Indian Patients Suffer from India’s Weak Pharmaceutical Patents

A version of this Health Alert appeared at Forbes.

India’s recently elected Prime Minister, Narendra Modi, will visit the United States later this month. One of the sticking points in the U.S.-India relationship is weakness in India’s laws governing intellectual property (IP). The Global Intellectual Property Center of the U.S. Chamber of Commerce ranks 25 countries in its Global IP Index, and India comes in last place. Indian growth will continue to lag as long as this persists, as researchers have demonstrated the positive relationship between IP protection and a country’s prosperity.

One of India’s weak spots is patent protection for new prescription drugs. New research also shows, counterintuitively, that this limits patients’ access to new medicines. Professors Ernst R. Berndt and Ian M. Cockburn analyzed the 184 new medicines approved by the U.S. Food and Drug Administration between 2000 and 2009. Shockingly, it took more than five years for half of those drugs to become available in India.

Ten years after being launched in the United States or elsewhere, almost one quarter of the new medicines were still not available in India. The authors also compared when the drugs were available in other developed countries. For example, in 2010, 160 of the new medicines were available in Germany, but only 111 were available in India.

Berndt and Cockburn conclude that India’s patent law is to blame for this long lag in access versus the United States and other countries. The authors found that half of the new medicines faced copycats within one year of launching in India, and 85 percent faced copycats within three years. In Germany, by contrast, none of the drugs faced copycats within five years.

These results indicate that effective patent protection is not available for most prescription drugs in India. So, it is unsurprising that innovative drug-makers are reluctant to sell their medicines there. Investors are also unlikely to put their capital at risk in Indian drug companies that seek to discover new medicines.

It appears to be a lose-lose situation: An innovative pharmaceutical industry is unlikely to grow out of India, and Indian patients will continue to be deprived of new medicines, until India’s patent law is fixed. The new government recognizes the need for laws that protect intellectual property. However, it has not yet announced decisive steps to improve this situation.

Why the delay, in the face of mounting evidence of harm? India has a world-leading generic pharmaceutical industry, which rose to global prominence largely because India had no pharmaceutical patents at all until 2005. India could not take full advantage of international free trade without signing onto international treaties meant to level the playing field. So, India started granting pharmaceutical patents. However, they are limited in important ways, and Indian jurisprudence has confirmed innovative firms’ lack of confidence in the patent regime.

India’s generic drug industry is an important national asset, which benefits patients worldwide. It is unlikely that U.S. patients would be able to buy a month’s worth of generic medicines for four dollars without Indian generic drug-makers competing in the market. However, a strong branded pharmaceutical industry and a strong generic industry are not mutually exclusive. The United States and other developed countries have successful, home-grown generic competitors as well as brand-name drug-makers.

Indian patients and Indian medical innovation will benefit when India improves its patent law to the highest global standard.

Comments (10)

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  1. Devon Herrick says:

    Indian courts look for almost any excuse to throw out a patent on a medication. It’s a form of political corruption. A disallowed patent frees up the drug for generic drug makers. But, as John points out, the number of drugs available in India is lower that it would otherwise be. Although India now (at least in theory) recognizes patents, looking for loopholes to disallow a patent is a short-term strategy that ignores long term costs and benefits of patent protection.

    • Gitmoray says:

      The reality is that the rest of the world benefits from the stance India has taken on patents. I have probably traveled to over 40 countries, and in every one of them ( including the first world nations…Canada hey !) generic versions are available within 5 years of a brand med hitting the market…not so in the dear old U.S. where people have to wait 17 years, and sometimes 22 years(hello molecular tweaks) to use the generics.

      It is not magic that you can buy Canadian drugs at huge discounts from U.S. prices. it is the fact that Canada and all other countries allow the retail of Indian generics. Where are the other posts berating the Canadians, Dutch, Australians, Brazilians, Brits et al for doing exactly the same thing the Indians are doing ? By the way, I am not Indian, I am a Cuban-American from South Florida who sees the tremendous benefit that accrue to my healthcare clients from having quality generic medications at less than outrageous, abusive and prohibitive prices.

      Please send big pharma their dirty dollars back, wash your hands, and let them know that even though you can BS most of the people most of the time, their brand of BS is really not marketable.

      • Devon Herrick says:

        The United States is especially good at generating intellectual property. The U.S. excels at creating original products from advanced drugs, to Hollywood movies, to highly-advanced medical equipment, to iPhones to jet engines.

        By contrast, China excels at manufacturing products for export to the U.S., Europe and the rest of the world. Chinese products are often not technically-advanced or original to Chinese companies.

        India has an abundance of cheap labor, many of which are highly skilled. Indian generic drug makers are very competitive by international standards.

        Basically, every country has strengths and weaknesses. Every country has some type of competitive advantage (or disadvantage). I find it rather disingenuous that countries like China and India want to exploit their competitive advantage (i.e. export products to the American/European markets). At the same time, they don’t want American companies to be allowed to exploit our competitive advantage (i.e. protect our intellectual property).

