Report From India: A new patent battleground has formed over India's drug shipments through the European Union.

June 11, 2009
Pharmaceutical Technology Editors

Pharmaceutical Technology, Pharmaceutical Technology-07-02-2009, Volume 33, Issue 7

Patent infringement claims and a lack of clear global trade distribution routes may be unraveling the country's generic-drug export industry.

On Jan. 12, 2009, a ship loaded with the bulk drug losartan, used to lower blood pressure, from Dr. Reddy's Laboratories (Hyderabad, Andhra Pradesh, India) dropped anchor at an European port. Although the shipment's final destination was Brazil, European officials seized the ship's cargo and ended up sending it back to the manufacturer in India. Authorities charged that the drug on board infringed the patent of the original drug, Cozaar (losartan potassium). Losartan is not patented in India or Brazil. Cozaar is protected in The Netherlands until September 2009 under a patent held by DuPont; Merck and Co. (Whitehouse Station, NJ) holds the product's marketing rights (1).

Another drug shipment of clopidogrel bilsulfate from an Indian manufacturer, Ind-Swift Laboratories (Chandigarh), bound for Venezuela made a pit stop at a Dutch port on Oct. 15, 2008. The local customs agency seized the consignment on charges of counterfeiting and patent infringement. A trade promotion agency in India objected to the claims, arguing that the drugs were perfectly legal in the market they were meant for—Latin America in this case. Ind-Swift appointed a lawyer in Amsterdam to secure the release of the goods, worth $50,000. At the end of May 2009, diplomacy and legal channels helped to release the shipment back to the manufacturer, although the European Commission is still reviewing the case in The Netherlands (1).

ADAM JONES/GETTY IMAGES

Dutch authorities seized yet another shipment from India on Nov. 12, 2008. This time, the detained product was generic abacavir sulfate used in lamivudine tablets, an antiretroviral HIV/AIDS treatment. Bound for Nigeria, the abacavir tablets were found to violate patent rules and declared counterfeit. The cargo was not returned to its Indian manufacturer, Aurobindo Pharma (Hyderabad), and was in fact, burned (1).

The response from India

These are only a few examples (see Table I), and the abacavir seizure was the veritable last straw for the Indian government. Feeling hounded at European ports and dismayed at the long list of seizures of Indian drug exports, India's leaders complained to the World Trade Organization (WTO).

Table I: Indian drug exports seized in Europe.

"We have raised the issue with the expectation that the European Commission will urgently review the relevant regulations ... and bring them in conformity with the letter and spirit of the TRIPS [trade-related intellectual property rights] agreement and the rules-based WTO system," said Indian government officials in a statement to the WTO council. The statement added that it was not a case of temporary detention, "as some consignments have been held for over months, with procedures initiated for their destruction as well."

India's $12-billion domestic pharmaceutical industry gets 40% of its revenue from generic-drug exports around the world. Although drug seizures happen from time to time, the sudden increase in seizures in Europe touched on sensitive nerves—those of rich and poor countries and of those fighting for the right to access affordable medicine. The repeated seizures also enraged advocacy groups and nonprofit organizations such as Oxfam International and Knowledge Ecology International, which sent letters voicing their concern to the World Health Organization (WHO) and WTO (2, 3).

What was particularly embarrassing about these events was that the abacavir cargo was paid for by international donor goverments, an aid facet amply supported by European Union nations such as France and the United Kingdom. The particular consignment of antiretroviral drug was to be distributed in Nigeria by the Clinton Foundation, established by former US President Bill Clinton.

Moreover, GlaxoSmithKline (London), which holds the patent for abacavir and markets it under "Ziagen," did not object to Aurobindo Pharma manufacturing the drug for Nigeria's population. The Indian company obtained a waiver under TRIPS.

Echoes around the world

Brazil joined the chorus. In its complaint to WTO, the Brazilian government alleged that multinational drug manufacturers in Europe had gone a step further by persuading African nations to enact anticounterfeit laws (4). Without these laws, Indian drug exporters could stand to lose more than $1 billion, according to trade sources.

