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Big Pharma Lobbies Hard to End India’s Distribution of Affordable Generic Drugs

Aid organizations are calling on Indian leaders to resist US pressure to change India’s patent laws in favor of the pharmaceutical industry.

In 2000, the international aid organization Doctors Without Borders launched small HIV/AIDS treatment projects in Thailand, South Africa and Cameroon. At the time, the cost of treating one person with anti-retroviral drugs was about $10,000 a year, posing a significant challenge for humanitarian groups fighting HIV/AIDS in developing countries.

Then, in 2001, the price of HIV/AIDS treatments suddenly dropped by 96 percent, as generic drug manufacturers in India began competing in the anti-retroviral drug market. At the time, India’s patent law excluded patents for live-saving drugs, ensuring that market competition would keep the prices down for Indian consumers.

The cost of anti-retroviral drugs has continued to drop, and the annual cost of treating one person is currently about $140, according to Doctors Without Borders. Research has shown that treating HIV patients early can significantly reduce transmission rates, and now the group provides HIV/AIDS treatment in 24 developing countries.

“These generics have been a game changer in terms of being able to provide medical care in developing countries,” said Judit Ruis, the US policy advisor for Doctors Without Borders’ Access Campaign.

India has since updated its patent laws to meet international standards set by the World Trade Organization (WTO), but took advantage of flexibilities within the WTO framework to protect its domestic generic drug industry and keep drug prices low for its people, many of whom continue to live in poverty even as India emerges as a major world economy.

But big drug manufacturers in the United States and Europe are not happy with these flexibilities. A Truthout investigation has revealed that an aggressive lobbying effort by pharmaceutical interests pushed Congress and the White House to put mounting pressure on India to change its patent laws, despite India’s current role as the “pharmacy of the developing world.

“It’s an issue of survival for us and an issue of survival for our patients,” said Ruis, who told Truthout that 90 percent of the 11 million people living with HIV/AIDS in developing countries are on generic drugs, most of which come from India.

Doctors Without Borders and its allies are now calling on Indian leaders to resist pressure from the United States to change India’s patent laws in favor of the pharmaceutical industry, which they believe would drive up prices of lifesaving drugs for HIV/AIDS, tuberculosis, hepatitis and other diseases, making it more difficult to treat patients in the developing world.

Patents or People?

“In the US you can get a patent for just about anything, but then if you change the drug a little bit, you can get a whole new patent,” said Matthew Kavanagh, a senior analyst for the Health Global Access Project (Health GAP).

Kavanagh told Truthout that US drug companies could maintain a market monopoly on a drug for years after the original patent expires by patenting a “long-lasting” version, for example, or by simply changing the delivery method from a pill to a dissolvable capsule.

Health GAP estimates that India produces about 40 percent of the generic drugs sold in the United States, and much of US-funded aid to HIV/AIDS efforts in Africa and across the developing world is spent on generic drugs from India.

India, Kavanagh said, has prioritized public health and its generic drug producers over the profits of foreign companies. Drug manufacturers must prove that their products are innovative and provide new benefits to receive a patent, and India has angered Western companies by refusing to grant or revoking patents on lifesaving cancer medicines and other drugs that are simply new formulas of existing products.

If the price of a much-needed drug is too high or in low supply, the Indian government can also give a “compulsory license” to a domestic firm to manufacture a generic version for a fee paid to the original patent-holder. Compulsory licenses are rare, but last year India angered the pharmaceutical industry and its supporters in Congress when a patent review board upheld a compulsory license for a generic version of a liver cancer drug originally produced by Bayer.

Last year, India’s Supreme Court upheld a patent rejection for the cancer drug produced by the Swiss company Novartis. The court ruled that the drug, known as Glivec, was a modification of an existing drug and could not be patented in India.

PhRMA, the leading lobbying group for the drug makers in the United States, immediately went on the offensive. PhRMA president John Castellani called the Glivec ruling, “yet another example of the deteriorating innovation environment in India” and proclaimed that “protecting intellectual property is fundamental to the discovery of new medicines.” Patents, PhRMA argues, help drug companies secure the profits and other incentives that spur innovation and the research and development of new drugs.

PhRMA would like India’s patent laws to be more like those in the United States, but Kavanagh said that the medical innovation system in the United States is broken.

“Why don’t we have a drug for Ebola?” Kavanagh asked, adding that there are plenty of treatments available for erectile dysfunction.

Big Pharma’s Heavy Hand in Washington

PhRMA has spent nearly $132 million lobbying Congress since 2008 and ranks fifth among the top spenders in Washington, according to the MapLight campaign finance database. A Truthout review of the group’s lobbying records confirmed that “intellectual property” and “market access” issues related to trade with India have been among the organization’s top issues when lobbying Congress, the White House and the Department of Commerce.

The latest push from PhRMA and its allies came in late September, as Indian Prime Minister Narendra Modi made his first visit to the United States to meet with President Obama and prominent business leaders.

PhRMA is a member of the Alliance for Free Trade with India (AFTI), a coalition of manufacturers ranging from the music recording industry to agrichemical companies that also have gripes with India’s intellectual property laws. In the days before Modi’s visit, AFTI sent a letter to Obama urging the president to push Modi on economic and intellectual property reforms, including changes to “guidelines that present a clear bias against the granting of biopharmaceutical patents.”

