|Image from here|
Khomba Singh of the ET had carried this interesting report on 3rd August, 2012 hinting at the possibility of the European Union (E.U.) installing ‘non-tariff’ barriers to punish Indian generics for blatantly violating the patents of foreign innovator companies in India. The measures proposed so far seemed to be aimed at using India’s own impotent drug regulatory bureaucracy to slow down Indian generic drug exports to the E.U. Honestly, I’m not surprised that E.U. is considering something so drastic especially since no European company has been able to enforce any of its patents in India. It should be remembered that companies like Cipla derive almost 40% to 50% of their annual revenues from American and European markets. Hence any announcement from these countries about possible measures targeted at Indian generic drug manufacturers will result in a blood bath for the ‘shares’ of these companies on the stock exchanges. Pharmaceutical stocks are extremely sensitive to any announcements from foreign regulators as evidenced by the way Ranbaxy’s share prices fluctuated during its face-off with the USFDA. The degree of the blood bath is usually proportional to the media coverage of the issue.
In this backdrop, I thought it would be interesting to discuss a bit of history. During my last visit to the DIPP with Sumathi, we managed to examine the government’s files on the WTO case filed by the U.S. & E.U. against India and which is titled the ‘Patent Protection for Pharmaceutical and Agricultural Chemical Products. You can access the official WTO page for this dispute over here.
The root cause of this particular trade dispute was India’s failure to enact a legislation to meet its TRIPS requirements in the year 1995, especially the requirements of Article 70 of TRIPS which required India to put in place interim measures to protect pharmaceutical inventions until such time that India introduced a full-fledged patent system to protect pharmaceutical and agro-chemical products. The timeline for implementation and India’s initial attempt to enforce it is as follows:
(i) TRIPs was supposed to come into effect from 1st January, 1995;
(ii) On 31st December, 1994 the President of India issued the Patent (Amendment) Ordinance, 1994 – Ordinances have a limited shelf-life, unless they are ratified by Parliament;
(iii) On the 21st of March, 1995 the Patent (Amendment) Bill, 1995 was introduced, debated and passed by the Lok Sabha (the lower house of Parliament) and then sent to the Rajya Sabha (the upper house of Parliament).
(iv) The Rajya Sabha referred the Bill to a Select Committee of the House and before the Committee could submit its report, the Lok Sabha was dissolved since the P.V. Narasimha Rao had completed its five years in office. As a result the Bill lapsed and the Government was required to repeat the entire process. The ordinance also had lapsed since it was not ratified by Parliament within six weeks of Parliament convening for business. India had thus run afoul of its TRIPs obligations;
The United States Trade Representative reacted swiftly to the situation and asked for ‘consultations’ to being on the 2nd of July, 1996 and when those consultations did not result in any result, the USTR requested the Chairperson of the Dispute Settlement Body (DSB) to create a panel to hear the dispute. Eventually India lost before both the Panel and the Appellate Body and by the year 1999 the Indian Parliament had enacted the Patent (Amendment) Act, 1999 which introduced amongst others measures, the system of ‘exclusive marketing rights’ to provide interim measures for pharmaceutical patent products.
Available below are some of the key documents circulated within the Indian government, prior to and during the dispute with the WTO. The list below is by no means thorough or exhaustive:
(i) 24th July, 1996: A note prepared by the DIPP for the Prime Minister on the request made by the U.S. & E.U. for consultations under the WTO agreement; (Available over here)
(ii) 7th November, 1996: Communications from Booth Gardner, Ambassador from the office of the U.S.T.R. to the Chairman, Dispute Settlement Body; (Available over here)
(iii) __________ November, 1996: A note prepared for the Cabinet explaining the request made by the US to the WTO for establishment of a panel to examine the alleged inconsistency of India’s legal regime with TRIP’s obligations; (Available over here)
(iv) 25th February, 1997: A very, very detailed brief circulated by the DIPP amongst the government, prior to a high-level government meeting to discuss strategy regarding the dispute before the WTO; (Available over here)
(v) 7th April, 1997: Amusing correspondence between India’s Ambassador from the Permanent Mission of India at Geneva to the DIPP, explaining very diplomatically that the ‘chalta hai’ attitude of the Government in asking for adjournments at the WTO would simply not cut any ice; (Available over here)
(vi) 11th September, 1997: Correspondence between the Permanent Mission of India at Geneva, the DIPP, Professor Frieder Roessler (Georgetown University Law Centre) and Mr. Krishnan Venugopal discussing strategy regarding a request from the E.U. to establish a panel to hear a similar if not identical complaint as was filed by the U.S. and which dispute by that time had already been decided against India. (Available over here)