        The U.S. has some great generic drugs that can be freely copied and sold in the United States or all over the world. At the same time, American companies have intellectual property under patent protection that should be safeguarded.

        You don’t necessarily have to like drug companies to be in favor of protecting their intellectual property — just as I don’t necessarily have to know you in order to support protecting your property from theft.

        • Gitmoray says:

          If you guys want to participate in the “Let’s protect intellectual property” derby, then you need to pick a more noble steed than Big Pharma.

          You guys also need to be more above board about the rapacious practices of these companies, and about the incredible hypocrisy of all the other first world nations that spout intellectual property bs on one side of their face, then stock their pharmacy shelves with Indian generics the minute they are available.

          We are the only ones that remain true to the patents, and for our honesty, our people get to pay Big Pharma two to three times the amount for BRANDS as people in other countries pay…why the price difference? because the pharma companies face the imminent generic competition, and lowball the prices in other countries by increasing the prices for our people in this country.

          This system lends itself to such abuses as the Medicare Prescription Drug Act explicitly prohibiting Medicare from negotiating discounts with drug manufacturers. Medicare corrected this shameful gift to Pharma by deciding not to offer part D plans, and making that the exclusive province of private companies (Humana, Coventry, United health Care etc) that were not controlled by the act’s no-negotiation provision, and had no restrictions on negotiating drug prices. Without this twist, Part D plans would not have been viable.

          • Devon Herrick says:

            If you guys want to participate in the “Let’s protect intellectual property” derby, then you need to pick a more noble steed than Big Pharma.

            Either you favor intellectual property rights, or you don’t. Picking and choosing whether a company’s intellectual property is “worthy” of protection doesn’t make much sense to me.

            Is protecting a designer dress from cheap Chinese knock-offs noble — so a wealthy women isn’t embarrassed when a lesser mortal wears an identical-looking dress? Is it noble to allow a patent drug to be reproduced with impunity so low-income people in Africa get access to drug they couldn’t otherwise afford? (what if the cheap African drugs aren’t sold in Africa, but diverted because they are worth more when smuggled into Europe and America? Is it any more noble to protect the property of General Electric jet engine design from being copied by Chinese companies who want to learn the technology so they can make competitive engines in China? Is it noble to prevent cheap DVDs of Disney movies from flooding Latin America and Asia (mostly because DVD makers can sell a DVD with a movie on it for more than a blank DVD).

            As I see it, it’s a slippery slope.

  2. CL says:

    Okay, I’m confused. The article states, “The authors found that half of the new medicines faced copycats within one year of launching in India, and 85 percent faced copycats within three years.” If copying drugs in India is so easy and lucrative, why would it be any more difficult to copy popular drugs that have *not* launched in India? Am I missing something?

    • John R. Graham says:

      Thank you. That is a good question. India, or any other country, could abolish its patent law and simply state that it will steal anyone’s IP.

      But that approach is no longer popular because a country like the U.S. will reply by not accepting patents from such a country. Companies in that country will never grow beyond commodity producers.

      Imagine if Switzerland, for example, said it would just copy Pfizer’s or Merck’s medicines. The U.S. would retaliate by not issuing patents to Swiss drug-makers.

      International treaties designed to encourage global trade describe these conditions in great detail

      So, countries like India pass patent laws to encourage entry, but then fail to enforce properly.

  3. Arnie Poutala says:

    I find this blog to be intellectually honest in discussing subjects I understand well. I have never been concerned that NCPA takes a position that supports any one industry such as big Pharma so I disagree with your suspicion that NCPA is taking sides.
    I compliment John Graham as laying out a clear position that he believes patients in India do not have access to all of the latest new drugs that may benefit them. Perhaps this is a good argument for not using India as a favored location for medical tourism.
    I also think big Pharma is an easy target to attack in our overly expensive health care system. I am continually learning about their generosity is assisting low income people afford expensive brand name drugs.
    I believe our free enterprise system will not last if we give up our reaction to people stealing our intellectual property.

    • Devon Herrick says:

      Big Pharma is often the target of derision because of the cost of drugs. Yet,drugs are the most efficient way to treat illness. About 83% of drugs dispensed are generic drugs that have lost patent protection. Of the nearly $3 trillion spent on health care, only 10% of that is spent on drugs. Why aren’t doctors attacked as costly; they consume 20% of health care spending? Why aren’t hospitals attacked as costly? Hospitals account for 30% of health care spending. Yet, hospitals put up billboards on the freeway proclaiming their humanitarian credentials. Doctors have an image like Marcus Welby. Yet, a drug company discovers a drug that will actually cure Hepatitis C for $80,000 — a cheaper cost than a liver transplant. But the company is vilified as greedy. It seems strange when you think about it.

  4. Pat says:

    While I completely support providing protection for intellectual property, American patent laws have totally corrupted pharmaceuticals and hence, the medical profession. Substances should not be patentable. Only processes. We have so many poisons on the market, and the pharmaceutical companies drive the act of poisoning the people by bribing doctors. They do it to make money off their patents. Patenting of medicines needs to end. There are many natural substances that cannot be patented that truly heal and do not poison people.