Troubling times for Indian Generic Companies

Seizure at Frankfurt

A consignment of about 3 million pills of Amoxicillin, representing about 76,000 courses of treatment for a range of bacterial infections, were stopped at the Frankfurt airport on May 5th, on the suspicion that they might be infringing upon the trademark of a brand-name antibiotic. These drugs were on their way to Vanuata, a small LDC comprised of an archipelago of 83 islands. On May 20th, GSK attested that the seized drugs are not in violation of their trademark. A few days later, the consignment was finally released.

Indeed, as Latha Jishnu points out in the Business Standard, there could not have been a trademark violation as amoxicillin is an international non-proprietary name. An INN, or the generic name given to a pharmaceutical substance is meant to prevent confusion by providing a standard name for pharmaceutical substances. It is globally recognised and is public property.

While this is the first such seizure in Germany, it is creating fear of an EU-wide position on generic drugs as products which are to be looked upon with suspicion. According to the response from the Dutch government to HAI’s freedom of information request, of the 17 seizures by the Dutch custom authorities, 16 were from India and 15 of these were headed to developing countries. None of these were headed from or to Netherlands. IP-Watch has reported that certain Indian officials believe that there is a pattern in the seizures, and that it indicates a ‘well thought out strategy’ on the part of IP enforcement authorities. As reported there,

“These random seizures seriously impact our ability to service the healthcare needs of people living in developing countries in a timely manner, forcing us to consider re-designing our entire supply chain to avoid any transit through European territories,” said Sune Sveningsen of Missionpharma, which had supplied the drugs stopped in Germany.

While this may seem like a slightly ‘conspiration–alistic‘ point of view to take, it bears noting that some of the grounds on which the seizures were made have included substandard drugs, patent violations and even drug trafficking. Indeed, the scare is bound to, if it hasn’t already, pressurise generics into changing their transit routes since they may feel a need to bypass ports where their goods would be confiscated, leading in turn to a rise in costs of the drugs.

The EU is continuing to enforce its controversial Regulation 1383 despite the fact that India has already spoken up strongly against this TRIPS-plus measure (See previous posts on this). The EC, in fact, has failed to send information as per India’s request to provide details of all drug consignments seized by custom authorities, with the only information available coming from the above mentioned report made available to HAI. The TRIPS which does not require ‘in-transit’ goods to be examined by border protection, also only requires mandatory measures at the border for instances of copyright-infringing pirated goods and counterfeited trademarks. There are some who believe that this regulation came about in the first place due to heavy lobbying by Big Pharmaceutical Companies, and go on to say that the purpose behind these regulations are in fact to increase their own monopolies under the guise of counterfeit checks meant to impose barriers for and eventually frustrate generic companies.

In a statement to the TRIPS Council recently, India has stated protested sharply against these seizures and the EU regulations causing them. It marked the EC’s belief that generic products are synonymous with potentially dangerous substances. India also reminded the EC of the concept of territoriality, stating that soveriegn functions of the country of destination, such as ensuring health and safety of their citizens, should be exercised by that country itself. India urgently called for a review of Regulation 1383 so as to bring it in conformity with the TRIPS agreement, in letter and in spirit. (the text of India’s intervention is available here) Brazil and India, complained that the EU was confusing legitimate generic medicines with counterfeits as well as undermining poorer countries ability to acquire low cost medicine. The EU maintained their position of trying to cut down on the ‘fast growing and dangerous’ problem of counterfeits in developing countries, without addressing the fact that they were undermining the destination countries’ authority in the process.

Incidentally, this is not the first time that India is bringing this up at the TRIPS Council. In fact, at a prior meeting, along with India, the destination country of a shipment which had been seized – Brazil, protested the ex-officio actions of the Dutch authorities, stating that the prerogative to act was theirs and theirs alone.

This is prompting India to ‘seriously contemplate’ filing a case before the Dispute Settlement Board of the WTO, so as to find a permanent solution to this. The government is trying to collect information from the parties affected in order to get a more complete picture before they take it up at the WTO.

Indian pharmaceuticals facing trouble in US as well

In the meanwhile, while there has been plenty of attention on the custom seizures in Europe, Seema Sapra points out in her blog , another startling statistic that has come from the further west. According to the US Customs and Border Protection Agency, India has become the 2nd highest in terms of IPR seizures at the American border in the last year.China topped the list again by accounting for nearly 81% of all the IPR seizures, while India and Hong Kong followed next with 6% and 5% respectively. This is quite a jump from 2007 where India contributed to less than 1%, however, there has also been a jump of 38.6% in the overall value of the custom seizures since then, with the monitory value going from $196.7M in 2007 to $272.7M in 2008. Custom seizures from India in 2008 were valued at 16,258,368 and more than 99% if these goods are pharmaceuticals. This is quite a shocking statistic considering that the global percentage of pharmaceutical products seized is only 10% of the total goods, up from 6% in 2007. Pharmaceuticals are 5th in the list of goods seized, behind “Footwear” and “Handbags/Wallets/Backpacks” with 38% and 11% respectively. Comparatively, only 7% of China’s goods are pharmaceutical products. The statistics can be found here.

Meanwhile.. Unhealthy competition?

As per a recent article in TOI, the National Agency for Food and Drug Administration and Control (NAFDAC) of Nigeria has issued a press statement stating that a large consignment of fake anti-malarial generic pharmaceuticals labelled `Made in India’ were, in fact, found to have been produced in China. There have been suspicions of this for some time by the Indian Government, but this is the first time that proof has come up. Reproducing relevant bits of the article:

“India’s High Commissioner in the Nigerian capital of Abuja, Mahesh Sachdev, had earlier written to then commerce secretary GSK Pillai, alerting him to the large seizure: “While this is a case of a Chinese company exporting fake `Made in India’ labelled medicines which has been accidentally exposed, it is unlikely to be an isolated incident. Indeed there is no reason for Nigeria to be the only country to be receiving such consignments.”

His letter went on to say:“Fake foreign-made generics carrying `Made in India’ label can do tremendous harm to our interests. It not only dents our image and takes our legitimate market share, it also erodes the distinction between generic and fake medicines that we have been campaigning for at WHO and WTO”.

Sachdev in his letter said that he had spoken to the director-general of NAFDAC Dr Paul Orhii who said that the Nigerian preference for generics made such cases of fake drugs more common. He expressed NAFDAC’s determination to curb circulation of substandard fake medicines.

However, Dr Mira Shiva of the Initiative for Health Equity and Society (IHES) told TOI that both India and China being large manufacturers of generics, multinational firms would look to discredit the two countries and label their drugs as substandard, so that they would have greater access to the African markets. She warned against the two countries trying to run each other down before ascertaining the full facts in the case to rule out any orchestration, but added that India ought to be more careful to ensure the quality of the drugs exported as well as sold domestically. “

As pointed out by the High Commissioner, taken in light of India’s case at the WTO on the seizures, it is all the more detrimental for India that the line between generic medicines and fake medicines is being becoming a fine one. With the Afro-Indian counterfeit debate gaining more importance (See the excellent work done by the Afro-IP blog in this regard), this is not a matter which is likely to fade away easily. In fact, the Indian government has already launched a mission for brand promotion of the Indian Pharmaceutical industry in Africa, so as to convince the African nations of the safety and standards of Indian generic products, as well as to show that India too has launched an offensive against spurious medicines. (See press note here)