The USPTO: Where Up Is Down, Expensive Medicine Saves Lives, And Cheap Alternatives Violate International Law

from the not-a-surprise dept

Well, this is unfortunate. We've written a few times about how various countries, under the TRIPS agreement are able to break patents on important medicines in the interest of public health. Most recently, we wrote about how India did this with a cancer drug made by Bayer called Nexavar. Despite the fact that Bayer has more than made back the money it spent bringing Nexavar to market, it's been pricing the drug at an unaffordable $70,000/year. After India allowed a small bit of competition, the price has dropped. We've seen that the USPTO doesn't like this at all and has tried to claim that high priced drugs are good for one's health, but that's beyond ridiculous to anyone who actually thinks.

Of course, "thinking" and "Congress" aren't words that often go together, so it appears that the USPTO is now trying to pull one over on Congress, with USPTO deputy director Teresa Stanek Rea misleading Congress by suggesting that these efforts violate international agreements like TRIPS. Unfortunately, TRIPS says exactly the opposite:

Rea told the committee, saying she believes the issuance of the Indian compulsory license was in violation of the Agreement on Trade Related Aspects of Intellectual Property Rights, an international pact administered by the World Trade Organization which sets minimum standards for intellectual property regulation. Rea said the USPTO is working to stem the tide of IP infringement in foreign countries by the use of a host of training programs and educational efforts aimed at foreign officials and judges along with the placement USPTO overseas IP attaches in Thailand, China, Russia, India, Brazil and Egypt.

Article 31 of the TRIPS Agreement expressly permits compulsory licenses as does the much earlier Paris Convention on the Protection of Industrial Property. The U.S. Itself routinely makes government use of patented inventions pursuant to Congressional authority under 28 U.S.C. Sec. 1498, but also has other laws allowing compulsory licenses in specific circumstances. Compulsory licenses have been allowed globally in the vast majority of intellectual property regimes since the 19th century. And, the patent on Nexavar in India had been granted under a 2005 Amended Patents Act that clearly articulated compulsory licensing rights at the time that Bayer prosecuted its patent and the patent was granted.

Finally, and most to the point, the US signed the Doha Declaration on the TRIPS Agreement and Public Health that pointedly grants countries the right to issue compulsory licenses, to define the terms upon which such licenses are granted – without restrictions, and to define the emergency circumstances that permit licenses to be granted without any prior notice to or negotiation with the patent holder (note: these expedited, no-negotiation procedures were not used in the Natco case). Under the Doha Declaration, countries are permitted to issue compulsory licenses in order to ensure “access to medicines for all” – something that India has attempted to do via the license granted.

It's a shame that the USPTO appears to be so in the tank for big pharma (they get lots of patents, which helps pay USPTO salaries...), that they're willing to mislead Congress on issues like this, even if it means that very sick people around the globe don't get the medicines they need.

Filed Under: generic drugs, india, nexavar, trips, uspto
Companies: bayer

Putting Lives Before Patents: India Says Pricey Patented Cancer Drug Can Be Copied

from the hello-compulsory-licenses dept

India has an interesting relationship with pharmaceutical patents. In 1970, India did away with drug patents entirely, believing it would help create a domestic drug industry. And it worked. As we discussed in the past:

2,237 licensed drug manufacturers in 1969-1970 grew to 16,000 by 1991-1993, production of drugs grew at an average rate of 14.4% per year from 1980 to 1993, India became a net exporter of pharmaceutical products, and the market share of foreign multinational corporations (MNCs) dropped from 80-90% to 40% (Fink 2005). In 1995, six of the top ten pharmaceutical firms in India were domestic, and employment in the sector had reached half a million people

Now, remember how people say that without intellectual property, industries protected by those monopolies collapse? Yeah, the opposite happened in India. And yes, many were producing generic versions, but not all of them were. Either way, despite all of this success, the international community, pressured by the big pharmaceutical firms, cracked down on such practices, and demanded that if anyone wanted to join the WTO -- an important organization for large countries to be a part of -- they had to recognize pharmaceutical patents as per the TRIPS agreement. India finally did so in 2005.

However, one key point in TRIPS that developing countries such as India and Brazil have paid close attention to is the fact that they can force a compulsory license on a drug patent holder in the interest of public health.

For the first time since re-instating patents on pharmaceuticals, India has granted just such a compulsory license, covering a kidney and liver cancer drug marketed under the name Nexavar. Indian generic drug company Natco requested a license, noting that Nexavar was in short supply in India and exceptionally expensive. A typical dosage costs around $70,000 per year in India -- something Bayer says is necessary to recoup the drug's R&D costs. However, reports show that it cost less than $300 million to develop this drug (not to mention that the US government subsidized the process) and Bayer has already made billions selling the drug around the world. In a detailed ruling (pdf and embedded below), India's Controller of Patents (nice title) granted Natco the right to make the same drug, requiring it to sell it at a significantly lower price than Bayer sells Nexavar for, and then pay back to Bayer a 6% royalty rate (which is actually at the high end of what the UN recommends). Natco has to make the drug itself and can't name it Nexavar, make it look the same or even state that it's the same as Nexavar -- but it can make its own version of the drug and sell it, and the license lasts the life of the patent. Bayer can and almost certainly will appeal, but this is going to be interesting to watch for a few reasons.

