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ANNUAL NUMBER FEBRUARY 1962
THE ECONOMIC WEEKLY
Manufacture of Modern Drugs Forging Ahead
But Menaced by Patent Laws
Saheb Singh Sokhey
Major General Sokhey had already initiated the manufacture of sulpha and synthetic antimalarial
drugs when he was the Director of Haffkine Institute in Bombay. Deputed by the Government of India
to visit drug plants in Europe and America, he had worked in the Toronto University penicillin plant and
prepared detailed project reports and blueprints for setting up penicillin, sulpha drugs and anti-malarial
drug plants in India. The Government approved these projects but could not find the finance to implement them.
Later, when he joined WHO as Assistant Director General, Sokhey took the initiative on behalf
of W H O to provide the know-how and equipment to such member nations as desired to put up their
own penicillin plants. Thus with funds from W H 0 and V N I C E F, the Hindustan Antibiotics at Pirnpri was put up from the ready-made project report.
Through an uptodate though small, but technically highly efficient plant in Belgium, which came
forward to render necessary assistance to W H O, Sokhey could
work
out the detailed methods
for the commercial production of penicillin, streptomycin and aureomycin.
This was the first time that
these met/tods were ever written up; so far they had remained strict trade secrets. He also obtained work
ing cultures of the moulds for the production of these antibiotics. Copies of these documents and the
cultures were made available to Czechoslovakia, Poland, Soviet Union and China,
Three of these countries started producing streptomycin only after they received this material; the Soviet Union which had already taken up production was able to increase its yield ten-fold by using the mould cultures sent from
the Belgium plant.
This assistance, among other factors, brought back the Soviet Union and the People's Republics
in Eastern Europe to WHO from which they had resigned earlier because U S A, which had developed
production of penicillin and streptomycin, had refused to give know-how or even sell equipment.
After so much effort and waiting, is India to be deprived of the benefits of
of the Patent Acts ? The author is afraid that she might, considering the operation of
the Kefauver Committee in the U S A. Neither the one-man committee of Justice
into the Patents Act nor the Health Enquiry Committee presided over by Dr Mudaliar
adequate attention to the problem.
It was welcome news indeed, w h i c h
S h r i N Sen, C h a i r m a n of the
I n d i a n D r u g s a m i Pharmaceuticals
L t d , gave to a press conference at
M a d r a s the other day, t h a t w o r k on
the f o u r d r u g projects to be set up
in the p u b l i c sector w i t h Soviet collaboration w o u l d commence " i m m e diately", and the projected plants
w o u l d come i n t o o p e r a t i o n i n 1965.
Let us hope that he has been correctly reported, and t h a t Government give the w o r d " i m m e d i a t e l y "
the same meaning as we c o m m o n
citizens do, especially when it is the
question o f modern
l i f e saving
drugs.
Strong hope is needed, because u n f o r t u n a t e l y we remember
that S h r i M a n u b h a i Shah, U n i o n
M i n i s t e r for I n d u s t r y , had told us
at the 10th A n n u a l M e e t i n g of the
I n d i a n P h a r m a c e u t i c a l Congress at
B o m b a y something to the effect t h a t
Government h a d decided to set up
( t o take steps to set u p ) the necessary plants to make synthetic drugs,
v i t a m i n s , and a n t i b i o t i c s etc as a
State enterprise d u r i n g 1958! However, better late t h a n never.
We
are s t i l l dependent f o r o u r supplies
of antibiotics, 1 except f o r the small
quantities of p e n i c i l l i n made at the
State plant at P i m p r i , sulpha drugs,
v i t a m i n s and w h a t not, on foreign
countries.
The e x o r b i t a n t prices
charged p u t t h e m beyond the reach
of most of o u r people. Even the
p u b l i c hospitals cannot use some of
these drugs, especially the important broad-spectrum antibiotics, unless the patients can afford to pav
for them w h i c h of course most of
them
cannot, and
deaths
result
w h i c h could otherwise be prevented.
