Is Product Patent Justified In The Case of Developing Countries?

The controversy of implementation of TRIPS is far from being over. It’s a very difficult question to answer. Biggest market for medicine is in developing countries. India came into limelight as after the removal of the product patent in 1972. Indian pharmaceutical industry flourished and became a major source of low price drugs for both developing countries and developed countries. Still the accessibility to the essential drug is low in developing countries. If the implementation of the product patent does not improve the access to drugs or does not make it affordable to people in need, then why should developing countries provide such protection?

TRIPS was introduced not because the developing countries wanted it but because the MNCs and the developed countries insisted on it. MNCs argued that they were losing out their profit margin and the market as the generic producers of the developing countries were supplying the cheaper versions of their medicines by the process of reverse engineering. They also argued that there is a positive relationship between the strong patent rules and the expenditure on R&D. Initially developing countries led by India and Brazil opposed the inclusion of Intellectual Property but USA aggressively pursued and created tremendous pressure on developing countries to accept it. Hence, developing countries accepted it under the threat that otherwise developed countries would deny the advantages of having trade ties with them.

However, the benefit of TRIPS, i.e., increase in R&D does not seems to developing nations’ favour. The nature of diseases is different in developed countries and developing countries. 90% of the drugs demand is from developing countries and only 10% of R&D is done in this direction. The scenario is unlikely to change much after the product patent, but the negative impact is surely going to hamper the condition. Thus, TRIPS gave rise to conflicting debate between the developed and developing countries.

Patent, Indian Pharmaceutical Industry and Health Care

Public healthcare is one of the major issues in developing countries. In these countries, a significant part of the population is below poverty and is affected by several infectious diseases. Still they have little or no access to drugs required by them. The MNCs dominate the pharmaceutical industry worldwide, but India, due to its extraordinary growth of the indigenous sector has limited the dominance of MNCs.

We have taken up the issue of Indian pharmaceutical industry because it has become one of the important source of producing generic drugs and exporting to the developing countries. Indian companies, under process patent started producing patented drugs by different process, most of them at competitive price and quality matching the best in the world. Hence generic drugs produced by Indian companies at prices among lowest in the world, imposed serious threat to the MNCs, which charges very high prices for the similar drugs. Introduction of TRIPS has been a debatable issue. TRIPS were set-up to avoid ‘free rider’ problem. If developing countries do not provide product patent, then they can free ride on the innovations that takes place in the developed countries.

Intellectual Property Regime (IPR) had little impact on most of the Indian industries but had significantly affected the pharmaceutical sector. Process patent brought about significant structural changes and growth in the pharmaceutical industry in India. India became self-reliant in drugs. The pharmaceutical industry grew at a faster rate and established a strong position in the world market. From being a net importer of drugs in the early 1970s, the industry has become a net exporter. Before the introduction of TRIPS, forty-seven countries despite providing process patent, could not develop the pharmaceutical industry, but due to entrepreneurial spirit of the indigenous private sector, supported through public investment in R&D and manufacturing accounted for success of the Indian pharmaceutical industry.

TRIPS promise to promote the R&D, but it also imposes threat to rise in price. The cost hence, outweighs the benefit from it. The new patent law will, more adversely affect developing countries other than India, as Indian pharmaceutical industry has already established a strong position in the world market. Moreover, developing countries in spite of low prices of generic drugs, struggling for the availability of modern drugs. Implementation of product patent from January 1,2005 would worsen the situation. Doha declaration recognized the drawbacks of TRIPS and provided some flexibilities that would ease the pressure, but still the problem of developing countries is far from being solved.