Why the Modi government's rollback of drug price control is worryingly anti-people

Following the Drug Price Control Order in 2012, which brought 348 drugs under essential list of medicines, when the Narendra Modi government capped the prices of another 108 medicines in July 2014, it was considered a bold step indeed.

The decision, despite stiff resistance from the pharmaceutical industry, brought down the prices by at least 25 per cent because the logic employed was to cap the drug-prices if they exceeded the average market price by 25 per cent. With the new move, the government had brought 58 per cent of cardiac medicines and 21 per cent of anti-diabetic drugs under price control.

Now with a retrograde decision, the union government seems to be giving it all away. While civil society and access-to-medicine activists demand for more such price controls, the government has removed the price controlling powers of the National Pharmaceutical Pricing Authority (NPPA), which had capped the prices of 108 drugs. The Department of Pharmaceuticals of the union government has instructed the NPPA to revoke the guidelines issued on 29 May that gave it the power to fix prices of drugs that are not on the national list of essential medicines.

The decision will not affect the July price control that reduced the prices of cardiac and anti-diabetic drugs, however without the powers, the NPPA will not be able to do such capping any more.

Although no reasons have been given for this drastic step, it’s clear that the government is yielding to the pressure of the pharmaceutical industry and international lobbies that have been complaining against government interventions, including the use of TRIPS flexibilities such as compulsory licensing, to make life saving medicines accessible to people. That it came ahead of Narendra Modi’s maiden visit to the US, which has been making a lot of noise on India’s intellectual property situation, is alarming.

The words of Rod Hunter, senior vice-president, Pharmaceutical Research and Manufacturers of America, who wrote an article in the Hindustan Times, are revealing: one of the obstacles to investment in knowledge-intensive industries in India “is intellectual property (IP) rights. India has been hostile to IP protection, especially for biopharmaceuticals. In recent years, India has invalidated or otherwise attacked patents on a significant portion of innovative drugs available in India in order to make way for local champions. These attacks have been implemented through ‘compulsory licences’ and state approvals of copies of patented drugs. India should clarify that compulsory licences will be confined to genuine public health emergencies (as prescribed by international agreements), and reform drug approval procedures.”

Not that the government decision is directly related to intellectual property rights, but it certainly pleases the pharmaceutical industry. Perhaps this is the first step towards placating the industry at the cost of its people’s interest. “It’s encouraging that Modi is speaking out on the importance of attracting FDI. But translating rhetoric into reality will depend on overcoming inertia and confronting vested interests that are committed to the status quo. If he succeeds, India will benefit from more investment, more economic opportunity, and greater prosperity for millions of people,” Hunter further wrote.

There is also considerable fear among public health activists and civil society organisations that the Modi government may tinker with India’s Patents Act. They point to the statement made by Commerce and industry minister Nirmala Sitharaman that the government would roll out a revised policy on Intellectual Property Rights (IPR). She also indicated that this policy would focus on boosting innovation and tone up the overall administration, besides setting up a think tank to strengthen the country’s patent regime.

Countering the minister’s claim that India doesn’t have an IP policy, a group of activists have said that “the current Indian IP legal regime represents the policy framework on IPRs which was adopted after considerable debate inside and outside Parliament. The strength of this IPR policy is reflected well in the successful establishment of the Indian pharmaceutical industry within three decades”.

Sitharaman’s statement is indeed worrying because India had followed the Indian Patents Act 1970 till 1995 and then made use of the 10-year transition period provided by the WTO agreement on TRIPS. The compulsory licensing provision, that the US and its pharmaceutical industry object to, is a flexibility provided by the WTO.

The US’s objection, expressed both officially and through its lobbies, is the Indian patent system because it’s not suitable for its interests. As the activists point out, the “Global Intellectual Property Centre of the US Chamber of Commerce accused India of harbouring the ‘weakest’ IP environment among countries that it studied. Further, the US International Trade Commission (ITC) has initiated an investigation on India’s industrial policy, which is primarily focused on India’s intellectual property regime and its impact on the US economy. Similarly, the United States Trade Representative (USTR) continues to make illegitimate threats (inconsistent with the principles of the multilateral decision making and dispute settlement processes of the WTO) of unilateral trade sanctions against India through the Special 301 process.”

The roll-back of the price control powers of the drug pricing authority or yielding to the pressure of the US are against the interests of the millions of people in India. There is a risk of India giving away its rights, obtained through multilateral platforms, through bilateral treaties with the US. Indians need to be vigilant.