WASHINGTON – Minnesota Rep. Erik Paulsen and several other House members met earlier this month with India’s finance minister to deliver a strong message: Stop messing with other countries’ intellectual property.
Paulsen, a Republican, specifically called out India for refusing to honor a patent for the cancer drug Nexavar produced by Bayer, a multinational company that employs hundreds of workers in Minnesota. In March, Indian authorities upheld a government-ordered “compulsory license” that let an Indian company produce and sell a generic version of Nexavar without Bayer’s permission.
It was the first time India had issued a compulsory license, which aims to make an expensive Western drug available at affordable cost. Paulsen called it “the blatant theft of intellectual property.”
The congressman and other critics within U.S. political and business communities fear that India’s trade rules signal a trend that will hurt American companies that want to expand in one of the world’s most profitable emerging markets.
“This sets the standard for other countries, and other countries are considering similar measures,” Paulsen said of India’s actions. In addition to the compulsory license, Paulsen said India “has revoked patents for other drugs” and required domestic production of other products.
Supporters say the rules are necessary to make lifesaving technology affordable. “It’s not an anti-patent movement,” patent lawyer Subhatosh Majumdar told the Star Tribune in a telephone interview from India. “It’s about access to drugs for poor people in the Third World.”
Only about 15 percent of the Indian population has health insurance to pay for expensive drugs or medical devices, Majumdar explained. “The rest must pay by selling property, begging, borrowing or stealing.”
The financial stakes are huge, given India’s 1.27 billion population and growing middle class. One recent estimate predicted that the Indian middle class will grow from 5 percent of the country’s population in 2007 to 40 percent by 2027. With increased wealth comes buying power.
Government data show that trade between the United States and India grew from $5.6 billion in 1990 to $62.9 billion in 2012. Minnesota exported $40 million in manufactured and non-manufactured goods to India in 2001, and by 2012 the amount had increased to $203 million.
Over Bayer’s protests, India allowed marketing of a generic $175-per-month version of Nexavar, destroying what Bayer hoped would be an exclusive, lucrative market for a patent-protected brand name product it sold for $5,500 a month. In exchange, Indian officials ordered the generic drugmaker to pay Bayer a licensing fee that amounted to a fraction of what Bayer expected to earn.
Paulsen has written to President Obama proposing that the White House pressure the Indians diplomatically.
At a recent meeting of the House Ways and Means Committee, Paulsen asked U.S. Trade Representative Michael Froman to convene a trade policy forum with India to address patent issues and domestic production restrictions.
Froman promised to do so, but told Paulsen, “it is very important for India to understand the breadth of concerns in the business community.”
Minnesota’s medical tech industry is looking for protection of its investments in research and development as it expands its markets in India.
“It’s a huge target,” said Shaye Mandle, chief operating officer at LifeScience Alley, a trade group representing hundreds of state businesses, including Bayer. “But our bigger members say it’s like the wild, wild West doing business there.”
Maplewood-based 3M has nearly 1,000 patents issued or pending in India. Kevin Rhodes, the company’s vice president and chief intellectual property counsel, said 3M believes a strong patent system is “essential to support the continued development of the Indian economy and the growth of 3M businesses and investments in India.”
Besides compulsory licenses that allow the immediate production of cheaper generic alternatives to patented name brand drugs or devices, other issues in the free-trade debate include India’s so-called “preferential market access initiative,” known as PMA, which requires Indian buyers to purchase certain domestically produced products and services, especially electrical devices.
Still, a demand by free market advocates for India to end alleged protectionist policies is no simple ultimatum. It is tied not only to the Asian nation’s self-determination, but also to its public health and economic development.
The medical group Doctors Without Borders backs India’s policies, believing they amount to lifesaving measures for millions who might otherwise be priced out of critical care.
At the same time, India owes a significant part of its recent economic growth to flourishing international generic drug sales. The Indian government just announced plans to review some of its trade practices, but in his meeting with Paulsen and others, Indian Finance Minister Shri P. Chidambaram reiterated that compulsory licenses and other patent and domestic production restrictions comply with India’s international trade agreements.
Drug companies say they sometimes offer to donate drugs to the poor. They may also choose to sell them at a discount. Indian officials have chosen not to depend on voluntary corporate philanthropy for critical health treatments.
Roy Waldron, Pfizer’s chief intellectual property counsel, charged that “since early 2012, India’s policies and actions have undermined patent rights for at least nine innovative medicines.”
Waldron’s accusation came at a June congressional hearing titled “How India’s Industrial Policy Is Hurting U.S. Companies.” Waldron’s allegation was among a number of intellectual property complaints lodged by the Information Technology Industry Council, the U.S. Chamber of Commerce and the National Association of Manufacturers.
Paulsen says these complaints show that India is “promoting discriminatory trade practices” that must change “to secure and insure” American investments that India requires to continue to develop.
Mujumdar, the Indian patent lawyer, countered that his country’s trade rules are not designed to hurt other countries. They are intended to save lives and create jobs.
“India has to have policies that allow it to do business with other countries,” he noted. “But it also has to look out for its people.”