Earlier this year, India concluded its long-awaited Free Trade Agreement with the EU, slashing tariffs on most goods, with the aim of boosting two-way trade and reducing both countries’ reliance on the U.S. amid growing international trade tensions. This is expected to bring the overall coverage of trade liberalisation to 96.6% for India and 99.3% for the EU, foreshadowing a doubling of EU exports to India by 2032. However, one important chapter of this agreement, on intellectual property, led to no change in Indian IP law and no enforcement of data exclusivity.
Data exclusivity is the licensing of clinical and non-clinical data – typically from the originator medicine’s research – that prevents generic or biosimilar manufacturers from using the data from the originator’s product license for their own applications. This is paramount as India is one of the world’s biggest generic medicines suppliers, fulfilling 20% of global generics demand, rising up to 40% for the U.S. market. With its current market size valued at US$26.31B, India’s behemoth generics industry makes medicines accessible for much of the world’s population, while driving much of India’s ever-expanding economy. This explains India’s decision to maintain its current IP regulations as an action to protect its generics manufacturing industry, to facilitate its economy’s development, and to safeguard public health.
To understand India’s pharmaceutical patent landscape better, it is essential to understand its history. Back in 1947, when India regained independence from Britain, it inherited the law system that once governed it, and made amendments to promote industrialisation. In the absence of a product patent regime, the Indian pharmaceutical industry grew at a remarkable pace, becoming a net exporting country, the world’s 3rd largest by volume and 14th largest by value. Against this backdrop, India decided to temporarily remove its restrictive product patent laws that prevented the recreation and reproduction of chemical substances, allowing the original company continued monopoly in foreign countries while impeding local manufacturing growth. Then, in 1970, in order to accelerate local chemical engineering capabilities and actualise its specialised manufacturing industry, India amended their Patents Act, abolishing product patents while retaining process patents with a reduced span of protection. Essentially, no one could patent a molecule or a substance, but could patent the method used to create the product, such that no other company could reproduce the product using the same method.
Following the conclusion of the World Trade Organisation’s trade negotiations in Uruguay in 1994, India pledged to bring its patent legislation in tune with the TRIPs (Agreement on Trade-Related Aspects of Intellectual Property Rights) mandate that demanded WTO members to comply with its minimum standards on intellectual property (IP). Through TRIPs, there was to be greater “protection and enforcement of all intellectual property rights to contribute to the promotion of technological innovation and to the transfer and dissemination of technology”, leading to the mutual benefit of originators and users of technological knowledge. Therefore, India allowed for the transitional filing of product patent applications in 1999, with retrospective effect from 1995.
It is during this period of change that Novartis, the Swiss multinational pharmaceutical giant, filed for a patent in India for their medicine Gleevac (generic name: Imatinib) in 1998. Gleevac, an oral targeted therapy medication used to treat cancer, is a beta crystalline form of imatinib mesylate, and a salt of imatinib (2-phenyl amino pyrimidine). This patent was rejected by the patent office and by an appeal board, under the basis of Section 3(d) that specified that inventions were only patentable if “they differ significantly in properties with regard to efficacy.” An escalation of the case to India’s Supreme Court similarly ruled that despite the substance’s modification from a known drug, Novartis did not present evidence of a difference in therapeutic efficacy between the final form of Gleevac and the raw form of Imatinib, and hence that the patent application was rightfully rejected by the patent office and the lower courts.
This decision highlighted the importance of balancing public good with monopolistic pricing and innovation against affordability. Had Novartis won and gotten its patent on Gleevac, other generic companies selling Imatinib would have been obliged to pay significant royalties under a grandfather clause included in India’s patent law. This would have dealt a major blow to generics manufacturers in India, as in 2001, the annual cost of Gleevac in the U.S. would have been $30,000, and for a cancer patient taking Gleevac chronically to manage tumour cell growth for the rest of their lives, it would be unaffordable without insurance. To compare Gleevac with Imatinib, one 100mg pill would be priced at $20 to $30 internationally, while the generic, merely $2.
Furthermore, trade negotiations on data exclusivity, which falls outside the realm of IP law, have reignited concerns of pharmaceutical companies’ monopoly on drugs being exerted past its home countries’ borders. Data exclusivity is used to limit the use of clinical trial data that needs to be submitted to the regulatory authorities before a raw drug can enter the market. Hence, for a specified period of time, generic competitors cannot apply for regulatory approval for equivalent drugs relying on the originator’s data. This would potentially lengthen the monopoly for the original drug while simultaneously impairing its availability through generic forms, meaning the exclusivity agreements essentially act as a patent term extension. While data exclusivity is now standard in the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), most developing nations have not yet imposed such regulations on their domestic industries. Owing to the side-effect of stunting local pharmaceutical innovation and limiting the transfer of technology, most developing countries are unwilling to impose such limiting measures proactively.
Thus, it is through data exclusivity that developed economies such as those of the EU and U.S. are attempting to impose disadvantageous trade rules on developing economies. These policies benefit already established multinational pharmaceutical corporations while quashing maturing companies in emerging countries, reproducing historical global inequities through international legal structures.
With this in mind, future FTAs or bilateral agreements, especially with the U.S. and EU, could continue to goad India and other developing nations into agreeing to unfavourable terms, and in an ever-unstable global atmosphere, states must strike a balance between amiable international relations and domestic growth and stability.
Catherine Toh is a writer at the Consilium and a third-year International Relations student currently studying abroad in the Netherlands. She writes primarily on international economics.
