S. 3(d) like provision under the proposed “Quality Affordable Medicines Act” in the Philippines

According to recent news articles (here and here), the Senate in the Philippines has passed a new “Quality Affordable Medicines Act” (Senate Bill No. 1658) (the text of the Bill can be found here) that seeks, inter alia, to amend patent laws to allow importation of cheaper drugs, support the development of local generic industries, authorize the President to impose price ceilings on life saving drugs (in India, this role is played by the National Pharmaceutical Pricing Authority – for details, read on!) and what it terms as giving “ample muscle to government in times of need” (suggesting perhaps a stronger compulsory licensing regime? :))

Interestingly, the law also seeks to strengthen the fight against fake or substandard drugs by strengthening the Bureau of Food and Drug (This echoes the concerns on piracy voiced in one of the earlier posts)
The Bill is being pushed partly because of a comparative study (quoted in part in this article) that shows that some common medicines are 2.5 to 40.3 times more expensive in Philippines than in India.

What I found most interesting was that the Bill seeks to “boost the generic drugs industry, by… disallow[ing] new patents for existing inventions under frivolous reasons of ‘new use’ or ‘new property.'” This proposal stems from the view that allowing such new use patents would “unduly [extend] the patent life of drugs even without a significant change in the formula or content.” According to the article, Ever-greening stifles the development of quality and affordable generic versions of patented medicines. If this sounds similar to the rationale underlying section 3(d) of the India Patents Act, its because it is! A look at the legislative debates that lead to the passing of the Patents (Amendment) Bill 2005, makes this amply clear. []

The article also states: “The Indian Patent Act protects generic firms from lawsuits arising from “newly-discovered uses” for previously patented products.” This again seems to refer to section 3(d) of the Indian Patents Act, which provides (in addition to the enhanced efficacy requirement) that the discovery of a new use for a known substance will not be considered an invention for the purposes of the Indian Patents Act. Clearly, the rationale of section 3(d) seems to appeal to more than one developing country!

Other interesting features of the Bill that are similar to provisions under the Indian Patents Act are:
1. Adoption of a Bolar type exemption. The article calls this the “early working” principle, “allowing local generics companies to start preparing for regulatory approval of generic versions of patented drugs even before the expiration of their patents.” India inserted Section 107A into its Patents Act via the Patents (Amendment) Act 2002
2. Broader compulsory licensing provisions: “The government or authorized third parties may use an invention even without the agreement of the patent owner when public interest so requires; when a judicial or administrative body has determined that a patent owner’s exploitation of his patent or license is anti-competitive. Such flexible use is to be determined by the President, with adequate compensation to the patent owner, and will be immediately executory. No court, except the Supreme Court, can issue a temporary restraining order or preliminary injunction to stop or delay it.”
3. Price ceilings to be a last resort: The Bill allows the President to impose price ceilings, but only as a last resort. This is because according to local economists, price controls may be incompatible with competition-enhancing policies. The circumstances in which a price ceiling are deemed justified are:
“1. An impending or existing calamity, or the effects of a calamity that affects public health.
2. The threat, existence or effect of a public health emergency as recognized by the DOH or by an officially recognized non-government organization.
3. Prevalence of widespread acts of illegal price manipulation of any drug or medicine.
4. An impending or existing event, or its effect, that causes artificial and unreasonable increase in drug prices.
5. Whenever the price of any medicine has risen to unreasonable levels.”

In India, price controls are the responsibility of the National Pharmaceutical Pricing Authority (NPPA) which implements the Governmental orders under the Drug Price Control Order (DPCO). (Shamnad’s wwritten on this earlier. See here) The authority to pass the order is granted to the government under Section 3 of the Essential Commodities Act, 1955 (See here http://www.medindia.net/buy_n_sell/pharm_industry/ph_drugprice.asp). The primary duties of the NPAA (established in 1997) include fixing and revising prices of pharmaceutical products, making recommendations to the government on drug price policy and enforcing the provisions of the DPCO. (See Here http://nppaindia.nic.in/function.html for more details) The NPPA website has also recently launched an online complaints monitoring system (http://nppaefile.nic.in/nppacms/). Does anyone know if any complaints have been filed under this system? A list of prices fixed/revised by the DPCO on September 27, 2007 is available here: http://nppaindia.nic.in/ceiling/press27sept07/stmt27-9-07.html. I would be interested in knowing if any studies have been conducted on the efficacy of the price control mechanism in place in India.


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2 thoughts on “S. 3(d) like provision under the proposed “Quality Affordable Medicines Act” in the Philippines”

  1. Under the Indian Patents Act, any person interested may make an application for grant of Compulsory licence after 3 years from the date of the grant of the patent,if the patented invention is not available to the public at a reasonable price.Wouldn’t this be a weaker form of price control?

  2. Hi Patent

    If you mean that the price control mechanism under the DPCO is weaker than under the Patents Act Compulsory Licensing route, you may be right – there probably is nothing as effective as competition when it comes to reducing prices. However, the Compulsory Licensing provision is useful only after three years and provided someone applies for and gets a CL. Under the DPCO, as far as I know, price controls can kick in immediately. How much of a price cut results is a different issue and as I said in the post, I would love to know if any studies have been done on how effective the mechanism under the DPCO is in making life saving drugs affordable.

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