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Special 301 Report 2023: Reflections from Public Health Perspective


May 17, 2023

Image from the Report

The US Trade Representative (USTR) released the Special 301 Report for 2023 on April 26, 2023, and has placed India in the ‘Priority Watch List’, yet again. The Special 301 Report is a unilateral measure whereby the identified countries, whose IP regimes are not in line with the trading interests of the US industries, are placed a threat of unilateral sanctions. India, which has featured in this list multiple times in the past, (as highlighted on the blog by different authors over the years) finds its position in the list yet again, for remaining as “one of the world’s most challenging major economies with respect to protection and enforcement of IP”. The consistent issues that the US cites for placing India in the Special 301 Report are inter alia, India’s provisions on revocation of patents, oppositions, lack against the presumption of validity, lack of data exclusivity provisions and Section 3(d).

While this may not be conducive to the interests of the US industries, these provisions are often touted as key mechanisms to ensure access to affordable medicines in India. With this background, we are pleased to bring to you a guest post by Prof. Prabhat Kumar Saha highlighting certain concerns of the USTR in the 2023 Special 301 Report and assessing the same from a public health perspective. Prof. Saha is an Assistant Professor of Law, Faculty of Law,  Banaras Hindu University, Varanasi.

Special 301 Report 2023: Reflections from Public Health Perspective

Prof. Prabhat Kumar Saha

India must stop pleasing US-based multinational pharmaceutical companies to make medicines affordable and accessible in India

On April 26, the United States Trade Representative (USTR) released the 2023 USTR Special 301 Report (Special 301). It puts India on a “Priority Watch List Category” for the outstanding and new issues which allegedly affect United States (US) based intellectual property-intensive industries (p. 5). The report shows specific concern about patents among the other intellectual property issues.

India and the US have been at loggerheads over patent issues until recently. As a member of the World Trade Organization (WTO), India has amended its Patents Act, 1970, in compliance with the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). While amending provisions of the Patents Act, 1970, India has also adopted flexibilities allowed under TRIPS, which have immense potential to provide affordable and accessible medicines in India and curb the monopolistic behaviour of pharmaceutical MNCs. Nevertheless, USTR habitually pokes at public health safeguard provisions of the Patents Act, 1970 at the behest of US-based pharmaceutical MNCs.

Prime Concerns: Observations on Section 3(d) and Oppositions

Special 301 report shows particular concern about Section 3(d) of the Patents Act, 1970 because it allegedly restricts “patent-eligible subject matter” to get a patent in contravention of Article 27 of the TRIPS (p. 56, para 3). However, the US has never challenged Section 3(d) on incompatibility with the TRIPS before WTO-Dispute Settlement Body (DSB). Perhaps the US fears that a contrary decision, which is most likely, shall deter the US from extracting pressure on India to remove Section 3(d) from the Patents Act, 1970. Article 27 of the TRIPS prescribes non-exclusive patent-exclusionary subject matters, providing policy space for member countries to incorporate more subjects as non-patentable inventions in their domestic patent legislation. However, Section 3(d) has been an issue for the big pharmaceutical companies, as an obstruction to get secondary patents on trivial variations because it blocks patents from becoming “evergreen” and gives opportunity to generic pharmaceutical firms to produce biosimilar drugs and sell them at a much lower price. One such recent example of a secondary patent application rejection by the Indian Patent Office on the basis of section 3(d) is the fumarate salt form of Bedaquiline for the treatment of drug resistant tuberculosis (see here for the post on this order.)

USTR has also raised the issue of pre-and post-grant oppositions in India, claiming it “costly and time-consuming” (p. 56, para 2). The opposition system in India mainly filters out bad claims related to pharmaceuticals which patent examiners fail to recognise during the examination of patent applications. Such filtration makes the medicine affordable and accessible because of the entry of generic pharmaceutical firms into the medicine production. Further, the number of pre-and post-grant oppositions are less than one percent of total patent applications published or patents granted as per annual reports of the office of the Controller General of Patents, Designs, Trademark and Geographical Indications (CGPDTM) during the period 2012-2022 (also see here). Furthermore, even if assumed that opposition proceedings are time-consuming, it does not prevent the owner from exploiting the invention subject to marketing approval.

