Response by S srinivasan LOCOST Baroda to compulsory licensing policy for drugs

1. Dated Sep 30, 2010
Comments on the DIPP Compulsory Licencing Discussion Paper1
1) We agree with the spirit of the suggestions made in the paper and congratulate the DIPP for the
proactive spirit and vision and the concerns shown for patient welfare.
2) CLs are an important instrument of maintaining more access to medicines, India’s health
security and self-sufficiency and the robustness of our generic drug industry. The pharma
industry cannot be seen as any other industry. The classical ideas of competition and rational
markets do not work here– at least most of the time – because of inter alia asymmetry of
information, etc. and the consequent market failures.
3) We agree to the main strands of suggestions made in the DIPP paper, on asserting by India the
right to CLs, and easing operational modalities thereof, creating policies that make it not so
automatic for India’s pharma companies to be taken over and/or sold, and asserting access to
price regulation and competition policies. However, we need to point out some collateral
factors that are likely to, in a manner of speaking, render this exercise nugatory from the point
of view of the enduser/the patient. Some concerns we delineate below:
4) The voluntary licensing (VL) of a drug by the patent holder to Indian drug companies. And terms
thereof. If you examine the terms of VL, for example Gilead’s VL to Indian drug companies on
Tenofovir, they are extremely restrictive and hence would constitute abuse of monopoly and
anti-competitive. This issue needs to be examined.
5) Importation should not be treated as working of the patent over and beyond a period of 2 years.
This is in effect an exercise of cross-border patenting and allows a justification for the foreign
company to maintain high prices. The DPCO provisions on price regulation of imported drugs are
not effective.
6) CLs may be deemed necessary in a wide range of therapeutic class, not just AIDS, cancer, etc. as
India’s disease burden is the ‘highest’ in a wide range – for example 60 % of the world’s cardiac
patients are in India with similar disease burdens in diabetes, TB, malaria, leprosy (which has
been ‘abolished’ after a fashion in India), hypertension and a range of non-communicable
diseases.
7) Vaccines and sera also need to come under the focus of CLs with a concomitant national
vaccine policy. (A draft of the latter arrived at after a recent consultation of a wide range of
experts in India is available.)
1
Circulated for Discussion by the Dept of Industrial Policy and Promotion (DIPP), GOI, during Aug 2010 and
available at its website.

2. 8) A CL policy without an Essential Drug Policy and a policy that does not allow for patenting and
licensing for manufacture only such drugs, is meaningless and will defeat the attempt to keep
prices low.
9) Likewise administrative actions of allowing costly and unnecessary drugs for import and
marketing in India (without even undergoing clinical trials, etc) is counterproductive to the CL
policy discussed in the paper. For instance, since 2003, over 650 “Registration Certificates” have
been issued to import finished formulations with the following distinguishable features (thanks
to Dr Gulhati, Editor, MIMS India for pointing this out):
i. Mandatory clinical trials not conducted; hence safety and efficacy not
established.
ii. Traders are importing and selling directly to patients on tips from doctors.
iii. Prices: free for all.
iv. Some Prices of such imported products:
v. Remicade: Therapy cost over Rs. 200,000.
vi. Herceptin: cost over Rs. 15 lacs every year.
vii. Avastin (bevacizumab): cost over Rs. 28,000 for just one vial of 100mg.
viii. Neorecormon (epoetin beta): A pack of 30,000 i.u. costs Rs. 9,500.
ix. Pegasys (peginterferon alfa 2a) 180mcg costs Rs. 17,500.
x. Tarceva (erlotinib) 150mg (10 tablets) is priced at Rs. 36,000.
10) Similarly factors that distort and skew the competition, such as there is in the Indian pharma
market, like unethical marketing practices, overpricing of locally manufactured drugs, irrational
and unscientific formulations, are inherently harmful to the patient apart from being collusive,
indicative of abuse of dominance, etc. and hence (are) anti-competitive.
One needs to add that as the case law on competition law is still not developed with the
Competition Commission of India itself functioning from May 2009, appropriate administrative
actions may need to be taken to bring these issues under the scope of the CCI in the interests of
convergence with the issues discussed in the context of CL.

3. 11) Indeed, if the government is going the extra mile for the pharma majors in the area of CLs, it
needs to give due consideration about a convergence of all related policies that will work in the
patient’s benefit.
12) CLs need to be issued only for rational and scientifically approved drugs.
13) Pricing of patented drugs by those taking advantage of CLs and its subsequent manufacture in
India needs to be given thought.
14) Price undercutting by foreign companies with ‘deep pockets’ ought not to be a factor in
issuing/not issuing CLs.
15) Convergence of a CL friendly regime being advocated in the DIPP paper needs to be in harmony
with government policies on data exclusivity, patent linkage, evergreening (that is no dilution of
Section 3d of the amended Patents Act), support to Bolar like provisions in the amended Patents
Act, and a general no to any TRIPS plus measures in FTAs including the ones currently being
negotiated, and unfortunately in secrecy.
16) TRIPS itself is up for review and the government should actively seek the same. After fighting for
the Doha agreement, India has shown remarkable reluctance in using the discourse of Doha
Agreement in trade negotiations.
17) CL policies also need to go in tandem with R & D and innovation policies in pharma and health
sector and a policy for rewarding innovation not just by the mere recognition of patent worthy
matter by product patents. However we do agree with the comment made in the discussion
paper: “Even without any effects on innovation, compulsory licensing may create significant
positive welfare effects on consumers in developing countries as a mechanism to maintain
product variety.”
18) India needs to see itself a leader of pharma as also an enabler of pharma manufacturing
expertise in other developing countries helping them productionise their CLs when issued in
their respective countries.
19) Also strategic linking with say BRIC countries or any other suitable bloc of countries to
strengthen long-term access to medicines for the poor world wide needs to be examined. India
needs to take the initiative – if we do not we will not have an Indian generic drug industry to talk
of in the next 10 years.
From: S.Srinivasan on behalf of LOCOST, Baroda; All-India Drug Action Network,
and Medico Friend Circle