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Indian pharma sector fears India-European Union FTA could imperil local industry

Economic Times, India

Indian pharma sector fears India-European Union FTA could imperil local industry

By Soma Das

27 March 2013

NEW DELHI: Drugmakers and healthcare activists are worried that the India-European Union Free Trade Agreement (FTA), which is in the works, may contain a provision that could imperil local industry and have urged the government to keep patent infringement issues out of FTAs.

They are apprehensive that India may agree to a clause in the final agreement, stipulating that mere suspicion of patent infringement by an Indian drugmaker could lead to seizure of the company’s bank accounts and immovable property. Injunctions could also be issued against intermediaries and third parties such as suppliers, drug distributors and medical procurement agencies for infringement of intellectual property rights.

It is believed that these provisions have been inserted in a draft of the agreement that is currently under negotiation. The drug industry and healthcare activists have taken up the issue with the government.

"Seizure of accounts and properties would discourage generic pharma companies even from challenging patents in legitimate cases and adversely impact medicine accessibility not only in India but across the world," said DG Shah, secretary general, Indian Pharma Alliance, an industry body of top domestic drugmakers.

India expects to conclude negotiations on the long-pending FTA with the European Union at a ministerial meeting with the EU trade commissioner scheduled for April 14-15, Commerce and Industry Minister Anand Sharma said recently. "The EU has sensed an opportunity in the government’s anxiety to showcase its achievement by concluding the FTA," said Shah.

Patent experts also feel if the government agrees to these provisions, it would go well beyond what is being offered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS). The official position of the government till now has been that it would not commit to any arrangement with the EU that goes beyond TRIPS.

"Provisions on freezing bank accounts, seizing property in a suspected infringement case or holding intermediate players liable in cases of patent infringement are beyond the mandate of TRIPS," said Shamnad Basheer, an intellectual property expert. He urged the government to make the provision of the agreement public before signing the treaty, as it would have serious ramifications in areas such as public health. "The very possibility that legal proceedings could be initiated against third parties could dissuade them from working with generic producers," said Leena Menghaney of Medicins Sans Frontieres, a medical humanitarian NGO. Menghaney urged the government to keep patents out of FTA discussions. Daara Patel, secretary general, Indian Drug Manufacturers’ Association, another industry body, concurs with this view. " WTO, and not FTA, is the right forum to negotiate patents. India should not cave in to pressure and include patents as part of the FTA. This could block exports and throttle the generic industry," he said.

Generic players and public health groups also fear that the border measures the EU is pushing for could lead to a repeat of the drug seizure cases of 2008-09. Legitimate generic drugs headed for other developing countries were then held up at different European ports of Netherlands and Germany in transit for infringing trademarks.

"Interruptions to medicines supplies will continue if ’civil trademark infringement’ is not also excluded from FTA," said Menghaney. Unlike earlier drafts, the latest text on border measures fails to categorically mention that provisions under this section will not be applicable on transit goods, she added.