In-Transit Pharma Consigments, IP Forum Proliferation and the WHO

In my interview to the Mint for this story, I stated that the “in-transit” seizures of Indian consignments (of Pharmexcil member companies) in the EU appear to implicate “patent” rights of EU patent owners. And have nothing to do with trademark issues (since the exports were unbranded API’s) or counterfeiting (as traditionally understood) or the WHO’s recent moves to expand the definition of counterfeiting (under its IMPACT initiative). Nonetheless, there may be cause to worry about the current trend towards more expansive IP enforcement measures worldwide (through ACTA etc) and the proliferation of international agencies that wish to jump into the IP bandwagon.

Shipments seizure: India’s drug makers may avoid EU route

Lison Joseph

An Indian drug shipment bound for Venezuela makes a pit stop at a Dutch port. Local customs sieze the consignment on charges of counterfeiting and patents infringement. A trade promotion agency in India cries foul, saying the drugs are perfectly legal in the market they were meant for—Latin America in this case.

The European Commission is non-committal, citing ongoing litigation in national courts. A patents lawyer points to problematic definitions of counterfeit drugs that could lead to misinterpretation of intellectual property rights violations.

Such instances are on the rise as countries and businesses start fighting turf wars over intellectual property rights and use local laws and international guidelines to their advantage.
A new battleground seems to have opened up over shipments of India’s drug exporters meant for Latin America that are being seized in transit by European Union (EU) countries.

In the last one month alone, Chandigarh-based Ind-Swift Laboratories Ltd and several other Mumbai-based bulk drug makers—all of them small- and medium-sized firms—have had their shipments seized at EU ports, according to the Pharmaceuticals Export Promotion Council (Pharmexcil), an agency set up by India’s commerce ministry.

“In the last couple of months, we have been receiving an increasing number of reports from pharma exporters about their consignments being seized in European Union countries including Germany, France, the UK and the Netherlands,” said Pharmexcil executive director P.V. Appaji.

Cost implications

This would force exporters to look at alternative routes to send the medicines, which is likely to impact the cost competitiveness of Indian generic drugs, said Ind-Swift vice-chairman N.R. Munjal. Munjal and Pharmexcil said the reason EU authorities have given for the seizures was that these drug consignments violated intellectual property rights and were, therefore, counterfeit. Pharmexcil, on its part, says the seized products—meant for largely unregulated Latin American markets—are genuine and legal.

“These are not substandard or in anyway of compromised quality. Besides, they are not meant for the European market but are just using EU ports while in transit to markets in Latin America, where they do not violate any laws,” Appaji claimed.

According to Pharmexcil, companies whose consignments ran into similar trouble include JB Chemicals and Pharmaceuticals Ltd, Medico Remedies Pvt. Ltd, Titan Pharma India Pvt. Ltd, and Mission Pharmaceuticals Ltd, all based in Mumbai, and Hyderabad-based Sainor Pharma Pvt. Ltd.

Appaji said the current definition of counterfeit medicines by the World Health Organization (WHO) and the one proposed by the WHO-backed International Medical Products Anti-Counterfeiting Taskforce (IMPACT) is leading to such interpretation of in-transit drug consignments from India.

He also claimed that the WHO-IMPACT initiative to combat counterfeiting, which WHO identifies as a serious public health threat, is being used as a shield to protect intellectual property rights.

The European Commission’s spokesperson for taxation and customs, Maria Assimakopoulou, said by email that the issues could not be discussed in detail “as cases are still ongoing in national courts”.

Assimakopoulou also said that “in the EU, customs are empowered by community customs legislation to detain goods that are suspected of infringing a variety of intellectual property rights, including possible trademarks, patents, copyrights… infringements”.

Lack of clarity

Surinder Singh, drugs controller general of India, told Mint that the issue has been taken up with the European authorities concerned. However, he said lack of clarity among enforcing authorities about the correct definition of counterfeit drug is leading to such seizures.
“You should always have a regulatory person to be a part of the oversight. Otherwise the police and the customs will not be equipped to interpret whether it is a counterfeit or not to the extent to which it is required,” Singh said.

Responding to an emailed query, Hans V. Hogerzeil, director of essential medicines and pharmaceutical policies at WHO, said: “The stoppage of generic medicines at European borders is solely based on the European legislation and regulation with regard to counterfeits. This is not dependent on any definition by WHO or by the IMPACT partnership.”

