Competition Law Drug Regulation

Poorly Drafted Regulatory Laws are Becoming the New Barrier for Indians to Access More Affordable Biotech Products


regulationIn highly regulated industries like pharmaceuticals and biotechnology, where all market players are required to prove the safety and efficacy of their products to government regulators, the lack of an efficient regulatory mechanism can act as a substantial hurdle to competition and greater accessibility. In such cases, poor regulation provides IP owners a window to further delay competition even after their patent rights expire.

To facilitate better competition in these sectors, it is necessary for governments to create new regulatory pathways to enable competitors to enter the market after the IP rights have expired. For example, in the case of the pharmaceutical drugs, where all market players have to demonstrate the safety and efficacy of their product, the Hatch-Waxman Act created a relatively simple regulatory pathway by allowing generics to enter the market once they could establish that their drug were bioequivalent to the innovator’s drug. This requirement did away with the need to conduct fresh clinical trials thereby reducing the time and cost for generics to enter the market and lower prices through competition. (It’s a different story that in India most generics enter the market without even cursory bioequivalence studies) The biotech industry is however a lot more difficult to regulate given the nature of the technology involved. India as a country has very little institutional experience when it comes to regulating complex technologies and that lack of experience is becoming all too apparent in the case of the biotech industry.

Bio-similar regulations and lack of clear rules on interchangeability  

Over the last few couple of years we’ve seen Roche, a Swiss company, suing several Indian biotech companies who were launching biosimilars of products over which Roche’s patents had expired or lapsed. In several of these cases, Roche managed to get limited injunctions from the Delhi High Court preventing competitors preventing them from marketing their products as equivalent to Roche’s own biologics.

This isn’t the first time that Roche has used the regulatory playbook to attack its competitors. Many years ago in 2001, Dr. Reddy’s had launched a biosimilar of another Roche biologic called Neupogen. Dr. Reddy’s product called Grastim was approved by the DCGI and launched in the market. After its launch, Nicholas Piramal, which had the marketing rights for Roche’s product in India, filed a complaint before the now abolished Monopolies & Restrictive Trade Practice Commission. This case is recounted by Dr. Anji Reddy, in his memoirs titled “An Unfinished Agenda”. He writes “Their main grievance was that the insert would lead people to believe that Grastim had undergone various clinical trials that demonstrated efficacy, whereas it was Neupogen that was used in clinical trials. It is normal practice for generics to have an insert that replicates the one of the innovator, except for the brand name of the innovator. It was never our intention to create an impression that Grastim was used in the clinical trials whose results had been reported, so we promptly made an offer to make the situation clear by making changes in the insert.”

You would have thought that both Indian Government and the Indian pharmaceutical industry would have learned their lesson after this episode and worked together to put in place a clear regulatory pathway to provide clarity on the issue of biosimilars. Rather, the government and the Indian industry were caught off-guard when Roche used a similar strategy against Biocon, Reliance and other companies more than a decade after the case against Dr. Reddy’s. The only regulations on the issue of biosimilars are the half-baked “guidelines” whose legality is not even clear since they have not been drafted under any particular legislation. As far as I’m aware the Indian government is yet to clarify the law on interchangeability and its lack of action jeopardizes patient safety and also hurt the efforts of Indian companies to convince doctors to substitute Roche’s biologics with their own biosimilars. Other national regulators like the USFDA have introduced guidelines on this crucial issue of interchangeability of biosimilars.

If doctors lose faith in the regulatory mechanism, it will be enough to strike the death knell for the still blossoming biosimilar market in India.  In fact this is already happening. Last year, a group of super specialty doctors advised their members on the adverse effects of a biosimilar launched by Intas, after which the company recalled their product from the market.

Plant varieties litigation & regulatory barriers on using GM traits

A second area where biotech regulations are adversely affecting competition is in the field of agriculture. Although genetically modified food crops aren’t allowed in India, the country does allow genetically modified cotton crop. Monsanto has patents over the crucial GM technology used in cotton plants. As explained in earlier posts, this technology is licensed to 48 different companies. In the last couple of years, 8 of these licensees have refused to pay Monsanto royalties, for a number of reasons. The open dispute between Monsanto and its licensees has brought to light some very interesting aspects of Indian regulatory laws.

The most important of these issues, which I touched upon, in earlier post, is the fact that one of our many environmental regulators – the Genetic Engineering Approval Committee (GEAC), has a rule requiring all companies introducing new GM crops in the field to get approval from the company that owns the ‘GM trait’ (incorporated in a plant variety developed by the seed company). In this case, Monsanto owns the ‘trait’ and licenses it to these 8 companies, who want to continue using the ‘trait’ in their own plant varieties without paying Monsanto. If GEAC’s rules require these companies to seek Monsanto’s approval, it is quite obvious that Monsanto will withhold approval until the contractual issue is sorted out. If there is a contractual dispute the contracting parties are free to litigate the issue in court but that contractual dispute should not be allowed to create additional entry barriers under environmental laws. The GEAC’s mandate is to ensure environmental safety and the buck should stop with it rather than a private company. Regulatory approval by a government body should proceed irrespective of private litigation between two private companies.

If the government wants to spur competition and investment in the biotech sector it first needs to sort out this regulatory mess.   

Image from here

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP). He has recently been appointed as an Assistant Professor at NALSAR, Hyderabad, starting September 1, 2017.

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