Recently, Mr. Ranjit Shahani, the president of Organisation of Pharmaceutical Producers of India (OPPI) and vice chairman and managing director of Novartis India, gave an interview to the Financial Express regarding the importance of patents to the pharmaceutical industry and its effects on access to medicines. I’d like to take this chance to react to his statements. I’ll be extracting certain excerpts but the full interview is available here (and it's a quick read). Disclaimer: I’ll be focusing on the parts that I disagree with, or don’t understand. There is also a fair bit that I agree with, but would be redundant to repeat here. [Image taken from here]
“Over 99.5% of the domestic pharmaceutical market in the country comprises cheaper branded generics covering all disease areas. Therefore, any fear that intellectual property rights (IPR) would curtail healthcare access is completely unfounded. Patents have little to do with the ability to access medicines.”…”The US, which is the largest pharmaceutical market in the world, has a robust IPR system in place and is also the largest generics market in the world. Over 72% of all prescriptions in the US are for generics.”
He seems to lead the reader towards the conclusion that patents do not hinder access to medicines. Instead he points to other faults in the healthcare system such as infrastructure, etc. He’s certainly right that there are several problems with the healthcare system in India, but saying that there are other problems does not change the fact that patents do directly affect access via price increase. The very fact that exclusion rights are given is so that pharmaceutical companies can recuperate high R&D costs through such pricing. If one must work within the patent system to innovate drugs, then it’s vitally important to ensure a fair tradeoff between access and innovation through exclusion rights– tilting it, if required, towards a country’s particular needs. India, being a developing country with such a large portion of its population poor and in need of medicines, ought to tilt it in favor of access rather than innovation.
Looking at his statements again, these first 2 lines seem completely disconnected to me. 99.5% of the market is generics – so patents don’t affect access to medicines? Till very recently, India, which is a predominantly poor country, didn’t allow patents on medicines, so naturally nearly all of the market will be on generics.If anything, this first line goes against his point. If 99.5% of the domestic pharmaceutical market comprises of generic medicines, then most certainly a strong patent system would affect this market as it would lead to the introduction of more patented medicines . He then says the US market, with a 72% generic market, is the largest in the world. I’m assuming this is in terms of sales revenues, since in terms of volume 99.5% of India’s pharma market is surely larger than 72% of USA’s pharma market. This again, points to the fact that generics in USA are much more expensive than generics in India. Probably exponentially so, since by sheer population, India is about 4 times that of USA, while 72% of that smaller (by volume) market is larger than 99.5% of the Indian generic market. This merely points towards a strong IPR system facilitating more expensive generic medicines.
“This [referring to apprehensions that new measures resulting from the India – EU FTA may restrict the production of affordable generic medicines across the world] is a misconception that seems to persist. Regulatory data protection does not delay the launch of generics.”
A generic company would either have to duplicate such protected data at its own cost (thus jacking up the price of the generic drug) which would require large chunks of capital – or – they would have to wait till the period of exclusion rights over this test data expires. Thus, it does delay the launch of generics. The more relevant questions ought to be a) whether exclusionary rights granted via patents aren’t sufficient to make up all the related costs, and b) whether, as a policy matter, India wants to trade this for access. Unfortunately, to determine the sufficiency of patent rights to make up these costs, the books of pharmaceutical companies would have to be looked at, and these are notoriously closed off.
In his closing paragraph, he finally narrows down to the actual issue of trading off of access rights in the short term so as to ensure continuous long term innovation. However, there is no reason India, or the rest of the world for that matter, should continue to use a faulty drug innovation system simply because it has been the path taken thus far. India is indeed uniquely positioned to become a hub of drug innovation as he points out, but this means India should step forward cautiously, ensuring not to make mistakes which may be very costly in the future, and not run straight into the arms of the much critiqued patent systems of the US, EU and Japan.