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By Shailly Gupta, Centad
India’s pharmaceutical industry is currently the fourth largest pharma industry in the world in terms of volume. India is now emerging as a new R&D hub for pharmaceutical sector. The aggregate R&D expenditure of 20 leading Indian pharma companies increased from Rs 2067 crore in the year 2005-06 to Rs 2207 crore in 2006-07 2. Many pharma companies are forging ahead in R&D on New Chemical Entities and Novel Drug Delivery System and making it an integral part of their strategy to attain long term advantage 3.
With its growing global presence, Indian pharma can play a lead role in contributing to global R&D in the area of neglected diseases which is very often ignored by the multinational corporations due to low commercial value of these products. Hence, national policies and programmes giving priority to public health over profits may help in steering the R&D in right direction.
At this juncture, the Ministry of Science & Technology, Government of India, has proposed a bill titled 'Public Funded R&D Projects (Protection of Intellectual Property) Bill', intending to promote innovation and technology of transfer through Government-funded research. The bill pursues the following objectives:
a)Promote the protection of IP and thereby leading to optimal
utilisation of public investments on R&D
b)Encourage innovation in small and medium enterprises
c)Encourage University-Industry Partnership to commercialise
IP and make patents available for public use
In a nutshell, the Bill strives to boost the commercialisation of inventions made through government-funded research by passing on the IP rights on the same to the institution responsible for that invention. As stated in the bill, the institution will have to report to the funding agency within a stipulated period of time about the invention in order to procure a patent. An IP management cell will be established by the institution to manage the inventions created and formulate mechanisms for commercial utilisation of the inventions. The bill has the provision of how the royalty received by the institution will be shared by the inventor, IP cell and the institution. It proposes that 30% of the royalty will be given to the inventor and rest will be used by the IPM cell and the institute as fund for future R&D. Safeguard measures in the form of compulsory licensing of the patent has been mentioned in the bill and these can be exercised by the government in case of abuse of privileges granted.
US Bayh Dole Act
The legislation proposed by DST has been modelled on the United States’ Patent and Trademark Law Amendments Act commonly known as Bayh-Dole Act (BDA) that came into existence in 1980. BDA created a uniform patent policy for the universities to own rights to patent resulting from federal funded research and to license these patents on an exclusive or non-exclusive basis. It encouraged universities to set up Technological Transfer Offices (TTO) to manage and promote their patents. The underlying objective of this act was to stimulate innovation and ensure commercialisation of the technology leading to increased public access to federally funded research. The act also allowed for march-in rights under which the government can acquire the compulsory licensing of the patent.
The Bayh Dole Act in the US came into practice with an implied duty to commercialise. Prior to Bayh Dole, while lots of patents were being held by US universities, very few of them were being licensed to industry for commercial development. This act was an attempt to stimulate public institutions’ participation in an established IP regime and commercialise their research.
This act has received more criticism than acclaim in the US. While on one hand, it is regarded as a catalyst for bringing boom to the US economy and facilitate transfer of technology from academic institutions to industry. On the other hand, this legislation is seen as detrimental to the innovation system that hinders innovation access to public.
There is evidence of striking increase in the patenting and licensing activities in American Universities since 1980. In 1980, approximately 20 universities had technological transfer offices. The number rose to 200 in 1990 and by 2000 nearly every major university had a TTO. Large number of universities verified that technology transfer programmes aided licensing of inventions and commercialisation of federally funded research. This resulted in invention of many new technologies which were successfully introduced for public use 4. With the significant increase in number of patents issued, royalties and licensing fees received by the inventor and the universities respectively immensely benefited the universities. The US economy was also estimated to grow post Bayh-Dole Act owing to creation of additional jobs and generated substantial economic activity.
On the other hand, many experts claim that this Act has not led to increase in public access as the inventions still remains in the clutches of monopoly pricing. People ended up paying twice for the drugs, first through taxpayer funding for R&D and then paying for high priced drugs, higher insurance and other medical facilities 5.
March-in rights have rarely been invoked to protect the interest of the public. Several requests had been made by NGOs like Essential Medicines to US Federal agencies for exercising March-in rights to make the treatment drugs for neglected diseases to be made available for public use. In one such case, Essential Medicines wrote to National Institute of Health (NIH), a government body for making a HIV-AIDS treatment drug Ritonavir available for public use at a reasonable price. This drug was priced five times higher by pharmaceutical company Abbott which invented this drug with the help of funds provided by NIH. Essential Medicine made a petition to NIH for issuing an open license for use of this medicine so that it can be made available for public use. NIH rejected the petition stating that Abbott has made the drug available for public use and so fulfil the conditions of Bayh Dole Act. It further stated that regulation of prices does not fall in the purview of march-in rights and hence cannot be exercised by NIH. 6
Organisations like Universities Allied for Essential Medicines raised its concern that Bayh Dole does not have much role in innovation of Neglected diseases. Owing to the fact that the treatment for neglected diseases is not commercially viable, Bayh Dole do not offer any additional incentive which can promote research in this area 7.
Apprehensions about the Proposed Indian Bill
In line with the US Bayh Dole Act, the proposed Indian bill seems to assume that public funded R&D cannot be fruitful without IP protection. However, experts are claiming this bill which aims at IP management and protection will not serve any purpose in our country. 8 The bill is being labelled as an ill-studied one which has not been backed by enough empirical research 9. It needs to be supported by data on how much patenting and technology transfer takes place in universities.
Arguments are also being made that the bill has been drafted with the assumption that IPR is the best way to steer innovation. IP is but one way of incentivising innovation and too much of IP may prove to be fatal. Too much of IP may skew the balance in favour of patent holder and may lead to monopoly. Alternative ways need to be sought after to incentivise innovation 10.