Hogerzeil said, “The WHO and IMPACT definition… is focused on the public health aspects of counterfeit medicines and specifically excludes the misuse of the definition to exclude or hamper the trade in genuine approved generic products.”

WHO defines counterfeit medicines as “medicines which are deliberately and fraudulently mislabelled with respect to identity or source.” It covers both branded and generic products with the correct ingredients but fake packaging, with wrong ingredients, without active ingredients or with insufficient active ingredients.

The key change in the proposed IMPACT definition is that it drops the phrase “deliberately and fraudulently”, adds the term “history” along with identity or source, and changes “fraudulently mislabelled” to “false representation”.

Generic seizure

A consignment valued at some $100,000 (Rs49 lakh) of Ind-Swift in transit for Venezuela was seized in November by customs authorities in the Netherlands under suspicions of being counterfeit.

The product was the generic drug pantoprazole, used for treating ulcers, in the form of pellets that were to be filled in capsules and sold in Venezuela, where Indswift has marketing rights for it.

EU authorities have said the consignments are being seized because firms have violated patents rights

According to Munjal, the authorities have seized it saying it is counterfeit, as Ind-Swift does not have marketing rights in the EU. The company sells the drug in India as Pentagon-D.

“Patent legislations have been around in Europe for some time but there seems to be a sudden interest in enforcing it, but it is unreasonable to enforce it on goods in transit,” said Munjal.
“We are already pursuing possibilities of sending consignments through routes where it doesn’t touch European ports while in transit. Another alternative we are looking at is having a storage facility in a non-European country, from where we can serve our markets,” he said. Significantly, pantoprazole is an unbranded bulk drug, which means the consignment can’t be an instance of trademark counterfeiting.

The EU patent for the molecule is held by a privately held Swiss company Nycomed SCA which acquired the original patentee Altana Pharma AG in 2006, and Wyeth in the US. Bigger Indian generic drug makers that Mint contacted, including Sun Pharmaceutical Industries Ltd, said that while they are yet to face similar issues, they think “it (the definition of counterfeit medicine) is a very important issue and needs to be debated as it can have serious impact on Indian pharma exporting companies.”

Problematic definition

Patent lawyers said the definition of a counterfeit drug is problematic. “The IMPACT definition is certainly problematic in that it uses the term ‘when there is a false representation in relation to its identity, history or source’. If the word ‘false’ is defined quite loosely, it could potentially even catch legitimately approved generics, whose brands are similar to the innovator,” said Shamnad Basheer, a professor in intellectual property law at the National University of Juridical Sciences, Kolkata.

India’s reservations about the IMPACT definition were raised at a meeting of the taskforce held at Bonn in Germany in the last week of November. This resulted in the word history being dropped from the draft of the definition, as it could lead to multiple interpretations and could be misused, as reported in Mint on 3 December.

A final decision on this will be taken in May next year at a world health assembly meeting, though that draft was finalized last week at Tunisia. “As to whether or not foreign authorities can capture Indian goods in transit on account of IP violations depends solely on the respective national laws of the foreign country concerned. Some countries permit such seizures—others do not. This has nothing to do with the IMPACT definition or the WHO,” Basheer, however, said.

To be sure, Greg Perry, director general of the European Generic Medicines Association had told UK-based trade journal Pharma Times just ahead of the Tunisia meeting: “The problem in the definition does not lie with IMPACT, which is doing an excellent job in dealing with the real problem of fake products being pushed by criminals.”

Rather, the issue of most concern is “growing confusion in other areas” such as ACTA (the Anti-Counterfeiting Trade Agreement proposed by the US and EU, among others, to be finalized next year) and the World Customs Organisation’s draft SECURE (Standards to be Employed by Customs for Uniform Rights Enforcement) treaty, “where patents and patent infringement is being mixed up with counterfeiting and piracy,” Perry was quoted as saying.

Basheer agrees. “Developing countries are increasingly facing the prospect of enhanced non-trade barriers through a heightening of international IP (intellectual property) standards and enforcement and a proliferation of IP fora, with the WHO, World Customs Organization and several other international bodies now jumping into the fray,” he said.