The real question here is how the US will react to this. The Obama administration has been trying to exempt drugs that treat non-communicable diseases (such as cancer medication!) from such compulsory license rights. In the meantime, the big (non-Indian) drug companies have been working hard to lock up the Indian drug market with patents. Not surprisingly, the Obama administration and the big drug companies have a cozy relationship when it comes to dealing with patents in India.

It's likely that you'll start to hear some rumblings from the US government about how this kind of ruling is a "problem" and how India isn't "respecting" international patent law. Expect to see diplomatic pressure placed on India to put limits on its compulsory licensing program, and potentially even noises about how India has to change its patent laws to "update" them and "harmonize" them with the world. Also don't be surprised if stuff like this leads India to jump up the charts on next year's Special 301 reports from the USTR, which list "naughty" countries. It's probably too late to make it into this year's list for this particular move. Is it really any wonder that India is so worried about ACTA? It knows that ACTA is entirely about ratcheting up enforcement, without any exceptions for things like this where something as important as saving lives comes into play.

Filed Under: cancer, compulsory license, health, india, nexavar, patents, pharmaceuticals, trips, wto
Companies: bayer, natco

India And China Claim That ACTA Violates Earlier IP Agreements

from the at-least-someone's-fighting... dept

Recently, we noted that India and some other countries were gearing up to oppose ACTA, as it presents a huge problem for a variety of developing countries. India should know. It's still getting over the troubles created by TRIPS, which forced it to make some massive changes to its IP laws, which multiple studies have shown to have caused trouble for India. So it doesn't seem to keen to sign up for yet another, even more draconian, set of IP rules. Michael Geist points us to some notes from the recent WTO meeting where India (along with China, and some other developing nations) expressed their serious concerns with ACTA, including that it appears to violate the TRIPS agreement that they've already signed onto:

Briefly, China's and India's lengthy statements argued that ACTA and other agreements could:

• Conflict with TRIPS Agreement (a reference to TRIPS Art.1.1) and other WTO agreements, and cause legal uncertainty
• Undermine the balance of rights, obligations and flexibilities that were carefully negotiated in the various WTO agreements
• Distort trade or create trade barriers, and disrupt goods in transit or transhipment
• Undermine flexibilities built into TRIPS (such as for public health, and trade in generic medicines)
• Undermine governments' freedom to allocate resources on intellectual property by forcing them to focus on enforcement
• Set a precedent that would require regional and other agreements to follow suit. (One example cited was negotiations involving CARIFORUM, the group of Caribbean states. However, a delegation representing CARIFORUM said it understood the concerns but denied that CARIFORUM would have to apply ACTA's provisions.)

They also argued that the focus on enforcement did not take into account a country's level of development.

A number of developing countries broadly supported the concern.

Not too surprisingly, ACTA supporters hit back, but note how they avoid some of the bigger issues here:

ACTA participants voiced their concerns about what they saw as a steadily increasing level of counterfeiting and piracy. They countered that the draft ACTA agreement will not conflict with TRIPS and other WTO provisions. They denied it would upset the negotiated balance, distort legitimate trade or undermine TRIPS flexibilities. One said generic medicines would not be affected since ACTA does not deal with patents.

They said that ACTA was necessary because counterfeiting is no longer a question of products such as fake luxury watches, but involves commercial scale production of fake medicines, car and aircraft parts and other products, which are dangerous to health and safety, and that developing countries are particularly vulnerable.

Some of them also said they had to get together outside the WTO because countries had opposed discussing enforcement substantively in the TRIPS Council.

That claim about ACTA not dealing with patents is news to us. Both the leaked and the released draft still had language suggesting that at least some negotiators used language such that ACTA applied broadly to all intellectual property. If they're really dropping patents from ACTA, that would certainly be news. Jamie Love noted at a recent meeting that Steve Metalitz, who is a lawyer representing the entertainment industry, has said that patents are being dropped from ACTA. Hopefully it's true, but until we actually see that, who knows whether it's really happening.

As for the claims that ACTA is "necessary," that's clearly bogus. Also, it's amusing to note that the "necessary" part focuses on the typical fear mongering points of fake medicines. If they want to stop fake medicines and fake aircraft parts, fine. Then create a document that does that. The problem is that ACTA supporters hide under those claims to lump in a ton of unrelated stuff, which is where many of the concerns come from.

Separately, Love also notes that Metalitz claims that it's "not appropriate" for trading partners to discuss fair use in ACTA. Huh? This is an argument we've seen before, and it makes absolutely no sense. ACTA's copyright provisions include all sorts of aggressive enforcement requirements, and without clear fair use exceptions, those enforcement rules strip copyright of most of its key balancing points. The whole ACTA process continues to be a sham.

Filed Under: acta, china, copyright, enforcement, india, intellectual property, patents, trips