India’s Patently Wise Decision

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The Indian Supreme Court’s refusal to uphold the patent onGleevec, the blockbuster cancer drug developed by the Swiss pharmaceuticalgiant Novartis, is good news for many of those in India suffering from cancer.If other developing countries follow India’s example, it will be good newselsewhere, too: more money could be devoted to other needs, whether fightingAIDS, providing education, or making investments that enable growth and povertyreduction.
But the Indian decision also means less money for the bigmultinational pharmaceutical companies. Not surprisingly, this has led to anoverwrought response from them and their lobbyists: the ruling, they allege,destroys the incentive to innovate, and thus will deal a serious blow to publichealth globally.
These claims are wildly overstated. In both economic andsocial-policy terms, the Indian court’s decision makes good sense. Moreover, itis only a localized effort at rebalancing a global intellectual-property (IP)regime that is tiltedheavily toward pharmaceutical interests at the expense of social welfare.Indeed, there is a growing consensus among economists that the current IPregime actually stifles innovation.
The impact of strong IP protection on social welfare has longbeen considered ambiguous. The promise of monopoly rights can spur innovation(though the most important discoveries, like that of DNA, typically occurwithin universities and government-sponsored research labs, and depend on otherincentives). But there often are serious costs as well: higher prices forconsumers, the dampening effect on further innovation of reducing access toknowledge, and, in the case of life-saving drugs, death for all who are unableto afford the innovation that could have saved them.
The weight given to each of these factors depends oncircumstances and priorities, and should vary by country and time. Advancedindustrialized countries in earlier stages of their development benefited fromfaster economic growth and greater social welfare by explicitly adopting weakerIP protection than is demanded of developing countries today. Even in theUnited States, there is growing concern that so-called hold-up patents and me-too patents – and the sheer thicket of patents, in which anyinnovation is likely to become entangled in someone else’s IP claims – are diverting scarceresearch resources away from their most productive uses.
India represents only about 1-2% of the globalpharmaceutical market. But it has long been a flashpoint in battles overexpansion of pharmaceutical companies’ global IP rights, owing to its dynamicgenerics industry and its willingness to challenge patent provisions bothdomestically and in foreign jurisdictions.
The revocation of patent protection for medicines in 1972greatly expanded access to essential medicines, and led to the growth of aglobally competitive domestic industry that is often called the “pharmacy ofthe developing world.” For example, production of anti-retroviral drugs by Indian genericmanufacturers such as Cipla has reduced the cost of life-saving AIDS treatmentin Sub-Saharan Africa to just 1% of the cost a decade ago.
Much of this globally valuable capacity was built under aregime of weak – in fact, non-existent – protection for pharmaceutical patents.But India is now bound by the World Trade Organization’s TRIPSagreement, and has revised its patent laws accordingly, causing widespreadanxiety in the developing world about the implications for global provision ofaffordable medicines.
Indeed, the Gleevec decision is still only a small reversalfor Western pharmaceuticals. Over the last two decades, lobbyists have workedto harmonize and strengthen a far stricter and globally enforceable IP regime.As a result, there are now numerous overlapping protections for pharmaceuticalcompanies that are very difficult for most developing countries to contest, andthat often pittheir global obligations against their domestic obligations to protect theircitizens’ lives and health.
According to the Indian Supreme Court, the country’samended patent law still places greater weight on social objectives than in theUS and elsewhere: the standards of non-obviousness and novelty required toobtain a patent are stricter (especially as they pertain to medicines), and no“evergreening” ofexisting patents – or patent protection for incremental follow-up innovations –is allowed. The court thus reaffirmed India’s primary commitment to protectingits citizens’ lives and health.
The decision also highlighted an important fact: Despiteits severe limitations, the TRIPS agreement does have some (rarely used)safeguards that give developing countries a certain degree of flexibility tolimit patent protection. That is why the pharmaceutical industry, the US, andothers have pushed since its inceptionfor a wider and stronger set of standards through add-on agreements.
Such agreements would, for example, limit opposition topatent applications; prohibit national regulatory authorities from approvinggeneric medicines until patents have expired; maintain data exclusivity,thereby delaying the approval of biogeneric drugs; and require new forms ofprotection, such as anti-counterfeitingmeasures.
There is a curious incoherence in the argument that the Indiandecision undermines property rights. A critical institutional foundation forwell-functioning property rights is an independent judiciary to enforce them.India’s Supreme Court has shown that it is independent, interprets the lawfaithfully, and does not easily succumb to global corporate interests. It is now up to the Indiangovernment to use the TRIPS agreement’s safeguards to ensure that the country’sintellectual-property regime advances both innovation and public health.
Globally, there is growing recognition of the need for amore balanced IP regime. But the pharmaceutical industry, trying to consolidateits gains, has been pushing instead for an ever stronger and more imbalanced IPregime. Countries considering agreements like the Trans-Pacific Partnership orbilateral “partnership” agreements with the US and Europe need to be aware thatthis is one of the hidden objectives. What are being sold as “free-tradeagreements” include IP provisions that could stifle access to affordable medicines,with a potentially significant impact on economic growth and development.

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关键词：Decision Patent India ATEN WISE countries developed education providing devoted

If other developing countries follow India’s example,it will be good news elsewhere, too: more money could be devoted to otherneeds, whether fighting AIDS, providing education, or making investments thatenable growth and poverty reduction.But the Indian decision also means less money for thebig multinational pharmaceutical companies.
The impact of strong IP protection on social welfarehas long been considered ambiguous. The promise of monopoly rights can spurinnovation (though the most important discoveries, like that of DNA, typicallyoccur within universities and government-sponsored research labs, and depend onother incentives). But there often are serious costs as well: higher prices forconsumers, the dampening effect on further innovation of reducing access toknowledge, and, in the case of life-saving drugs, death for all who are unableto afford the innovation that could have saved them.
The weight given to each of these factors depends oncircumstances and priorities, and should vary by country and time. Advancedindustrialized countries in earlier stages of their development benefited fromfaster economic growth and greater social welfare by explicitly adopting weakerIP protection than is demanded of developing countries today. Even in theUnited States, there is growing concern that so-called hold-up patents and me-too patents – and the sheer thicket of patents, in which anyinnovation is likely to become entangled in someone else’s IP claims – are diverting scarceresearch resources away from their most productive uses.


But India isnow bound by the World Trade Organization’s TRIPSagreement, and has revised its patent laws accordingly, causing widespreadanxiety in the developing world about the implications for global provision ofaffordable medicines.As a result, there are now numerous overlappingprotections for pharmaceutical companies that are very difficult for mostdeveloping countries to contest, and that often pit their global obligations against theirdomestic obligations to protect their citizens’ lives and health.
Globally, there is growing recognition of the need fora more balanced IP regime. But the pharmaceutical industry, trying toconsolidate its gains, has been pushing instead for an ever stronger and moreimbalanced IP regime. Countries considering agreements like the Trans-PacificPartnership or bilateral “partnership” agreements with the US and Europe needto be aware that this is one of the hidden objectives. What are being sold as“free-trade agreements” include IP provisions that could stifle access toaffordable medicines, with a potentially significant impact on economic growthand development.