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New drugs are usually under patent protection, preventing Indian companies from developing affordable generic/biosimilar drugs. | Photo Credit: Getty Images/iStockphoto
IEnsuring affordability of pharmaceuticals is essential to control healthcare costs, especially in India, where out-of-pocket expenditure on health accounted for about 47.1% of total health expenditure in 2021. Drug Price Control Order, 2013With the aim of regulating the prices of existing medicines, establishing a competitive environment for critical medicines by promoting local production is a better option. However, the government has taken two initiatives to meet domestic requirements through imports, which may have a negative impact on the domestic industry.
The first was a Department of Expenditure (DoE) order allowing the health ministry to procure 120 drugs through global tenders to supply central government schemes. The list includes several best-selling anti-diabetic drugs and anti-cancer drugs. Currently, companies selling these drugs enjoy a monopoly over the market in India, mainly due to patent protection, regulatory barriers, or both. Moreover, for more than 40 of these 120 drugs, the DoE order specifies a specific brand to be procured, meaning that foreign companies will have enhanced monopoly control.
Second, Union Budget 2024-25 There is a proposal to remove 10-12% customs duty on three cancer drugs marketed by AstraZeneca, with the aim of reducing their prices. Given that some of these drugs are priced very high, the proposed import duty reduction will not help in making them affordable.
These measures could severely discourage domestic producers, making the country dependent on imports. More importantly, they could further strengthen two entry barriers faced by the domestic industry, namely the product patent regime and the regulatory guidelines for marketing approval of biotherapeutics.
New drugs are generally under patent protection, preventing Indian companies from producing affordable generics/biosimilars. Meanwhile, regulatory guidelines that impose costly and time-consuming requirements for obtaining marketing approval of biosimilars may adversely impact domestic producers. However, both of these entry barriers can be overcome through proactive government action. The Patent Act has several public interest provisions that can be used to promote local production. Similarly, regulatory guidelines for marketing approval of biosimilars can be suitably amended to reduce the burden on domestic companies.
Section 83 of the Patent Act states that “patents are granted to encourage inventions and to ensure that inventions are carried out in India on a commercial scale and as fully as possible without unnecessary delay” and that “they are not granted merely to enable patentees to enjoy a monopoly for the import of the patented article”. It also states, “patents are granted to make the benefit of the invention available to the public at reasonably affordable prices”. The substantive provisions implement these key statements, ensuring that patent holders are guaranteed their rights under the Act, but cannot act in a manner that is detrimental to public interest.
If a patented drug is not “available to people at a reasonable price,” a compulsory licence (CL) can be granted to any company willing to manufacture the product in India. Issuing a CL is the most effective measure to ensure affordability of drugs, but it was issued only once. This happened when the originating company was charging around three lakhs for a drug. Using CL, an Indian company produced it for ₹8,000. However, despite the high prices of drugs, the patent office has not issued a CL for any other drug. The government also opposed granting CL during the pandemic. This is in stark contrast to the US government’s stance, which granted licenses on several patents during the pandemic.
India’s Patent Act also allows licensing for government use. Section 100 states, “A patent granted shall not in any way prevent the Central Government from taking measures to protect the public health”. Provisions under this section allow licensing for government use to enable domestic production of generic versions of patented drugs.
biosimilar guidelines
The guidelines for marketing approval of biosimilars in India are not only outdated but also resource and time-intensive. For instance, the current guidelines require mandatory animal studies, which are no longer required even in developed countries with stringent regulatory standards, including the US and the EU. Furthermore, the WHO guidelines and the UK guidelines for biosimilar marketing approval treat clinical trial requirements as the exception rather than the rule, while the Indian guidelines still insist on mandatory clinical trials. These requirements pose another barrier for Indian manufacturers. In a recent press release, the International Generic and Biosimilar Medicines Association stated that “saving time and resources by eliminating these duplicative requirements could have a meaningful impact on patient access.”
The proposed duty exemption on cancer drugs and global tendering for critical medicines undermine Parliament’s directives to improve access and affordability of medicines through domestic production using the provisions of the Patents Act. Dependence on imports could have a negative impact on the pharmaceutical industry, weakening its ability to remain relevant. The government needs to review its recent decisions, but more importantly, it should align its policies to support the growth of the domestic pharmaceutical industry.
Biswajit Dhar is Distinguished Professor at the Council of Social Development, New Delhi; KM Gopakumar is Legal Advisor and Senior Researcher at Third World Network; Chetali Rao is Consultant at Third World Network
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