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How India Used Patents to become Pharmacy of the Developing World

May 21, 2012

Over the past decade, activist groups have relentlessly claimed that patents were a barrier to access of ARV therapies for the poor. In February, Oxfam issued a Letter to Citizens of the World under this ominous headline: The End of the World as We Know It. By this, Oxfam meant that if a pending EU-Indian Free Trade Agreement was approved, then the poor would no longer have access to inexpensive generic ARVs for AIDS treatment.

Is there merit to Oxfam’s contention? If patents were a barrier, how then did India become Pharmacy of the Developing World by an unrestricted use of right-holders’ Intellectual Property?

In 2004, WHO said that there were less than 50,000 AIDS patients in the developing world that were being treated with ARV therapies. Through its Prequalification Programme, WHO listed ARVs that it had approved for patient use. However, these ARVs had been patented before India joined the World Trade Organization and thus were being produced as copies with no known regulatory standards. As such, they could not be procured with U. S. foreign aid funds. As part of India’s agreement to join the WTO, it agreed to honor any patent on any drug that was approved from 2005 onward.

Beginning in May 2004 and through October of that year, WHO had to de-list 36 ARVs due to their lack of proof of bioequivalency to the patented drug. (See WHO Announcement (Removal of Antiretroviral Products from the WHO List of Prequalified Medicines, Information and Guidance for Regulatory Bodies, National AIDS Programmes, Doctors and Patients)  In order to restore confidence in WHO’s Prequalification Programme, the U. S. FDA stepped in and offered in the same year to accept any ARV file from any manufacturer in any country wishing to have its products classified as a generic. It even proposed to move any such files to the head of the line for review and approval, at no cost to the manufacturer.

However, since all ARVs at this time were covered by extant patents, the FDA had to offer the right-holders the opportunity to present a legal challenge. None did so.

As a result, of the 289 ARVs in various dosages, strengths and manufacturers listed on WHO’s Prequalification Programme in February 2012, 209 are produced in India. Of this number, 161 are now FDA approved as true generics through Indian manufacturers using the Intellectual Property of right-holders to the patents. They are now eligible for purchase with U. S. foreign aid funds.  By February 2012, the number of AIDS patients receiving ARV therapies rose to7.8 million.

According to a report by the Journal of the International AIDS Society:

  1. Indian generic manufacturers dominate the ARV market, accounting for more than 80% of 2008 global purchase volume;
  2. among pediatric ARV and adult nucleoside and non-nucleoside reverse transcriptase inhibitor markets, Indian-produced generics accounted for 91% and 89% of 2008 global purchase volumes, respectively;
  3. from 2002-2008, the number of Indian generic manufacturers supplying ARVs increased from 14 to 53;
  4. Ninety-six of 100 countries purchased Indian generic ARVs in 2008, including high HIV-burden Sub-Saharan countries;
  5. Indian generic producers supply the majority of ARVs to developing countries.

By February 2012, the number of AIDS patients receiving ARV generic therapies which were mainly produced in India rose to 7.8 million. The rapid increase in coverage from 2004 when less than 50,000 were on ARV therapies, to the present number would have been impossible if patents were a barrier to access. In point of fact, it was because of patents that this signature achievement in global public health was made possible.

There is nothing in the pending Indian-EU Free Trade Agreement that would affect the FDA’s continuing program to classify more ARVs from Indian producers as true generics. In recent years, some of the most contemporary ARVs under patent continue to be classified by the FDA as generics, a situation that only improves India’s position in global pharmaceutical markets.  Without the FDA’s intervention, India would have had to comply with WTO provisions  and honor these patents, allowing the right-holders to produce and market these drugs as generics for their own proprietary ROI.

The U. S. has agreed with the WHO target of providing ARV therapies to 14.7 million AIDS patients by 2015. India is positioned to be the main financial benefactor from this goal. It is able to produce and market additional billions of dollars worth of ARV therapies without having had to invest one cent into their Research and Development.

One can understand why the Indian producers don’t need to look back on their way to deposit their Irrevocable Letters of Credit from donors.  After that instrument is executed, donors cover all expenses in moving generics from India to an AIDS patient. WHO conducted a 2-year study on the pricing of medicines. It found that “taxes and duties levied on medicines, as well as the mark-ups applied, frequently contribute more to the final price than the actual manufacturers’ price”. (See The Price, Availability and Affordability of Medicines for Chronic Diseases, WHO, 2006.) In this global battle against AIDS, where solidarity should be the mantra among all participants, it is less understandable, though, why prestigious groups like Oxfam and the Journal of the International AIDS Society choose to ignore the role that patents played in improving AIDS treatment coverage from less than 50,000 in 2004 to 7.8 million today. In their publications and Letters to Citizens of the World, there isn’t a single reference to the source of Intellectual Property which has made India Pharmacy of the Developing World.

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