Global Innovation Policy Center

By Kelly Anderson

The May 2014 inauguration of Indian Prime Minister Narendra Modi signaled a turning point in the U.S.-India relationship, from a period of stalled bilateral engagement to an apparently mutual desire to reinvigorate the partnership between the two nations. President Obama welcomed Prime Minister Modi during his first official state visit in September, where the leaders had the opportunity to discuss ways to expand the relationship between the U.S. and India. A significant result of the meeting for intellectual property stakeholders came as the leaders agreed to create a high-level IP working group as part of the Trade Policy Forum (TPF), which had not met since 2010. The first meeting of TPF, scheduled to take place next Tuesday, marks an important first step to restarting the conversation between the U.S. and India.

The creation of the IP Working Group, a key deliverable from the visit, sent a much-needed signal to industry about India’s willingness to begin a discussion about their IP environment. As Ambassador Froman prepares for the meeting on Tuesday, we hope that he will use this opportunity to highlight industry’s ongoing concerns with India’s IP system. The Alliance for Fair Trade with India (AFTI) sent a letter to Ambassador Froman ahead of the trip, urging him to take concrete steps to improve India’s trade and investment environment in order to further the U.S.-Indian trade relationship. In a positive step for IP, officials from the Office of the U.S. Trade Representative (USTR) indicated that copyright will be discussed during the meeting, a decision largely welcomed by industry. With a robust copyright-intensive industry, India’s Bollywood sector produces more feature films than any other country in the world. A commitment to create a cooperative strategy on copyright policy would do much to increase confidence that copyrights in India will be adequately protected moving forward.

However, specific concerns remain in the pharmaceutical IP space. Each year, the U.S. Chamber releases the GIPC Index, which maps the IP environment in a number of countries. The criteria evaluated in the Index were selected by industry as indicative of a strong IP environment, one which fosters innovation, stimulates economic growth, and attracts foreign direct investment (FDI). Next week, we hope that Ambassador Froman will utilize the TPF to highlight the following concerns in the pharmaceutical IP sector, as laid out by the 2014 GIPC Index.

• Patentability requirements: Section 3(d) of India’s Patent Act created a “fourth step” for patentability, which requires that applicants demonstrate the “enhanced efficacy” of a drug in order to receive a patent. The additional step in turn limits the patentability for certain pharmaceutical inventions that further develop – and improve – existing molecules. Section 3(d) of India’s Patent Act is out of step with international best practices and India’s commitments under the Trade-Related Aspects of Intellectual Property Rights (TRIPS). Industry sincerely hopes that the leaders will utilize the TPF as an opportunity to begin the discussion about revising India’s patentability standards, which will do much to increase pharmaceutical investors’ confidence in India’s IP system.
• Compulsory licensing: In March 2012, the Indian Patent Board issued a compulsory license (CL) on Nexavar, a Bayer drug used for cancer treatment, on the basis that Nexavar is not manufactured locally. However, the issuance of a CL on such grounds is inconsistent with India’s international obligations as a TRIPS signatory. In order to help ensure that pharmaceutical IP in India will be adequately protected, industry urges Ambassador Froman to seek a principled commitment from the Indian government refuting the use of compulsory licenses as a commercial tool.
• Regulatory data protection: Indian law does not currently provide a term of regulatory data protection (RDP). However, the TRIPS Agreement requires that data be protected against unfair commercial use, in order to prevent third parties from utilizing that data to make a generic version of the drug. The RDP term allows the innovative company to recoup the time and investment required to develop a successful medication and often incentivizes R&D-intensive companies to launch innovative products in new markets. The introduction of RDP, as part of India’s TRIPS commitments, would do much to motivate innovative companies to continue to introduce new innovative drugs in India.

As many Americans prepare to celebrate a holiday of thanks, industry would be particularly grateful to see Ambassador Froman highlight our concerns with India’s IP environment as part of the conversation at the Trade Policy Forum. Improving India’s IP system would only serve to benefit India as it would increase investors’ confidence in investing in India, which would, in turn, create a stronger innovative environment, spur economic growth, and strengthen India’s global competitiveness.