From: pankaj@bass.bu.edu (Pankaj Tyagi)
Newsgroups: soc.culture.indian
Subject: Re: AIDS drug by indian firm
Date: 3 Jan 93 23:13:43 GMT
Reply-To: pankaj@bass.bu.edu (Pankaj Tyagi)
Followup-To: soc.culture.indian
Distribution: usa
Organization: Boston University

In article <1i509oINNslo@roundup.crhc.uiuc.edu> sunder@grusin.crhc.uiuc.edu (Srinivas Sunder) writes:
>In article <1993Jan2.194625.5575@udel.edu>, chitoor@dori.cis.udel.edu (Srikrishnan R. Chitoor) writes:
>|> >
>|> >>An Indian drug company recently announced it could produce the 
>|> >>AIDS-treatment drug AZT and market it at one-quarter the cost 
>|> >>charged to patients in the U.S. But Burroughs-Wellcome, which 
>|> 
	[ Background on AZT/BW/INDIA controversy along with fairly
accurate factual remarks on the difference between US and Indian
patent laws by Sunder deleted ...]

>|> Agreed. AZT may not save lives, but it does have a lot of market and there
>|> is nothing wrong in India trying to claim a market share for the drug.
>|> You are just trying to divert the attention from the US patent laws
>|> by claiming that AZT is next to useless. US is indeed a greedy landowner
>
>Fine. Since you brought up the question of whether or not US laws are 
>too monopolistic and anti-free-market, let me address that. The central
>idea that drives drug companies to do research and market their products 
>are the profits generated by marketing the products of their research. To 
>do research and develop a product takes millions (sometime billions) of 
>dollars, and the idea of providing a patent on the product before allowing 
>other producers with to manufacture it using the same basic research-results
>but a more efficient process from manufacturing it is to provide time for the
>original company to recover its investment. 
>

Your argument is eminently logical, if you limit the scenario to US.
Keep in mind that the investment that a company puts in developing a
drug in US is largely targeted to US consumers. All the tests are
carried out to satisfy the guidlines set up by the FDA, an American
agency. The costs that directly result from that are hence the cost a
company has already earmarked to be recovered by the sale of the drug
in US. The duties the drug company must pay the FDA that goes towards
contributions in Health care. The expensive process of testing and
other studies, the money spent for which benefits the American
economy.
	Also keep in mind that biggest cost factor in developing a drug
is the insurance cost against a possible lawsuit that can be brought
against a company by an individual and/or class action. It is the high
cost of litigation that is the major contributor to the cost for a
drug development. Though I have noything against high rates of
litigation in US. I personally believe that a high rate of litigation
in a country simply indicates a higher sensitivity towards personal
and individual liberties, as opposed to India where the concept is
quite non-existant. However the realities of the situation can not be
ignored by anyone who lables Indian patent laws as unfair. The drug
was not targetted for Indians and the costs involved in developing are
thus not responsiblities of Indian consumers. Thus extension of the US
pricing structure for AZT to India is unethical. Also Keep in mind
that an Indian drug user cannot bring a Class action suit against the
American drug company. 

>The Indian Government, in its wisdom (or lack thereof) has decided
>that product patents don't mean a damn thing and that only process
>patents matter. Is there something wrong with such an approach? You
>bet your bottom dollar there is. 
>
>Right now, when there are hardly any companies in India doing any serious
>research to develop drugs (whether a cause or an effect of the lack of 
>protection is a chicken-egg problem), the idea of no product patents
>on drugs is eminently sensible -- but only if you are afflicted with
>myopia. If there is no incentive for Indian companies to do R&D to
>develop drugs (which incentive is robbed by the lack of protection for
>the product), we will be permanently reliant on foreign companies, and
>on our ability to plagiarize things that some foreign company like B_W
>or B_M_S (Bristol Myers Squibb) have spent loads of cash on, for our
>drugs. We will also wind up earmarked as a bad nation to do business
>or any kind of R&D in (leaving our scientists to rot away in
>Government owned labs), and that can't help but be bad for us in the
>long run. 

