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New drug era

Whittling away of innovator vs generic divide brings its own challenges.

Modi’s US visit is likely to throw up highly contentious intellectual property rights issues. Modi’s US visit is likely to throw up highly contentious intellectual property rights issues.

Prime Minister Narendra Modi’s US visit is likely to throw up highly contentious intellectual property rights issues. Indeed, for the last several years, US drug majors and their European counterparts have lobbied hard to demonise the Indian patent regime. But the government must continue to defend the law and stand its ground. Particularly since our own industrial moguls have caved in and are less vocal about their opposition to a global patent paradigm scripted by Western industrial interests.

It is against this backdrop that one must view the latest deal between Gilead, a leading US pharmaceutical company, and seven Indian generic firms, to manufacture and distribute an important antiviral in several low- and middle-income countries. The deal pertains to the licencing of Sovaldi, a patented hepatitis C drug that revolutionised treatment but is priced at a whopping $84,000 for a three-month course. Faced with mounting pressure from patient groups and strong patent opposition in India, Gilead announced that it would sell Sovaldi for $900. Immediately thereafter, it announced the licencing arrangement.

It even went to the extent of explaining this private commercial deal to the commerce minister, presumably to ward off compulsory licencing. After all, two years ago, another excessively priced patented drug, Nexavar, was forcefully licenced to an Indian company for manufacture at a 30th of the price at which the German patentee, Bayer, was selling it in India.

The announcement of Gilead’s licencing agreement generated consternation among public health activists, who believe that its patent is vulnerable under India’s stringent patent standard, which was upheld by the Supreme Court in the famous Novartis case. One wonders: would such a deal have been struck a decade earlier? Perhaps not. At least not with Cipla, a much-admired company whose visionary leader, Yusuf Hamied, had held that the introduction of pharmaceutical patents in India would cause a “genocide” and that he would do all he could to mitigate the disaster.

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And he did walk the talk. At least for a while. In 2008, a brazen Cipla released a generic version of a patented lung cancer drug and took on the litigious might of Roche, a Swiss multinational. Fortunately, Cipla won the case at the first instance, arguing that their cheaper version should be kept on the market for the sake of poor patients. However, in a surprising move, the company recently opted to pursue a settlement with Roche. This, after four years of litigation, three sets of appeals and a full-fledged trial, which resulted in a verdict largely favourable to Cipla.

What does all of this mean? Are we seeing a new phase in pharmaceutical history? Does this have to do with a gradual whittling away of the sharp innovator-versus-generic divide? A divide that is often considered a defining feature of the pharmaceutical industry, distinguishing it from most other technology sectors. Notably, while the high technology sector routinely sees a fluid innovator versus infringer dynamic, with Microsoft and Google suing as much as they are sued, the pharmaceutical industry is different. Patent positions are more ossified, with alleged innovators, typically MNCs, suing generic copycats, typically Indian companies. However, it would appear that this dividing line is now blurring, with generic companies aspiring to jump on to the innovation bandwagon, and drug innovators waiting to acquire generic divisions.

The last few years have seen an increasing number of partnerships, collaborations and mergers between the hitherto warring factions. But this is hardly surprising. In the world of business, pragmatism often trumps principle.


Given the increased patent scrutiny and the mounting pressure of instruments such as compulsory licencing and drug price control, innovators are looking to partner with generic companies for local manufacture and distribution of their drugs at cheaper prices. On the other side of the fence, the advent of biologics, a species that is often difficult to copy, and increased regulatory pressures are forcing generic firms to rush into the welcoming arms of drug innovators.

Cipla reflects this changing paradigm. Under Hamied, the company positioned itself as a strong ideological warrior, taking on the global might of MNCs and slashing prices of patented HIV medicines to save thousands of lives in Africa. Today, it is just like any other corporate that seeks to enhance shareholder value and readily aligns with those that it had vehemently opposed in a bygone era.

All of this means that public health and affordable access will take a severe beating. We can no longer expect our home-grown generic companies to guard this turf. Growing partnerships between them and global innovators will mean fewer patent challenges. As such, the government cannot remain content with relying on free-market competition from the generic sector to bring drug prices down. It has to play a more active role to foster affordable healthcare and revive its once-prominent public sector units.


It is this new dynamic that Modi must bear in mind as he negotiates with a partner that is all too keen to collaborate on the IP front, but mostly on its own terms.

The writer is founder of SpicyIP and former professor of IP Law at WBNUJS, Kolkata

First published on: 27-09-2014 at 12:03:27 am
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