The Plants
The largest o f the f o u r plants w i l l
be the a n t i b i o t i c p l a n t at Rishikesh
(UP).
I t w i l l produce
all the
usually used broad-spectrum antibiotics, such as a u r e o m y c i n , tetra1
Since 1958, several production units
have been started in the private sector e g, Standard Pharmaceutical,
Pfizer, etc.
235
cheap drugs because
patents disclosed by
Ayyangar to enquire
seems to have given
m y c i n , Chloromycetin, tetracycline
etc and also p e n i c i l l i n and streptom y c i n and any other antibiotics that
may be f o u n d to be of use by the
t i m e the p l a n t goes u p . Of course,
the plant w i l l have the facilities to
discover new antibiotics and to put
them into p r o d u c t i o n . At present a
p r o d u c t i o n of 300 tons a year is
planned, b u t the p l a n t is so designed
that it could be easily enlarged to
increase p r o d u c t i o n to twice that
q u a n t i t y . T h i s p r o d u c t i o n would
f u l l y meet the needs of the expandi n g health organisations and the
needs of a n i m a l husbandry.
It is to be noted, however, that
after the M i n i s t r y o f I n d u s t r y had
obtained the consent of the Soviet
Government to put up the a n t i b i o t i c
plant in the p u b l i c sector it gave
licences to t w o A m e r i c a n firms —
Pfizer and Squibbs—to p u t up two
plants to manufacture tetracycline.
It is to be hoped that these
A m e r i c a n firms w i l l put up the
plants
actually
to
manufacture
A N N U A L NUMBER FEBRUARY 1962
and not use their licences merely
to provide themselves w i t h a channel to b r i n g i n t o I n d i a ready-made
penultimate products f r o m U S A
to queer the p i t c h for the State
plant.
A synthetic d r u g p l a n t at Hyderabad, w i l l produce 800 tons a year
o f twenty drugs named b y the M i n i s t r y of I n d u s t r y . O r i g i n a l l y the
Soviet and I n d i a n experts h a d suggested some 2500 o d d tons of 52
drugs or so. The drugs removed
f r o m the Soviet project w i l l now be
made, we are t o l d , by private firms.
A plant w i l l be put up at Neriamangaiam in Kerala, to make drugs
f r o m medicinal plant i n w h i c h I n d i a
is p a r t i c u l a r l y r i c h . West Bengal
and K a s h m i r Governments are already cultivating these plants, and
should prove of great assistance to
the Kerala plant for o b t a i n i n g its
raw material.
Collection o f w i l d
plants is not a sound proposition as
the supplies r e m a i n uncertain and
the strength of the active p r i n cipals varies enormously. W h e n resort is had to cultivation, plants w i t h
good quantities of the desired p r i n cipal can be m u l t i p l i e d at w i l l . This
plant w i l l make large quantities of
caffeine and a large number of other
alkaloids used in medicine.
Then there w i l l be a plant at
G u i n d y . Madras, to make surgical
instruments. I t w i l l produce surgical instruments and such useful
things as syringes and needles by the
million.
Exorbitant Prices under Patent
Monopoly
A l l the four plants w i l l cost about
35 crores of rupees to b u i l d and of
this sum the Soviet U n i o n is p r o v i d i n g a credit of 80 m i l l i o n roubles
(about 10 crores of rupees) f o r the
equipment and technical services,
but w i l l provide all know-how ent i r e l y free of charge and w i l l t r a i n
hundreds of scientists and technicians in plants in the Soviet U n i o n ,
so that Indian personnel can take
f u l l charge of the plants f r o m the
w o r d go. At the time when the
Soviet D r u g Project was d r a w n up in
1956, it was estimated that these
plants w o u l d save the country over
Rs 35 crores w o r t h of foreign exchange a year.
