Intellectual Thoughts by Sanjay Panda


Loosing battle- The patent issue

The global pharmaceutical giants are increasingly getting drawn into a tangle of expensive legal challenges and strong opposition from governments of developing countries over safety of drugs and patent protection they have been enjoying for years.
These governments are also being pressurized by several patient groups and social organizations to take tough stand against pharmaceutical giants over monopoly prices. No industry is facing this kind animosity from its consumers and governments these days.
The crux of the issue is the pricing of patented drugs. Most advanced drugs for cancer, HIV, diabetes, cardiovascular diseases and neurological disorders are under patent and are blockbusters with very high price tags. As most of these life style diseases are also affecting middle class and poor people today their monopoly prices obviously come under public scrutiny. The governments of developing countries cannot ignore suffering of millions of their people afflicted by these deadly diseases when the drugs for such ailments are being sold at highly unaffordable prices.
This is exactly what has happened in Thailand & Brazil and is likely to happen in India too. The Thai government issued compulsory licenses on three drugs a few months ago. That allowed Thailand to import affordable, safe and effective generic versions of the patented drugs from other countries or produce them on their own through their Government Pharmaceutical Company. The first license was issued on November 29, 2006 for the HIV/AIDS medicine, efavirenz a patented drug of Merck and sold by the brand name of Storcin. This was followed by additional compulsory licenses on January 26, for the heart disease drug clopidogrel, a patented drug of sanofi-aventis which sells it by the brand name of Plavix and another HIV/AIDS drug, lopinavir/ritonavir sold by Abbott under the brand name Kaletra.
Thailand has made very clear to the global pharmaceutical industry that it will continue to break patents until prices for AIDS medication come down significantly. Thailand's action was followed by Brazil with the President signing a decree awarding compulsory licensing for efavirenz early this year. It is quite possible that India may also go for compulsory licensing route in case of Gleevec to make available this cancer medication affordable to several lakhs of Indian patients. Novartis is engaged in a court case over its patent.
Officials in India's health ministry are seriously considering this option in the wake of the widespread support to Thailand's steps and pressure from the public interest groups in India.Top pharmaceutical companies are furious over these developments. But they are helpless as powerful patient groups and NGOs in the US and Europe are also getting extremely vocal on monopoly pricing of essential drugs.
It is true that compulsory licensing is meant to be used only as a last resort and TRIPS allow it under limited circumstances, such as national health emergencies, and after lengthy efforts to negotiate prices with firms. And most of these life style diseases are hitting the populations like epidemics leaving no options to the governments but to act fast. That apart, a large number of patent claims for drugs are for incremental innovation. There is no justification for patent authorities to grant a 20-year patent when the product is nothing new in terms of efficacy and safety.
Ongoing patent litigations over Lipitor, Caduet, Gleevec and many others are over the novelty issue. The global pharmaceutical industry should therefore realize that their pricing of so called patented products need to be on the basis of realistic costs and reasonable profits. Otherwise, the whole edifice of patent system in pharmaceutical industry may collapse.
pharma Biz

Mylan to buy Merck Generics Unit

Mylan Laboratories Inc. agreed to buy Merck KGaA's generic-drug unit for 4.9 billion euros ($6.7 billion) in cash to become the world's third-largest maker of generics.The acquisition will create a company with 2006 sales of about $4.2 billion. Mylan has arranged debt financing from Merrill Lynch & Co., Citigroup Inc. and Goldman Sachs Group, Inc. Mylan beat a rival bid by Teva, according to several people familiar with the transaction. Darmstadt, Germany-based Merck is selling the unit to pay down debt for its $13.7 billion acquisition of Serono SA.

The purchase, the biggest in generics since Teva Pharmaceutical Industries Ltd.'s $7.6 billion takeover of U.S.- based Ivax Corp. in January 2006, brings to an end a four-month battle for the world's fourth-largest maker of generics. The price Mylan is paying is more than five times its own sales in the year ended March 2007 of $1.26 billion and more than its own market capitalization of $5.39 billion. The acquisition comes almost two years after Mylan's failed $4 billion bid to buy King Pharmaceuticals Inc., the Bristol, Tennessee-based maker of the heart pill Altace. Mylan in January completed the $560 million purchase of a controlling stake in Secunderabad, India-based drugmaker Matrix Laboratories Ltd., giving the U.S. company access to lower-cost labor and materials. Mylan was the third-largest seller of generic drugs following Teva and Sandoz respectively. Actavis, Stada Arzneimittel AG, Ranbaxy and private equity bidders including Apax Partners Worldwide LLP and Bain Capital LLC also vied for the Merck unit, according to people with direct knowledge of the process.

Global warming- Climate change

With climate change experts huddled in Bangkok over global warming, India is finally forming an experts committee that will look into this issue. The need for country-specific reports on this subject has increased after the United Nations Intergovernmental Panel on Climate Change (IPCC) confirmed earlier this year that the consequences of climate change have begun to show. The developed countries have stepped up their campaign for forcing the developing countries, such as India and China, to shoulder greater responsibility for reversing environment damage. This is sure to become a major issue when the emission reduction targets are re-negotiated for the new protocol on climate change that will succeed the present Kyoto accord once it expires in 2012.

Unless India is well-prepared with documentary evidence to present its case for continuation of emission reduction holiday, it will be caught on the wrong foot, as happened in the case of tariff reductions under the new global trade agreement, patenting norms under the trade-related intellectual property rights (TRIPs) for industrial products, and protection of plant genetic resources under geographical indications and other protocols.

Each time, our country & the thinktank had to take post-accord protective action after the global norms had already been laid down. What needs to be realised is that India is neither a major environment polluter (its contribution to greenhouse gases is merely 6 per cent) nor is it unmindful of its responsibilities. What is perhaps not duly appreciated is that India began promoting renewable energy sources by setting up an exclusive ministry of non-conventional sources of energy much before other countries thought of doing so. It is hardly surprising, therefore, that India has emerged as a leading player in the global carbon credit trading market.

Of the total 633 projects registered with the CDM Executive Board of the UN Framework Convention on Climate Change (UNFCCC), as many as 220—34.75 per cent—are from India. Notably, the bulk of these projects belong to the categories of energy efficiency and renewable energy, reflecting emphasis on the clean development mechanism (CDM). India, in its self-interest, must promote the CDM at a greater pace. But, unlike the developed countries, it has begun to industrialise in real terms only now and can ill-afford any obligation that will hurt this process at this juncture. It has, therefore, to tread with extreme caution when it comes to taking on the targeted emission reductions. What is important for India is to balance the need for development with that for containing the damage caused by climate change.