Brian Noyes, a spokesman for AFTI and the US Chamber of Commerce’s Global Intellectual Property Center (GIPC), did not reply to repeated requests for comment on the concerns of humanitarian groups that distribute generic drugs from India in developing countries. Instead, he issued a statement from GIPC policy director Patrick Kilbride applauding an agreement between Obama and Modi to establish an intellectual property working group at the US-India Trade Policy Forum.

“We hope that the [intellectual property] working group will lead to a principled commitment to the legal rights of patent, copyright and trademark holders by the Indian government,” Kilbride said. “This will be key to helping US investors regain confidence that their [intellectual property] will be adequately protected when investing in India.”

AFTI has spent a total of $240,000 on lobbying Congress and the State Department in 2013 and 2014, according to campaign data from MapLight. The group exclusively hired lobbyists with the firm Akin Gump, which provides lobbying and legal services on international trade, intellectual property and other issues.

Congress Puts Bipartisan Pressure on India

Akin Gump and its employees top the list of 2014 contributors to Sen. Ron Wyden’s (D-Oregon) campaign committee, with $61,533 in total donations, according to the Center for Responsive Politics (CRP). Akin Gump also donated nearly $20,000 during the 2012 cycle, and the drug company Amgen Inc. and its employees donated $26,000 in 2014.

Wyden is a member of the Senate Finance Committee, and is one of four members of Congress who helped put mounting diplomatic pressure on India by requesting that the International Trade Commission launch a special investigation into India’s trade policies in 2013. As Prime Minister Modi arrived in Washington in late September, Wyden and his allies filed another request to the commission demanding a second investigation into “India’s trade policies that discriminate against US trade and investment” to build on the first.

Joining Wyden in the request is Finance Committee Chairman Sen. Orrin Hatch (R-Utah), who has received $341,600 in campaign contributions from pharmaceutical manufacturers since 2008 – more than any other member of Congress. Since 2012, Hatch’s campaign war chest has received more than $105,800 from Merck and its employees, $117,000 from Amgen and $44,000 from Pfizer.

The out-of-cycle review of India’s trade policy comes only months after the US Trade Representative once again placed India on its “priority watch list” of countries of concern in its annual Special 301 Report on the intellectual property regimes of US trading partners. Both moves amount to the threat of economic sanctions, according to Health GAP and Doctors Without Borders.

“We are strongly concerned,” Kavanagh said. “The 301 watch list is basically a threat of trade sanctions.”

Lobbying records show that both AFTI and PhRMA have lobbied the US Trade Representative on intellectual property and trade with India.

The other lawmakers who signed on to the request for a second ITC probe are Rep. Dave Camp (R-Michigan) and Rep. Sander Levin (D-Michigan) of the House Ways and Means Committee. Since 2013, Camp has received $15,000 in donations from the political action committees associated with Amgen, Eli Lilly and Pfizer. Levin receives support from several health care firms.

The four lawmakers behind the trade commission probe are not the only ones in Congress who have pushed to put pressure on India. Last year, Rep. Erik Paulsen (R-Minnesota) sent a letter signed by 170 House members to the White House demanding that President Obama make intellectual property a priority at bilateral talks between the United States and India, citing compulsory licensing and Indian court decisions that revoked patents on pharmaceuticals.

Since 2012, Paulsen has received $94,000 in campaign contributions from pharmaceutical manufacturers, according to MapLight and the CRP.

Will India Budge on Generic Drugs?

The pharmaceutical industry put its own pressure on India, with groups like GIPC and PhRMA issuing statements and reports claiming that patents are necessary to make profits that drive research into new lifesaving medicines, and the intellectual property climate in India would force US companies to divest in its burgeoning economy.

Kavanagh said the threats of divestment are just hot air.

“Does having stronger patent laws lead to more investment [in the developing world]? No.” Kavanagh said. “Companies go where countries are growing.”

Kavanagh said that most truly innovating research in medicine comes from universities and the National Institutes of Health, and although pharmaceutical companies do spend money on research and development, “it sure isn’t anything close to the full cost of drug development.”

It’s unclear if mounting pressure from the United States is having an impact on Modi, who, as PhRMA is quick to point out, has declared India “open for business.”

His agreement with Obama to form a high-level working group on intellectual property might signal the kind of changes that drug companies hope for and health advocates fear, but a joint statement from the White House emphasized the importance of information technology, not pharmaceuticals, in US-India trade relations.

Modi has also made it clear that he sees both sides of the issue. During his recent US visit, the CEOs of Merck and other drug companies pressed Modi on India’s patent laws during a breakfast meeting with US businesses leaders.

“I understand that you want to be compensated for your investments in [research and development],” Modi was quoted as saying in India’s Economic Times. “At the same time, India needs medicines that are affordable for its population.”

He apparently stressed that the issue was not just about India, but the entire developing world.

Doctors Without Borders said it would continue to monitor the patent situation in India and demand that its government resist pressure from the United States and the pharmaceutical industry. The group also publishes a database of information on challenging patents in countries across the world to help people and governments fight to remove barriers to affordable medicine.