Now that the p u b l i c sector and
the private industry are planning to
THE ECONOMIC WEEKLY
make in the country all essential
drugs like antibiotics, vitamins, synthetic drugs, alkaloids etc, and make
the country self-sufficient and independent o f i m p o r t s f r o m foreign
countries, it w o u l d be possible to
p r o v i d e them at reasonable prices,
somewhere near the cost of production.
B u t the development of a l l
industries and the prices of their
products, p a r t i c u l a r l y those of the
d r u g industry, are affected by the
patent laws in force hi the country.
Under the existing law even when
we p u t up our o w n plants we shall
have to pay royalties to foreign
firms who have taken out patents on
the processes of m a k i n g drugs, even
though we shall not go to them f o r
know-how, w h i c h is going to be
made available to us free of charge
by Soviet Union in this case. Besides charging royalties, the patentees usually impose a
number of
other terms in their licences w h i c h
enhance prices. B u t since our Government is undertaking i n d u s t r i a l i sation on a large scale and would
not l i k e its development to be h i n d ered by the existing patent laws,
and especially as they w o u l d not like
the patents to add to the cost of
drugs, they appointed a one-man
Committee of S h r i Justice Rajgopala
Ayyangar
in 1959 to see if our
Patent Act was conducive to national
interests and to make necessary recommendations.
Kefauver Committee Report
Justice A y y a n g a r submitted his
report in September 1959 covering
the p r o b l e m of patents in all industries including the d r u g industry.
B u t later, on June 27, 1 9 6 1 , was
published the Report of the A m e r i can Senate Committee,
under the
Chairmanship of
Senator Estes
Kefauver, on Administered Prices
in the D r u g
I n d u s t r y (Report
No. 448, 8 7 t h Congress).
This
Senate Committee had conducted
a very exhaustive e n q u i r y i n t o
all
aspects
of
ethical
drugs,
that is, drugs not advertised to the
l a y m a n , but sold only on the presc r i p t i o n of a physician. T h i s enq u i r y lasted over two years d u r i n g
which numerous
public
hearings
were held, at w h i c h leading professors f r o m medical schools, research
scientists, and the representatives of
leading d r u g manufacturers of the
U n i t e d States gave evidence and had
their f u l l
say. The Committee's
236
report throws a flood of l i g h t on the
practices of the d r u g manufacturers
and how they exploit d r u g patents
to r i g i d l y control the m a r k e t to
make excessive profits—more t h a n
double of those made by the U S
manufacturing industries as a whole,
i n c l u d i n g o i l steel, automobiles and
chemicals.
Justice A y y a n g a r d i d not have the
benefit of the findings of this American enquiry, and he himself could
not have conducted a w o r t h w h i l e
enquiry i n t o the operation of patents
in the d r u g i n d u s t r y . He d i d not
have the facilities, very largely because there is yet l i t t l e or no d r u g
industry in I n d i a to investigate.
But now that the findings of this
very exhaustive American e n q u i r y
are available they should be given
due weight in the d r a w i n g up of the
clauses r e l a t i n g to patents in drugs
i n our new Patent B i l l .
India the Victim of Drug Patents
Senator Kefauver Committee cites
I n d i a as an example of the disastrous
effect of patents 2 on the prices of
drugs. I t says:
"India which does grant patents
on drugs' provides an interesting
case example.
The prices in India
for the broad spectrum antibiotics,
aureomycin and
achromycin
are
among the highest in the world.
As a matter of fact, in drugs generally, India ranks among the highest priced nations of the world—
a case of an inverse relationship
between per capita income and the
level of drug prices"
(Italics
mine).
Kefauver Committee p a i d special
attention to the production and sale
of antibiotics, corticosteroids, o r a l
antidiabetics and tranquilizers w h i c h
constitute in money value the largest
p o r t i o n of the total sale of drugs in
the U n i t e d States.
A n t i b i o t i c s account for more than
h a l f of the total ethical d r u g sales,
and tetracycline, one of the broadspectrum antibiotics, accounted in
1956 for 24 per cent of the industry's
3
It should be understood we are not
talking of patent drugs, but of easen'
tial drugs which are sold to patient'
only on doctors' prescription and are
advertised only .in medical journals.
