Inside Health

INDIA ALTERS LAW ON DRUG PATENTS

By DONALD G. McNEIL Jr.

Published: March 24, 2005

India, a major source of inexpensive AIDS drugs, passed a new patent law yesterday that groups providing drugs to the world's poorest patients fear will choke off their supply of new treatments.

The new law, amending India's 1970 Patent Act, affects everything from electronics to software to medicines, and has been expected for years as a condition for India to join the World Trade Organization.

But because millions of poor people in India and elsewhere -- including by some estimates half the AIDS patients in the Third World -- rely on India's generic drug industry, lobbyists for multinational drug companies as well as activists fighting for cheap drugs had descended on New Delhi to try to influence the outcome.

The law, which passed by a voice vote in Parliament's upper house yesterday after days of wrangling over amendments in the lower house, was in the end not as restrictive as the drug activists had feared.

''It's very disappointing, but it could have been worse,'' said Daniel Berman, a coordinator of the global access campaign for the medical charity Doctors Without Borders. ''All generics could have been removed from the market.''

Instead, all the generic drugs already approved in India can still be sold, though sellers must now pay licensing fees. There are also provisions allowing companies that make generics to copy drugs in the future.

But there are relatively tough criteria for such copying, and activists predicted that prices for newly invented drugs will be much higher, because drug makers will have the same 20-year patent monopolies as they have in the West. As AIDS patients develop resistance to old drugs, new treatments will become less affordable, they said.

In addition, it is unclear whether makers of generic drugs in other countries, like Brazil, China and Thailand, will fill any increasing demand for cheaper medicines.

But India's governing Congress Party, which sponsored the bill, disputed the contention that prices would soar. ''The government will have enormous powers to deal with any unusual price rise,'' said Commerce Minister Kamal Nath.

All Western countries grant ''product patents'' on new inventions. Since 1970, India has granted ''process patents,'' which allow another inventor to patent the same product as long as it was created by a novel process. In pharmaceuticals, that has meant that a tiny tweak in the synthesis of a molecule yields a new patent. Several companies can produce the same drug, creating competition that drives down prices.

Before 1970, India's patent laws came from its colonial days, and it had some of the world's highest drug prices. Process patents on drugs, fertilizers and pesticides have extended life expectancy and ended regular famines.

In Africa, exports by Indian companies, especially Cipla and Ranbaxy Laboratories, helped drive the annual price of antiretroviral treatment down from $15,000 per patient a decade ago to about $200 now. They also simplified therapy by putting three AIDS drugs in one pill. Dr. Yusuf Hamied, Cipla's chairman, called the new law ''a very sad day for India.''

But some other Indian drug makers, along with multinational companies, praised it. The International Federation of Pharmaceutical Manufacturers and Associations, a Geneva-based lobbying group, called the law ''a significant step'' that would let India ''take a leading role in global pharmaceutical research and development.''

S. Ramakrishna, chief lobbyist for Pfizer India, a subsidiary of the world's largest drug maker, said the bill's passage abandoned ''the utopian concept that every invention should be as free as air or water,'' according to The International Herald Tribune.

In the United States, Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, the lobbying organization for the American drug industry, said the new law would be ''good for India and good for Indian patients,'' but cautioned that his group was ''still measuring the impact on the overall bill of several last-minute amendments.''

Some multinationals had refused to invest in India without stronger patent protection, and Indian companies that do original research were also eager for it.

But Mr. Berman said a ''mailbox'' created by the government two years ago in which drug makers could deposit patents they hoped to file when the law was amended had 1,500 proposals from Indian companies -- and 7,000 from foreign ones, suggesting the new law would benefit foreign companies more.

Under the new law, a maker of generics can apply to copy a patented drug, but only after it has been marketed for three years. In addition, the patent owner can object.

Also, the generic's maker must pay a ''reasonable'' royalty, although the law does not define reasonable. Two years ago, Mr. Berman noted, the London-based company GlaxoSmithKline demanded 40 percent of the sales proceeds of an AIDS drug it licensed to a South African company. (Under pressure from South African regulators and activists, it later licensed it to three rival companies for only 5 percent.)

In 2003, the Swiss drug maker Novartis forced Indian competitors to stop making generic versions of its leukemia drug Glivec, which the Indian companies sold for $2,700 a year. Novartis then priced its version at $27,000 a year, while giving free treatment to a few poor patients.

If a drug is desperately needed, the new law allows the government to declare an emergency and cancel its patent. But Mr. Berman said India had never declared such an emergency, and for years resisted admitting that it had an AIDS problem.

Most governments, including the United States, have such patent powers, though they use them sparingly. When the Bush administration thought it needed huge supplies of the expensive antibiotic Cipro during the 2001 anthrax scare, it threatened to cancel Bayer's patent if the company did not cut its price. Other countries permit generic versions of AIDS drugs, but none have been as aggressive as Indian companies about getting them approved by the World Health Organization and exporting them. Generics made by companies in Brazil go mostly to Brazilians. China makes generics, but also has problems with counterfeiting and, like India, is under pressure to comply with W.T.O. rules.

The Indian bill was amended to prevent ''evergreening,'' in which patent owners try to get a new 20-year monopoly by patenting a variant on the same molecule. To win a new patent, the applicant will have to prove the variant works better.

An editorial in The Business Standard of India said the law is ''better put together than seemed possible a month or two ago.''

But Loon Gangte, who runs a program in India for people with AIDS, criticized the new law, saying: ''I am using generic AIDS drugs because I can afford the price. Since the bill has passed, when I need new drugs, I won't be able to afford them. I could become one of the casualties.''