Progressive or Regressive: Form 27 and the Revised Patent Manual

Special 301 report has shown a gentle gesture about the revised version of Form 27, which mandates filing annual statements by patentees and licensees regarding the working of patented inventions (p. 59, para 1). The revised Form 27 runs counter to the principles envisaged in the Patents Act, 1970. It accepts “importation” as “working”, which significantly dilutes the local working requirement and other statutory provisions of the Patents Act, 1970. Moreover, revised Form 27 makes a severe blow over statutory provisions capable of providing affordable and accessible medicines.

Another noted progress made by India, as mentioned in the Special 301 report, is the revised Manual of Patent Office Practice and Procedure in 2019 ((p. 59, para 1). The Manual removes the concerns of the US patent-intensive industries over burdensome patent reporting requirements. It mandates patent examiners to get information about patent applications filed in foreign jurisdictions through the WIPO Centralised Access to Search and Examination (CASE) system and Digital Access Service (DAS). The mandate of the Manual takes away mandatory reporting requirements for foreign patent applicants mentioned under Section 8 of the Patents Act, 1970 (see here).  It is pertinent to note that non-compliance with Section 8 is one of the grounds for pre-and post-grant opposition and revocation of patents. Practically, the Manual has effectively omitted a few mandatory provisions of the Patents Act, 1970, without any legislative scrutiny.

Special 301 report praises the efforts of the Cell for Intellectual Property Rights Promotion and Management (CIPAM) for promoting intellectual property awareness, commercialisation and enforcement (p. 59, para 2). However, careful scrutiny of work done by CIPAM reveals that it seriously overlooks the developmental and socially responsive role of patents. Awareness programmes, including pedagogic materials of CIPAM, (see here) do not mention the role of limitations and exceptions provided under the Patents Act, 1970 and its capability to protect public health and counterbalance the monopolistic behaviour of right holders.

Propaganda of Data Exclusivity

The Special 301 report also claims that India does not have a robust mechanism to protect undisclosed test and other data of the originator submitted to obtain marketing approval for pharmaceutical products. (p. 56, para 3).  The US demands the provision of 10 years of exclusive rights to clinical trial data from the originator pharmaceutical company and considers any subsequent marketing approval given to a domestic pharmaceutical firm based on the originator’s data as “unfair commercial use.” If India bows down to such demands, then the drug regulatory authority won’t be able to approve the manufacturing of bio-equivalent drugs by domestic firms that cannot carry out independent clinical trials to generate data for marketing approval due to financial constraints. Burdensome procedures and substantial time required to conduct clinical trials, as per the New Drugs and Clinical Trial Rules, 2019, are other barriers for most domestic pharmaceutical firms in conducting such trials. Therefore, granting data exclusivity will prevent the manufacturing and sale of bio-equivalent drugs by domestic firms, even if the patent application of the originator’s drug is rejected at the pre-grant stage or if the patent is revoked at the post-grant stage for not meeting any statutory requirement, resulting in high prices and less accessibility of the same drug in India.

The Special 301 report takes the stance that using test data submitted by the originator for subsequent marketing approval to others amounts to “unfair commercial use” under Article 39.3 of the TRIPS. However, TRIPS does not prevent the member state or its agencies from relying on the originator’s clinical trial data to provide subsequent marketing approval to any subsequent applicant. It only prevents any third person from taking clinical trial data unfairly and independently submitting it for marketing approval. Hence, there is no obligation on India to grant data exclusivity under Article 39.3 of the TRIPS.

The Mind Game

Special 301 report is a tool used by the US government on behalf of the US-based intellectual property intensive industries to extract pressure on foreign countries to change their domestic intellectual property laws. The US has been quite successful in bringing changes to intellectual property laws of foreign jurisdictions by showing “concerns” in the Special 301 report and threatening to impose unilateral trade sanctions subsequently. In the recent past, India made a few changes to the Patents Rules and Manual as per the recommendations of the Special 301 Report. These changes have severe repercussions on the public-health safeguard provisions of the Patents Act, 1970, as argued above in context of Form 27 amendments. We may witness relinquishing a few more flexibilities adopted in the Patents Act, 1970 to protect the trade interest of US pharmaceutical MNCs. Interestingly, the Special 301 report 2023 affirms that “the United States respects a trading partner’s right to protect public health” (p. 35, para 5). However, patent-related concerns raised in the report strike at the very heart of affordability and accessibility of medicine in India.

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