India’s incredible advancement in various fields of technology (including launching its own first ever Mars mission!) has attracted other nations to establish a trading relationship with India. This is further exemplified by President Obama’s recent visit to India in pursuant of a Free Trade Agreement (FTA) with the fast-developing nation. However, an agreement is yet to be achieved partly due to the US and India’s irreconcilable views on Intellectual Property protection (IPP). Being a major innovator in the pharmaceutical industry, the US is pushing India for implementation of more stringent IP laws by reducing the grant of compulsory licensing for generic pharmaceutical products. India, on the other hand, has been in favour of marketing cheaper generic versions of patented drugs for its people and tightening its patent laws on the granting of patent rights for what it considers to be minor changes in an already patented drug. Obama’s visit to India has sparked debates on whether India will adopt some of exclusive drug marketing approval systems available in the US.

One of such systems is patent linkage. This system is not only used in the US but also in major countries in Europe and other countries like China, Singapore and New Zealand. It is a system that promotes both IP rights and trade by linking the marketing approval of generic versions of a patented drug to the patent’s expiry. Under this system, local drug regulatory bodies will approve the marketing of a generic version of a patented drug only after the patent relevant to the drug has expired. In the US, patent linkage is implemented by maintaining a database known as Orange Book, which is regularly updated to provide data on drugs and its relevant patents, along with exclusivity information. A person expecting to market a generic version of a patented drug in the US needs to register for an Abbreviated New Drug Application (ANDA) by providing evidences on either one of the following in order to obtain approval from the US Food and Drug Administration:

  1. That the drug has not been patented;
  2. That the patent has already expired;
  3. The date on which the patent will expire, and that the generic drug will not go on the market until that date passes; or
  4. That the patent is not infringed or is invalid.

With this system in place, generic companies can make better business plans – to seek for a patent license, to wait until the patent expiry or to come up with an improved version of the existing drug. Patent linkage also eases and simplifies the approval process of generic drugs by the authorities. Delayed entry of generic drugs into the market enables drug originators to recoup expenses on the R&D of the drug and increase incentive for the development of new drugs. Patent linkage by no means increases the duration of patents or promotes the ever-greening of patents. This system ensures rights of a patent owner are exercised within the 20-year period of patent protection, avoiding imminent infringement by generic drug producers.

Apart from patent linkage system, the US also provides data exclusivity for drug products to prevent generic drug producers from using a drug originator’s preclinical and clinical trial results for obtaining marketing authorisation for their products. Under this system, the proprietor is responsible for the entire risk of the generation of the data which involves costly and lengthy clinical trials. Data exclusivity provides assurance to innovators that their test data will be conferred legal protection for a certain period of time. Protection of data exclusivity in the US varies from 3 months to 7 years, depending on the type of exclusivity. Having a different legal status from patents, data exclusivity is viewed as an additional protection which prevents the use of a drug’s test data by third parties for commercial purposes.

From a general public perspective, leniency in market approval for generic drugs and compulsory licensing of drug patents is seen as a commendable act. Most people in developing countries or third world countries cannot afford patented drugs which are usually highly priced. Under such circumstances, implementing patent linkage and data exclusivity systems is disadvantageous as it creates a barrier for cheaper generic drugs and hence, limits access to drugs by the poor. This is one of the reasons why economically disadvantaged countries are hesitant in implementing strong IP protection in respect of pharmaceutical products despite constant pressure by developed countries. It is mutually agreed in the Doha Declaration of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement that the TRIPS Agreement should not stand in the way of member governments acting to protect public health and affirmed governments’ right to use the Agreement’s flexibilities. Developing countries should not be obliged to contribute to the global R&D of drugs due to lack of resources and for economic reasons. Individual jurisdictions are free from influence of others to construct IP laws to suit their own interests.

However, care must be taken to ensure this provision is not abused. Generic drug producers should ensure that the quality of generic drugs complies with standards set by local authorities. Incidents involving substitution of active ingredients in drugs with a cheaper ingredient which does not have the same effect is not rare. The price of the generic drugs must also be controlled by local authorities, ensuring a healthy competition between generic drug producers and drug originators. Further to that, some producers may also illegally export generic drugs to other countries for commercial purposes. This is deemed as an act of infringement if the drug is patented in the country into which the drug is imported.

Like India, Malaysia also practices the granting of compulsory licenses in case of national emergency and public interest. In 2003, Malaysia became the first Asian country to grant a compulsory licence to Indian pharmaceutical company, Cipla Ltd., for the import of the generic version of HIV anti-retrovirals from India. Compared to India, however, there are no frequent cases of compulsory licensing of patented drugs in Malaysia. In terms of data exclusivity, Malaysia grants 5 years of data protection for new drugs and 3 years for a second indication of registered drugs. Malaysia is also considering a FTA with the US under the Trans-Pacific Partnership Agreement (TPPA). However, the negotiation is currently on hold.

It is undeniable that IP laws are important to a country as it measures a nation’s appreciation towards inventors’ talents and efforts in producing a valuable product and contributing to the economy. However, it is difficult to standardise the IP laws in countries with different economic advancements and different agendas for its people. Mutual consent from developed countries and developing countries is required for benefit of all.

* first published in the April 2015 issue of The Petri Dish (www.bic.org.my/the-petri-dish)