These drugs are produced by processes
which are patented by the inventors
under the Patent Act.
THE ECONOMIC WEEKLY
Sales. T h e practices of the manufacturers of broad-spectrum antibiotics reveal some of the worst features
of the d r u g trade. Three of the
broad-spectrum antibiotics are p r o duced and sold exclusively by one
company—aureomycin b y A m e r i c a n
Cyanamid, Chloromycetin by Parke
Davis and t e t r a m y c i n by Pfizer.
A n d tetracycline i s produced b y
three; companies B r i s t o l , A m e r i c a n
C y a n a m i d and Pfizer—and is sold
by five companies under five different brand names, i e A c h r o m y c i n ,
T e t r a c y n , Polycycline Stecline a n d
P a r m y c i n . A l l these antibiotics, the
Committee f o u n d , are sold ( 1 9 6 0 )
by these companies to the druggists
at exactly the same price of 8 5.10
for 16 capsules of 2 5 0 m g . each w i t h
suggested price of $ 8.50 to the consumer. T h e Committee at a lavish
estimate calculates the cost of the
p r o d u c t i o n o f tetracycline i n 1958
at 46 cents f o r 16 capsules, and this
gives a m a r k up above cost of 1,730
per cent to the consumer, i e more
than 17 times the cost of p r o d u c t i o n .
The Committee notes the fact
that in 1959 the same firms sold 16
capsules to chemists in I n d i a , w h i c h
grants p r o d u c t patents, at $ 6 . 5 0 ,
and to chemists in A r g e n t i n a , w h i c h
controls d r u g prices, at 8 1.19, i e
134 per cent and 23 per cent respectively of the U n i t e d States p r i c e .
The representative of the A m e r i c a n
C y a n a m i d admitted at the hearing
that they made a p r o f i t even at the
sale price of 8 1.19,
The most serious feature of the
sale of aureomycin, Chloromycetin,
t e r r a m y c i n and tetracycline, which
are produced under patents, is that
their unreasonably h i g h prices have
been kept unaltered between 1951
and I 9 6 0 — o n l y recently a reduct i o n of 15 per cent has been made
— w h i l e d u r i n g the same p e r i o d the
b u l k prices of
unpatented antibiotics
pencitlin
and
streptomycin,
have fallen f r o m 25 cents to 2.1
cents per mega u n i t and f r o m 32
cents to 3.6 cents per
gramme,
respectively.
In August 1961 the Justice Dep a r t m e n t o f U S A , o n a charge o f
conspiracy to fix prices a n d l i m i t
competition, won a grand j u r y i n d i c t m e n t against three of the nation's
largest a n t i b i o t i c producers and t h e i r
chief executives — A m e r i c a n Cyanam i d , Charles Pfizer and BristolM y e r s . T h e y were also charged by
ANNUAL NUMBER FEBRUARY 1962
the Federal Trade Commission w i t h
h a v i n g submitted false affidavits to
get the patent f o r tetracycline. As
a
result of these arrangements,
says the Government,
Cyanamid,
Pfizer and Bristol-Myers were able
to m a i n t a i n "non-competitive and
unreasonably h i g h p r o f i t s " for a l l
their broad-spectrum antibiotics. The
case has now gone to court and d r u g
companies are liable to be fined up
to $ 150,000 each, and their executives may get as much as one year
i n j a i l plus $ 5 0 , 0 0 0 f i n e each.
Corticosteroids and Oilier Drugs
The Committee took up prednisolone and prednisone as t y p i c a l
examples of corticosteroids.
Prednisolone, an a n t i - a r t h r i t i c d r u g much
in demand, synthesised and patented by Schering Corporation in comp e t i t i o n w i t h Merck's cortisone is
marketed under the b r a n d name of
Medieortclone.
