Published in The Hindu on August 31, 2007
What does a developing or a least developed country do when faced with a public health crisis and cannot afford expensive patented drugs? Either allow its people to die for lack of such medicines or override the patent and allow local manufacture at affordable prices or import cheaper generic versions. Many countries have, in the past, been driven to invoke the compulsory licence provisions of the World Trade Organisation’s agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). While these countries have invoked the provisions without fully following the WTO protocol, Rwanda became the first country to inform the organisation before overriding the pharmaceutical patents to import the three-in-one fixed dose combination drug for treating its AIDS patients. While informing the WTO prior to overriding the patents is significant, what is indeed more noteworthy is that the two pharmaceutical companies that hold the patents for the molecules used for making the drug have agreed to waive the royalty as the drug is made available at cost by the company based in Canada. While Rwanda – for want indigenous manufacturing capability – has been compelled to inform the WTO before importing the generic from a country that respects patents, it has been different in the case of countries that have sound manufacturing capabilities.
While pharmaceutical companies holding the patents have generally dictated terms with regard to pricing, countries that have strong manufacturing capabilities have used the compulsory licence route to force drug companies to bring down prices. Although the scaled-down prices are still higher than the cost of generic versions, the reductions have been substantial. Thailand has resorted to brinkmanship on many occasions and could make the patent holder offer an AIDS drug cheaper than the generic version. While it is reasonable for any company to seek financial gain from its research spending, of what use is a drug resulting from such research if it cannot be afforded by people who desperately need it? If several African countries have stood to gain by importing cheaper first generation AIDS drugs from India, the situation is quite different in the case of second generation drugs because India must now respect both process and product patents. With more and more people becoming resistant to first generation drugs, and with prices of second generation drugs being prohibitive, the number of countries breaking patent laws is bound to shoot up. Companies may in turn refuse to patent new drugs in those countries – and instead choose to make them available as generic versions and enjoy the first-mover advantage.