmaceutical Drugs 

  • Medicine copies made from a compulsory license may not be produced with the same quality standards. A compulsory license does not always imply that  the background knowledge of the company is sufficient to produce the drugs with the same efficiency as the original drug.
  • Compulsory licensing may undermine the development of new treatments. Manufacturers of pharma medicine will rely on the existing patents for their economic profits to produce copies of an existing drug and would never be able to focus on innovating new medicines.
  • Compulsory licensing discourages manufacturers from doing clinical trials in countries that don’t honor patents. This is a loss for patients who miss a chance to receive treatment. It is also a loss for local economies which would otherwise get a boost from having clinical trials in a region.

Conclusion

India is an emerging market of the drug industry and as a country, it has made enough efforts in the field of the pharmaceutical industry to come up with innovative research and development strategies of indigenous drugs. Given the fact that WTO cautioned that the pandemic represents an unprecedented disruption to the global economy, the council for Trade-Related Aspect of Intellectual Property Rights (TRIPS) has been successful in waiving off certain provisions of the TRIPS agreement.

In terms of Compulsory licensing, we should utilize the potential of compulsory licenses as a weapon by engaging with other Indian pharmaceutical firms and asking them whether they can use their production capacity to produce these vaccines and quality assured products. Even in terms of issuing the compulsory license for foreign-made vaccines, Indian private firms should step into that phase as well wherein the government shall ring-fence such private pharmaceutical firms in backstopping them in terms of cost of litigation or other such legal consequences.

References

  1. https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm#:~:text=The%20TRIPS%20Agreement%20requires%20Member,novelty%2C%20inventiveness%20and%20industrial%20applicability
  2.  https://ipindia.gov.in/writereaddata/Portal/IPOAct/1_31_1_patent-act-1970-11march2015.pdf

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