Schering licensed
U p j o h n Company to make it for
them, who charged them $ 1.19 per
100 tablets of 5 mg carh.
Schcring's cost after b o t t l i n g came to
$ 1 . 5 7 per bottle of 100 tablets.
They sold it to wholesalers at $ 14.32
who retail it to the druggists at
$ 17.00 w i t h a suggested price to the
consumer of 8 29.83 per bottle—a
mark up above cost of 1.800 pei
rent to the consumer, i e, 18 times
the cosl of production.
The same
d r u g is sold by arrangement with
Schering under a variety of other
brand
names by U p j o h n
(Delta'
C o r t e l l . Merck ( H y d e l t r a ) , Pfizer
(Stccane) and Parke D a v i s (Para
C o r t e h all at the same wholesale
and suggested retail and consumer
prices as indicated above. The rase
of prednisone is identical. It is
made by Syntex and sold bv different firms under different brand
names w i t h a mark up above cost of
1,982 per cent to the consumer, i e
a p p r o x i m a t e l y 20 times the cost of
production.
Stranger still, a 100 tablet bottle
of this d r u g , w h i c h is sold by
Merck to the druggists in U S A
at $17.00 is sold by the same firm
in England for $7.53 and in T o k y o
for $ 27.78, i e, 42 per cent and
155 per cent respectively of the
Urr/ted States price.
O r a l antidiabetics and t r a n q u i l i zers also t e l l the same tale. O r a l
antidiabetic tolbutamide i' marketed
by U p j o h n under the b r a n d name of
"Orinase" and sold to t h e consumer
237
at over 17 times the cost of production. S i m i l a r l y , meprobamate, a widely used m i l d tranquilizer, is marketed
by Carter Products under the b r a n d
name of M i l t o w n and by A m e r i c a n
Home Products under the brand
name of E q u a n i l , and both are sold
to the consumer at about 15 times
the cost of p r o d u c t i o n ' Note again,
that Carter, who sell a bottle of 50
tablets t o druggists i n U S A f o r
$3.25 sell it
to the druggists in
A r g e n t i n a for $0.75, i n England f o r
$ 1 . 4 8 and in I n d i a f o r $ 4 . 7 9 , i e
23 per cent, 45 per cent and 147
per cent of the A m e r i c a n p r i c e respectively.
Prices' in Countries with and without
Patents
The Committee finds that d r u g
prices tend to be substantially higher
in countries w h i c h a w a r d patents on
d r u g products as compared w i t h
those w h i c h do not. Of the 17
foreign countries for w h i c h usable
price i n f o r m a t i o n was obtained for
the Committee. 6 grant patents on
d r u g products; w h i l e 11 do not. In
these countries, in the case of 12
drugs (selected by the Committee
for their (importance) prices were
higher by 118.2 per cent to 355.0
per cent in countries w i t h product
patents-. To take a few examples:
Rhone Foulejie of France sells
prochlorperazine
(Compazine)
50
tablets of 25 mg each for $3.03 in
U S A I through S m i t h K l i n e and
French!, f o r $ 1.61 in Belgium but
f o r only 80.80 in France. American
Home
Products
sells Promazine
(Sparine) at $ 3.00 in U S A, at
$ 3 . 1 5 in Canada and at 8 1 . 3 2 in
Italy.
American Home Products
sells M i l t o w n for $ 3,25 in Belgium,
for $ 1.77 in Italy and for only
$ 1,38 in Germany. Ciba of Switzerland sells Serpasil for $ 4 . 5 0 in
USA
hut o n l y for $ 1.05 in Germany and $ 0.83 in France.
The difference in prices between
Brazil and Panama, both under-developed and close to U S A — Brazil
does not a w a r d patents in drug: pro
ducts while Panama does — makes
the contrast s t r i k i n g . M e t i c o r t r n .
B r a z i l $ 14.15,
Panama $ 2 2 . W :
M i l t o w n , B r a z i l 8 2.20, Panama
8 4 . 7 9 : