1. India 3.0: Debunking Myths Srividhya Ragavan University of Oklahoma Law Center

2. ► India 1.0 was launched in August, 1947 at the grant of independence. ► The current Prime Minister Manmohan Singh launched India 2.0 by liberalizing the economy in the 1990s. ► With the end of 2005, India enters the 3.0 phase where it is required to comply with international obligations.

3. Outstanding Questions ► Balancing trade with welfare  More than 300 million people below the poverty line – equal to the population of the United States ► Question for developing countries like India to provide low cost access to medication for the poor people  What would be the future of the generic drug companies

4. Myth ► In a product patent regime, all people, including the poor, have to afford the high cost of branded drugs ► In reality, even rich nations like the United States facilitates for low cost medication

5. Price Control ► Maine Program: ► Maine Program: Fairer Pricing for Prescription Drugs Act of 2000, (Maine Rx Plus Program)   The Rx Plus Program for drug pricing & profits.   Mandated manufacturers to discount prices. Otherwise, created a prior authorization requirement for non-compliant manufacturers. ► ► PhRMA argued that it violated the commerce clause by affecting interstate commerce ► ► 1 st Circuit: Used the Pike balancing test to hold that “the local benefits appear[ed] to outweigh the burden on interstate commerce.” ► Florida Program: Manufacturers not providing discounts were excluded from preferred list of the Medicaid program   PhRMA sued on the basis that amendments were preempted by section 1927(d)(4) of the federal Social Security Act (“SSA”) which mandates states to offer all federally approved prescription drugs to Medicaid beneficiaries.   11 th Circuit: No preemption. The economic effects far outweighs the burdens.

6. Price Control ► Michigan Program: ► Michigan Program: Best Practices Initiative set a low common denominator for all drug prices.   Drugs bearing negotiated rebates identified as “best in class.” Drugs not so identified were subject to the prior authorization requirement.   Manufacturers could avoid the prior authorization procedure by entering into two agreements with the State of Michigan. ► ► The first agreement required the manufacturer to match the price of the lowest priced “best in class” drug in the “relevant therapeutic class.” ► ► The second agreement required the manufacturer to discount prices of certain non-Medicaid drugs.   PhRMA challenged the authority of the Secretary of Health and Human Services under APA to approve the Michigan program and lost

7. ► ► Vermont imitated the programs and saved more than $1.6 million in three months. ► ► PhRMA contended that the SSA required the Medicaid program to pay the cost of medication. Instead, the state initiatives shifted the cost of funding Medicaid programs to the pharmaceutical companies, (18%). ► ► The district court rejected PhRMA’s suit. ► ► But the Court of Appeals for the D.C. Circuit upheld PhRMA’s argument holding that, barring Congressional approval, the SSA does not include manufacturers’ rebates as part of the state expenditure.

8. Price Control ► On cert, the Supreme Court in 2003 held that Maine program was not preempted by the federal Medicaid statute and commerce clause.   Justice Thomas posits that the state governments’ attempts are an essential, if not a commendable, “delicate balance... between competing interests.” ► ► The Court of Appeals for the First Circuit (had) noted in appreciation of balancing measures: [W]hen people whose incomes fall outside Medicaid eligibility are unable to purchase necessary medication, their conditions may worsen, driving them further into poverty and into the Medicaid program, requiring more expensive treatment that could have been avoided had earlier intervention been possible.

9. Price Control Story ► ► D.C. Prescription Drug Excessive Pricing Act of 2005 (“D.C. Act”) Patent law does nothing to alter the power of a state or of the District to “regulate a business in any of its aspects, including the prices to be charged for the products and commodities it sells.” Amicus at the CAFC

10. What lesson does this hold for India? ► The signing of the TRIPS agreement does not diminish the sovereign right of nations ► GOI has a Constitutional obligation to ensure right to good health as part of right to life (Article 21) ► Keshavanandha Bharathi: Basic structure of the Constitution  Ground reality dictates that generic drug is made available for poor people

11. ► Two things are essential in order for India to fulfill its Constitutional guarantee: ► Ensure low cost availability of patented medication ► Maintain a vibrant generic drug industry for the post-patent period.

12. For patented medication ► Revive the DPCO for patented products  TRIPS has no specifics against price control (it does not affect monopoly rights)  Doha read with Art 7 and 8: Need to balance rights and obligations of nations.

13. During the Patent term ► Use the flexibilities in TRIPS to the maximum  Broad definition and interpretation of what amounts to public interest  A public interest could affect a small section of the society ► Example: Anthrax crisis  Potential public health issues can be prevented by using the exception

14. Patent hangover ► At the time of patent prosecution, if a patent is granted or subsists abroad:  Aggressive challenge and review based on local requirements ► Example: Gleevac (Novartis)  A grant of a patent abroad does not necessarily mean that a patent should be granted in India

15. ► Developing nations have to make a conscious choice of boundaries of innovation for monopoly protection. ► Developed nations use sophisticated procedures and claim drafting techniques to enable patenting of minor innovations

16. Example ► India’s process patent regime meant to ensure that same products can be made using different processes.  Difference with the product patent regime ► Assuming X Corp owns product MNO patented using a product–by- process claims  Objective: protects a product produced using the claimed process

17. ► What happens when another person makes the same product using a new process? New Process & Known product

18. ► 1992: Atlantic Thermoplastics Co. v. Faytex  Protection to the product is only when it made using the claimed process.  Distinguished use of the claim for validity and infringement  Use of different process will not infringe (may not clear validity test) Patent Regimes of Developed nations

19. ► X Corp can market Product MNO as the patent owner ► Y Corp can market Product MNO as long as it is made by a different process ► In the context of drugs, generic manufacturers can put the same product in the market without violating the patent Implications??

20. Post –Patent term ► Aggressive stock-piling exception  Adequate amendments to ensure that stock-piling or making an application before expiry of patent does not amount to infringement ► Should resist introduction of data exclusivity provision ► Industry should pursue markets where the invention falls within public domain anywhere abroad

21. Generic Drugs: Export Market ► Reverse interest Lobby:  How lobby group interest worked towards creating patent protection  Creation of lobby efforts to use the public interest exception in 3 rd countries.

22. Generic Drugs: Export Market ► Aggressively pursue adequate rights to export under article 31 (f) of TRIPS read with the Doha Declaration  Exporter pays the CL fees even though the country is merely exporting  Importer required to CL even though there is no need to establish patent regime  No definition of economic value which determines the value of CL Policy Choice: 3

23. Generic Drugs: Export Market ► Pharmaceutical patents issue should be treated as the return obligation for agricultural subsidies ► Resist TRIPS plus efforts in third countries that can affect the market of the Indian generic drug industry