Ah but you might be too simplistic to attribute the lack of serious
drug research in India to lack of (or inadequate) intellectual
property rights protection. Though I cannot say that I know the
reason(s) myself but I suspect that it has similar roots as the lack
of research in say computers, telecommunications or any of the other
fields Indian truly lacks. All I can say that over the years the
research activity in India has been dictated by social profits and
costs as opposed to economical reasoning. A wrong trend in my opinion
but one that cant be wished away. Though there has been a few
developments in India that are unparalled in the world in
pharmaceutical and health care (for instance development of morning
after birth control pills) which have had true need in Indian
scenario, I will be first one to admit that these have been few and
far in between. Coming back to the pharmaceutical problems, let me
assure you that any of the American/European drug comapny that
operates in India and manufactures drugs there under license
agreement, is doing so only after it has recovered its cost in its
native country. It is here just to maximize its profits. Thus any
company that develops or plans to develop a drug does not take the
sales in India for granted when it makes its cost accounting
projections. Though all of them would love to make the same profit
margins that they make in their own countries :-) I can say this from
my personal experience as my father was a marketting executive for
Pfizer India ltd. for quite some time.

	Earlier on I mentioned that the expectation of BM to be able
to charge the US pricing structure for AZT in India as unethical. I
will submit here that BM can charge the same price for AZT in India if
Indian citizen have access to American health care, and Legal system.
Since that is not concievable, the expectaions of BM can be labled as
unethical. Some coutries have arrangements with the US that are closer
to above, and these countries honour US patent laws. The coutries that
honour US patent laws but do not receive adequate compensation back
have gotten a raw deal. They have been sold by their leaders who were
myopic or who got somethig else in exchange. In any event keep in mind
that the US patent law business is only a bargaining chip in the
process of trade negotiation that US has with any country. When Japan
honours US patents for drugs (and it does not do so for other patents)
it assures itself a freer access to US auto market(say). Note that the
trade negotiations are very 'Real Politik' and ideology has no place
in it. Ideology is fed for simple people like you and me. 'Negotiations
cant be based on bottomlines' is the first law of negotiations. The
only bottomline, that is left unsaid and all involved parties
understand is to get maximum concession form the party accross the
table. 
		
	Hence BM was not crying about Indian patent laws for last
fourty years, even though it was doing business in India. It sudennly
cried out 'FOUL' recently because the Indians have become a
force(small but perceptible) in world drug business, as it started to
export to third world countries. This upset the North-South tarde
equation, at least in drugs and pharmaceuticals. This change will
obviously make the trade negotiators around the world sit up and
watch. The next round of trade talks are going to be really
interesting to see if the Indian and in general the third world
negotiator can upstage the North negotiators. However I have a feeling
that all this discussion may already be moot due to flurry of behind
the curtain activities in North countries. They are certainly more
organized and have some very able negotiators,(Carla Hills for
instance) but they have offlate also had their own bones to pick, and
the opening up of oppurtunities in eastern europe and formation of
Nafta have made major alteration to the global trade picture. In all
respectt the playing field is most even now then ever, though from
third world point of view, you always see that the cards are decked
against you. the countries that have played their cards right(Brazil
and Mexico) stand to gain a lot. I hope that Indians also position
themselves well. 
 

>|> >So let's cut the bleeding-heart nonsense of comforting the afflicted, that's
>|> >Mother Theresa's job.  Does a US company have the right to protect its 
>|> >product from a foreign manufacturer's replication, or does India have the
>|> >right to export (domestic use is almost irrelevant) a replicated product
>|> >and seize the profits thereof?
>|> 
>|> I think, the Indian patent law which goevrns just the process and not the
>|> product is much more progressive than the US patent laws and thus
>|> India should be allowed to export the replicated drug IF the process
>|> is found to be different.
>
>
>|> -Krishna.
>|> Opinions are mine.
>
>-- 
>Srinivas Sunder                                         sunder@crhc.uiuc.edu
>
>If my employer shares these views, I'd be most surprised.
>-----------------------------------------------------------------------------


Pankaj Tyagi

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