A pharmacy in India. Flickr/Elton Lin. Some rights reserved.

India has been bristling at US moves to investigate its trade, investment and industrial policies. Indian media have been reporting that the country is ready to take on the US, even to drag the US to the World Trade Organization if India is classified as a Priority Foreign Country – which would relegate India to the list of worst offenders when it comes to the protection of Intellectual Property Rights (IPR).

This follows public hearings held last month by the United States International Trade Commission (USITC), as part of its investigation into Indian policies that are regarded as discriminatory towards US trade and investment. And, as recent developments illustrate, that includes scrutiny of India’s intellectual property regime, especially in relation to the pharmaceutical sector.

Stating that the campaign against India’s policies are led by US and European pharmaceutical giants, one media report said that India would not cooperate with any US investigations in this regard. 

Large western drug companies have been calling for stern measures against India in the wake of what they see as major blows to the protection of IP in that country. This has inevitably put big pharmaceutical companies, or Big Pharma as they are commonly referred to, at loggerheads with those advocating improved access to medicines. The vital access issue, closely linked to the production of cheap generics in India, is at once at the centre of the ongoing diplomatic tug-of-war on trade and IPR and is also swamped by it.

The long-running tensions were brought to a head some weeks ago by the publication of comments made by the head of a major German pharmaceutical company at an industry-related forum back in December.

The forum was the Financial Times Global Pharmaceutical and Biotech Conference and the comments in question were made by the CEO of Bayer AG, Mr. Marijn Dekkers.

Talking about the issue of access to medicines in India and the challenges Bayer is facing there to its patent for cancer drug Nexavar, Mr. Dekkers said: “…we did not develop this product (cancer drug Nexavar) for the Indian market, let’s be honest. I mean, you know, we developed this product for western patients who can afford this product, quite honestly.”

Initially, these remarks seem to have caused few ripples at the FT forum or anywhere else for that matter, with one blog merely suggesting Mr. Dekkers might have been more circumspect  and mainstream media not taking any notice at all. That is until a news report in January included the comments in relation to other developments concerning IPR in the Indian pharmaceutical sector. Since then, an intense debate about access to affordable medicines has ensued.

The international medical charity Médecins Sans Frontières (MSF) promptly condemned the comments. A statement by Dr. Manica Balasegaram, Executive Director of MSF’s Access Campaign, said they encapsulated, “everything that is wrong with the multinational pharmaceutical industry. Bayer is effectively admitting that the drugs they develop are deliberately going to be rationed to the wealthiest patients.”

He described this approach of Big Pharma as a “side effect of the way drugs are developed today” with companies only concerned about profits and in effect ignoring patients’ needs.

Adding to the controversial nature of the remarks was the fact that Mr. Dekkers was initially misquoted as having said: “We did not develop this medicine for Indians.” The company was at pains to point out that its CEO had been cited wrongly and that his remarks were in relation to whether the issue of a compulsory license in India for Bayer’s oncology medicine would have a big effect on the company’s business model.

A quick look-back at events will help a better understanding of the current scenario. Under the World Trade Organization’s agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a government can issue a compulsory license for the production of a drug to a local manufacturer when the price charged by the patent-holding company – in this case, Bayer – is deemed too high for the local market and therefore inaccessible to patients. And that is exactly what the Indian Patent Office did back in March 2012, when it issued its first ever compulsory licence to an Indian company, Natco Pharma, to produce a cheaper version of sorafenib tosylate, which is patented by Bayer and sold on the market under the name of Nexavar. That decision was upheld by an Indian appeals board last year.

This knocked down the cost of a month’s supply of the drug by roughly 97 per cent from over 5,500 USD to 175 USD. No wonder then that some are asking if an Indian company can produce a drug, market it, pay the prescribed royalty to Bayer and still make a profit, why should it cost such a staggering amount in the first place?

Back to the Bayer chief’s comments: Mr. Dekkers himself said while responding to a blog, he regretted, “that what was a quick response from me within the framework of a panel discussion... has come across in a different way as it was meant by myself.” He admitted he was frustrated by the Indian authorities’ decision to disregard the patent on Nexavar.

However, Mr. Philipp Frisch, Coordinator of the Access Campaign at MSF Germany, told this author that they were not really surprised by what Mr. Dekkers said: “We have seen pharma companies acting pretty much along the lines of the comments all the time. What was new was that someone in the pharma industry would state that in such a clear and direct manner. That came a little bit as a surprise.”