Another question that comes to one’s mind is whether our universities have the potential and capacity to commercialise their inventions. Often universities tend to go for inventions which are creative and different and are not much concerned about its commercial value or end use of the inventions. The creation of IP cell which is expected to provide support in this regard may not be of much help keeping in view the absence of availability proper training on IP management.
Concerns have also been raised about the effectiveness of compulsory licensing as safeguard measure. The government has hardly used this provision earlier in the interest of public use.
It is anticipated that the bill will provide a fillip to R&D sector of the Pharmaceutical industry in India. While the industry will benefit with this association as it would give it an opportunity to leapfrog on the numerous inventions made at University level 11, it will also offer an opportunity to the Universities who in itself do not have the capacity to take their inventions to the stage where it can be made available for public use 12. Industries can act as a missing link here to foster the creation of new products and services from research that might otherwise remain in either early-stage or undeveloped.
The bill is expected to lay down a formal structure for Public Private Partnership taking place in the country. Several Public sector research institutions such as Central Drug Research Institute (CDRI), Centre for Cellular & Molecular Biology (CCMB), Indian Council of Medical Research are already doing partnerships with private sector to contribute to R&D in field of neglected diseases. This bill seeks to help in providing incentives to the inventor and also ensure that the invention is made available for public use. However, by providing discretionary power to the Universities involved in research, the government may lose their authority over inventions which should be used for the general masses.
It should be noted that patent licensing is just one of the many avenues available for industry-university collaboration. Rather than focusing on just one avenue which has more risks attached to it, other avenues need to be explored and promoted. Other channels include publications, conferences, sponsored research, university-industry consortia etc. Policies should aim at exploring ways to engage faculty and industry in collaborative activities rather than just limiting it to patenting and commercialisation.
Conclusion
The environmental conditions that prefaced the adoption of Bayh Dole in the US are different from the conditions prevailing in India. While majority of Universities in the US are involved in R&D activity, in India universities’ contribution to R&D is minimal. Besides, the pharma R&D sector is currently in its nascent stage in India. At this point in time, if Bayh Dole like act is adopted, then there are chances that research will be driven by market rather than necessity. While the industry works on the principle of profit making and operates in an environment of competition, the industry-academic association might deviate the latter from the path of knowledge dissemination to revenue generation.
Many experts and institutes around the world have suggested alternative models like open source model which is considered to be more effective than Bayh Dole in stimulating innovation. University Allied for Essential Medicines has recognised that Bayh Dole Act is a narrow approach for handling access and innovation. It has insisted on considering technology transfer process in a broader perspective rather than looking at it through management of Intellectual Property as done in the Bayh Dole Act 13. At the global level, developing countries are recommending alternative models like prize fund, patent pool, Global R&D treaty during the negotiations held by Inter-Governmental Working Group on Public Health, Intellectual Property & Innovation.
In India, recently the Director-General of CSIR, Samir K Brahmachari, has introduced an “open source” approach for drug research and development for neglected diseases like TB, which envisages a system where researchers from all over the world working on different areas of drug design will deposit their findings into an open database for others to use and comment on it. 14
In light of the fact that the Bayh Dole Act has done very little in increasing public access to the innovation, will it be worthwhile to introduce a replica of such an Act in our country? With a large chunk of the population not having enough money to dispense on medical treatment, can we actually afford to go for an act which will result in monopolisation of the market? This bill with a clear focus on IP management will only lead to monopoly over access to technology and hamper academic knowledge generation.
As per the grapevine, the bill has already been approved by various ministries and is now with Cabinet for further refinement. It has also received recommendation from National Knowledge Commission, a government advisory body. The bill is scheduled to be tabled in Parliament soon. The government plans to share the bill in public after it is introduced in Parliament. But the question is how hassle-free and swift would be the procedure to make amendments in the bill when the slip-ups are spotted?
Rather than going for a policy or act having narrow approach of merely commercialising the inventions, the Ministry of Science & Technology should strive for alternative mechanisms recommended globally for encouraging innovation and transfer of technology which are more in favour of public interest.
1 Bill is not in the public domain yet. Comments received are authentic based on inputs from reliable sources.
2 Pingle Sanjay (2007), India Pharma Inc-Riding on R&D wave
3 India PRwire(2006), “KPMG Pharma report: India pharma industry has grown 1.5%-1.6% of the economy”
4 Council on Government Relations,1999, The Bayh Dole Act: Guide to Law and Implementing Regulations
5 Halperin David (2001), The Bayh Dole Act and March in Rights
6 Weissman Robert (2007), "The Role of Federally-Funded University Research in the Patent System" Testimony Before the Committee on the Judiciary U.S. Senate
7 Universities Allied Essential Medicines (2008), Universities and Access to Medicines: Issues to Highlight for the WHO Intergovernmental Group on Public Health, Innovation and Intellectual Property
8 Notes taken from the meeting held on Indian Bayh Dole Act at Medicines Sans Frontiers Delhi office
9 Kamath Gauri (2008), Patently not obvious, Businessworld
10 Basheer Shamnad (2008), "Exporting Bayh Dole to India: Whither Transparencies-Part II”," SpicyIP (Blog)
11 Kamath Gauri (2008), Patently not obvious, Businessworld
12 Narayan Subhash, Chandra Girish & Prasad TNN (2007), Legal Framework on sharing of IP, Economic Times
13 Universities Allied for Essential Medicines (2008), Universities and Access to Medicines: Issues to Highlight for the WHO Intergovernmental Group on Public Health, Innovation and Intellectual Property
14 Interview of Dr. Samir Brahmachari on Open Source Approach, available at: http://www.accessmed-msf.org.
October 20, 2008
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