Indian government recently capped the trade margins of 42 non-scheduled anti-cancer drugs sold under 463 brands to 30 percent.

The move, while partially addresses the problem of high prices of generic anti-cancer medications, leaves behind patented cancer drugs.

The spiralling costs of patented cancer drugs has come to focus with governments in the developed and developing world grappling to deal with it.

A study done by Indian Institute of Management (IIM), Calcutta titled ‘Impact of Product Patents on Pharmaceutical Market Structure and Prices’ found that the proportion of monopoly molecules (cancer drugs) sales has increased from 6.4 percent during 2000 to 2004 to 18.8 percent during 2010 to 2012 and to 59.5 percent during 2013 to 2015.

The molecules with two brands account for about two-thirds of the market during 2013 to 2015. It is a very common practice for innovator companies to in license molecules to Indian companies for distributing their products in domestic market.

In this backdrop comes a blanket statement from Vinod K Paul, a key member of government’s policy think tank NITI Aayog.

ThePrint quoted Paul as giving an endorsement to patented drugs and ruling out any price reduction of patented anti-cancer drugs. “The prices of patented drugs cannot be curbed and should not be curbed,” Paul said, according to the report in ThePrint.

“In principle, it is a discovery and we should respect the innovation,” he added.

​Paul, the chief architect of Prime Minister Narendra Modi’s flagship health scheme Ayushman Bharat and chairman of expert committee on pharma pricing that advises National Pharmaceutical Pricing Authority (NPPA) is an influential voice these days. The government’s decision on cancer drugs last week was based on the recommendations of this panel.

The statement from Paul is a departure from the past, when government officials avoided voicing views on patented drugs in public, given the sensitivities involved.

Let’s take look at how patents assumed so much prominence in Indian context.


In 2005, India amended its Patents Act, 1970 to introduce product patents in line with Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, disbanding its liberal patent regime that only identified process patents.

India grants patents to product or a process that is new, involving inventive step and capable of industrial application.

The patent term is 20 years from the date of filing, in essence it provides exclusivity of those many years to commercially exploit a product.

In the developed world, patents are used as a carrot to incentivise innovation and help recoup costs related to research and development of drugs.

There was firm opposition especially from Left Front parties against TRIPS agreement, on grounds that product patents will lead to monopolies and make lifesaving drugs unaffordable.

Also there was resistance from domestic pharmaceutical industry that thrived on process patent and by reverse engineering drugs, helping India becoming the pharmacy of the world for cheap copycat drugs.

TRIPS agreement did offer a flexibility in form of a provision for compulsory licensing to overturn patents in cases of national emergency and health crisis.

India used this flexibility once by granting compulsory license in 2012 to Natco Pharma for the generic production of Bayer’s Nexavar.

Bayer at that time was selling Nexavar used in treatment of liver and kidney cancers for Rs 2.8 lakh for a month’s treatment. Natco offered to sell the copy at Rs 8,800, agreeing to pay 6 percent of net sales as royalty to Bayer. The Indian Patent Office’s verdict to give compulsory license sparked outrage. Governments in the developed world accused India of failing to protect intellectual property rights.

To be sure, not all patents are genuine innovations. Some are just tweaks of formulation, dosage or combination that are intended at times to extend patent exclusivities, often termed as patent ever greening.

The Indian patent law did have protection from this. India inserted a clause — Section 3(d) — in the Indian Patent Act 1970 that does not allow patents to be granted to inventions involving new forms of a known substance unless it differs significantly in properties with regard to efficacy.

Compulsory licensing and Section 3(d), among others are often cited reasons by US Trade Representative (USTR) in keeping India in its priority watch list, that keeps track of countries accused as patent violators, who may potentially end up facing trade sanctions, if they do not act.

Time to exercise caution

Both, US and Germany, have invoked compulsory licensing in recent years, and US President Donald Trump had talked about plans to negotiate prices of drugs for Medicare and Medicaid programmes, all these aimed to reduce the burden on their patients and payers.

Patents are useful in encouraging innovation, but what purpose they serve, if large number of patients cannot afford the innovation and keep suffering and dying.

The classic solution often advanced is a universal health insurance to address the problem of accessibility. That does not hold much water as the experience of US government shows that cost of drugs has pushed the overall cost of healthcare, burdening the people and the government.

It is also documented that several top selling patented drugs, have come from public funded research laboratories and sometimes heavily subsidised by the governments through grants and giving them orphan drug status or fast tracking them requiring lesser subjects for clinical trials. Many times the prices of drugs just does not match up with the cost of development.

Such blanket statement may not help our cause, at a time when India is under tremendous pressure to dilute hard fought flexibilities and provisions offered under Indian Patents Act to protect patients.

Our actions and words are closely followed by rest of the emerging world, when it comes to patents and medicines.