July 12, 2011
The EU-India free trade agreement may be good for economy but it is bound to increase your medical bill

Thanks to our fast still sedentary lifestyle, there are more medicines than fruits in our baskets and hence a big share of monthly budget is spent on buying them. According to a study published in international journal Lancet, despite living in a welfare state, 78 per cent of the health expenditure is met by Indians from their own pockets. Also 72 per cent of this total expenditure is spent on purchasing drugs. If you think that’s high be prepared for much higher medical bills in near future. The free trade agreement (FTA)

India is signing with the European Union (EU) will not only increase the cost of medicines in India but it will also choke the supply of low cost drugs to those living with HIV/AIDS and cancer in other developing countries like South Africa and Brazil since India is their main supplier.

What is FTA?

It’s not that FTA has everything ominous for us. It is bound to increase investment by European Union in India and hence improve the prospects of Indian economy. However, the agreement has a provision on intellectual property which is bound to sound the death knell for generic medicines- the cheaper substitute for branded drugs produced after the patent on original product expires.

This provision will make section 3(d) of Indian Patents Act redundant. Section 3(d), which has been under attack from major pharma MNCs for quite some time, disallows patents for marginally modified drugs that do not constitute a novel molecule or original invention.

The provision which allows generic producers to make marginally modified patented drugs will turn obsolete if the agreement comes in force

Section 3 (d) It says: “Mere discovery of a new form of a known substance, which does not result in the enhancement of the known efficacy of that substance, would not qualify it for a patent.” The explanation under this clause says combinations and derivatives of known substances shall be considered the same substance unless they differ significantly in properties with regard to efficacy.

In 2006, pharma giant Novartis had challenged this provision in court. The company had slightly changed the formulation of one of its cancer drug which costs Rs. 1.2 lakh a month and applied for a new 20-year patent. The Indian generic version of the same drug was available for Rs 10,000 a month. The Indian Patents Office denied the exclusive right which the company termed unconstitutional claiming that it was incompatible with the Trade-Related Intellectual Property Rights (TRIPS) Agreement under the World Trade Organisation (WTO) to which India is a signatory. However, the Madras High Court upheld the rejection of patent and health activists saw it as a great victory. The EU and US continued to push India to drop the clause for quite under the TRIPS agreement and now FTA goes beyond TRIPS and seeks data exclusivity for 10 years.

Data exclusivity, which will be besides the regular patent protection the companies enjoy, will make it difficult for drug regulators to give approval for generic versions of the drug based on the test data submitted by the innovator pharma company. This means if after the patent expires, the original innovator submits data related to the new use of same drug, it will enjoy a further monopoly. The generic medicine producer has to get independent tests done to prove the safety and efficacy of the drug. This will naturally increase the cost of these drugs and hence nullifying the whole concept of generic drugs.

Even non-patented drugs would face such barriers, thus pushing monopoly of certain pharma companies.

Why is it such a big deal?

Currently, India supplies generic drugs to several non-profit groups to help them treat patients with life threatening diseases. For instance, international charity Medecins Sans Frontieres (MSF) or Doctors without Borders, depends on generic drug suppliers of India to treat those living with HIV and AIDS in over 27 countries of the world. Several countries also run social health programmes by buying Indian-made generics.

India supplies cheap generic drugs to several non-profit groups, including doctors without borders, to help them treat patients with life threatening diseases

Not only is India the third largest producer of generics but also one of the least expensive. It supplies over 80 per cent of AIDS medicines to developing countries at low cost which is why FTA is being seen as the latest salvo by the West to take over the hitherto out of reach third world population.

Besides India, South Africa and Thailand also faced action for being supportive of generics. South Africa was taken to court by 39 pharma MNCs in 2001 for violating the intellectual property rights by supplying cheaper, quality drugs sourced from India to those living with HIV. This led to Doha declaration which allowed WTO members to get generic medicines in favour of public health and greater access to medication for their population.

However, despite the international agreements, rich nations are trying to snuff the generic trade. The European Union has been targeting shipment of generic drugs from India passing through European countries on its way to Africa and Latin America by destroying or disallowing further progress by returning the consignment back.

Another war that is being fought against generic medicines is based on nomenclature. US and other rich countries are pushing in the Anti-counterfeiting Trade Agreement (ACTA) and generics are increasingly being equated with counterfeit and spurious drugs. This way whatever generic medicines India exports can be destroyed on grounds of suspicion. The takeover of Indian manufacturers like Ranbaxy and Piramal by international players is seen as another strategy to tackle the influence of generic drug makers.

In India, 39 million people are pushed back into poverty due to rising cost of healthcare every year. Weakening of generic medicine companies means many more people will join the segment unable to afford living.