He said MSF decided it was, “a good opportunity to highlight what is actually wrong with the overall R&D system” of the industry because Mr. Dekkers “pretty much said  that the industry does not really care about people that are sick or patients who need help but it only cares about profit.”

Its scathing criticism predictably found its way to social media. Mr. Frisch said there was a huge reaction on Twitter in particular, and “a somewhat emotional reaction, which also has something to do with the nature of social media.”

Still, according to Mr. Frisch, “What was really encouraging was that many people were immediately referring to the fact that health as a good shouldn’t be distributed according to income or wealth. That was the gut feeling of the vast majority of those who commented.” He adds that his team found this really encouraging because this reflected MSF’s message “that it shouldn’t be about profit when we are talking about health. I mean, it’s such a fundamental, important core of a human being that you shouldn’t distribute it according to purchasing power or economic wealth.”

Responding to this writer’s queries via e-mail, the German pharmaceutical company rejected accusations that it is putting profits ahead of patients: “At Bayer, we put progress over profit in the interest of patients. Because without progress none of today’s untreatable diseases will ever be curable, neither for the developed nor for the developing world.” 

However, it went on to say: “But progress is only possible when we protect IP (Intellectual Property) and allow the inventor to refinance the costs with the invention.” The company also said that through its “patient access programmes” in India it offered the drug for a small percentage of the original sale price. 

Both Mr. Dekker (at the December forum) and Bayer’s e-mail response relating to the developments in India have suggested access to medicines there has less to do with the pricing of (their) pharmaceutical products than with the shortcomings in that country’s health sector: poor infrastructure, distance to health care facilities and ultimately, poverty. While these are real problems, exorbitant drug prices are hardly likely to improve things. On the contrary, fewer people will be able to afford such medication and any government allocation for subsidies for medicines is likely to benefit relatively small numbers of patients. The affordability factor cannot be stressed enough, as even drugs produced by generics manufacturers may be out of the reach of millions not just in India but other middle-income countries, as well as vast swathes of population in low-income countries.

That is why these developments – India also rejected Swiss pharmaceutical company Novartis’ bid for a patent for its cancer drug Glivec – hold immense significance beyond the boundaries of that country. India has been dubbed “the pharmacy of the developing world” for a reason: it is a major supplier of cheap generics to other parts of the globe. For instance, about 80 percent of drugs MSF uses to treat HIV/AIDS patients are procured from India. It also relies heavily on generics manufactured in India to treat TB, malaria and several other infectious diseases.

The Director General of the World Health Organization (WHO), Ms. Margaret Chan, also recently endorsed the idea of granting licenses to generics manufacturers in India and elsewhere.

Notwithstanding these facts, those who back the Big Pharma business model built around protecting IP and the companies themselves will argue that patents must be protected at any cost in the interest of innovation and continued research for the discovery of new drugs. Some even suggest the pharmaceutical industry is like any other and so, why should we grudge them their profit margins?  MSF and other campaigners beg to differ and it is not difficult to understand why: if someone does not have access to a high-tech gadget or some other luxury goods, it is hardly likely to be a matter of life and death.

“Let’s look at it like this,” Mr. Frisch argued. “If another industry constantly, time and again, fought against regulatory actions of states that want to protect the wellbeing of their citizens, you wouldn’t allow it. And since health is such an important matter the pharmaceutical industry it is not like every other industry.” 

More importantly, it is not just about industry; it is about us as a society. 

And, as Mr. Frisch pointed out, it is about how the society and political system set up the incentives for R&D, for example in the pharmaceutical context. As a patent is basically a state-guaranteed right to market exclusivity, the state “is already heavily involved in this system.”  He went on to assert: “We just have to find a way to get the state involved in a way that gives us the best outcome. Then we have to change the political framework that defines incentives for private industry to work.” Nay-sayers will, of course, dismiss this as impractical and naive. Campaigners though are convinced that this transformation in approach is vital in order to secure improved access to medicines. 

Among alternative ways to incentivize innovation are investing more public money in R&D and prize funds. While some unorthodox approaches are already being tested, it will be a while before the efficacy of any of these options can be determined. In the meantime, MSF and other campaigners are pushing for countries to invest public money, especially in the area of the R&D of new drugs and vaccines for neglected diseases.

Meanwhile, IP-related developments in India are being closely watched, not only by stakeholders there, but by other emerging economies as well as charities like MSF, which source a huge proportion of medicine from India for the treatment of needy patients elsewhere in the world.