In December 2008, Kenya passed an anticounterfeiting act to disallow the sale of generic drugs on the grounds that they were spurious (5, 6). Other African countries such as Uganda, Peru, Zambia, and Ghana are debating similar laws.

Multinational drug firms, unable to compete with the cheaper and efficacious medicines from India, are now resorting to a smear campaign, according to D.G. Shah, secretary-general of the Indian Pharmaceutical Alliance (IPA), an association of pharmacists in the country. "Earlier, custom authorities detained generic drugs from India on the grounds that they were patented in Europe. Now, many are convincing African countries to bring in such legislations," he says.

Adding fuel to the fire is the fact that the US Trade Representative (USTR) recently raised an alarm over the proliferation of counterfeit drugs in India. "A significant contributing factor in this problem is the unauthorized use of bulk active pharmaceutical ingredients (APIs) to manufacture counterfeit pharmaceuticals," says an Apr. 30 release from the USTR's office. By bracketing India with China and Russia, as well as a few smaller countries, the USTR also put the country on a "priority watch list" (7).

Domestic backlash

"Is all this really necessary," questions Aurobindo Pharma Deputy Director Lanka Srinivas. "All of these are just maligning tactics to stave off generic imports. Multinationals are slowly realizing the tremendous growth that exists in the Asian region. They have realized that if they have to make a dent in these markets and not just feed off the US and Europe, they will need to play up their quality card. An easy way is to label Indian drugs as counterfeit."

There are severe cost implications, adds N.R. Munjal, vice-chairman of Ind-Swift. "Such attempts force exporters to look at alternative routes to send the medicines, which could impact the cost competitiveness of Indian generic drugs," he says.

The Pharmaceuticals Export Promotion Council (Pharmexcil), an agency established by India's commerce ministry, is understandably perturbed. "In the last couple of months, we have been receiving an increasing number of reports from pharma exporters about their consignments being seized in Germany, France, the UK, and The Netherlands," says Pharmexcil Executive Director P.V. Appaji. "The drugs are not substandard or of compromised quality. Besides, they are not meant for the European market but are just using EU ports while in transit. They do not violate any laws," he adds.

Sixteen global public health, consumer, and development groups voiced concern to WTO over the matter in a Feb. 18, 2009 letter (3). Noting that the seizure of drug products in transit were made under the EU's customs requirements, the groups claim that current trade rules do not protect legitimate sellers and buyers of generic medicines when those goods move through a global supply chain.

In a March response to the joint letter from concerned nonprofit organizations, Pascal Lamy, director-general of WTO, noted that creating barriers to legitimate trade in generic medicines should be avoided (8). Indeed, Lamy refers to the 2001 Doha Declaration on TRIPS, which confirms the determination of members to promote access to medicines for all. These recent actions seem to be threatening the delicate balance that exists between public policy goals and intellectual-property right holders, and widening the developing-developed country barrier. Only time will tell how far the scales tip in either direction.

A. Nair is a freelance writer based in Mumbai.

References

1. Press reports/company information.

2. NGO Letter to M. Chan, WHO Director-General, Feb. 18, 2009, www.keionline.org/misc-docs/seizures/WHO_seizures_18feb.pdf, accessed June 10. 2009.

3. NGO Letter to P. Lamy, WTO Director-General,Feb. 18 2009, www.keionline.org/misc-docs/seizures/WTO_seizures_18feb.pdf, accessed June 10, 2009.

4. Statement by Brazil to TRIPS Council, Feb.3–4, 2009, www.ip-watch.org/weblog/wp-content/uploads/2009/03/intervention-by-brazil.pdf, accessed June 11, 2009.

5. East African Customs Union, "Indian Drug Makers Say Kenya's Counterfeit Law Will Wipe Out Their Market," Jan. 17, 2009.

6. WTO, World Trade News, No. 1934, May 13, 2009.

7. Office of the USTR, "Special 301 Report," Apr. 30, 2009,

, accessed June 10, 2009.

8. P. Lamy, WTO Director-General, Letter to 16 organizations, Mar. 4, 2009, www.keionline.org/misc-docs/seizures/dglamyresponse.pdf, accessed June 10, 2009.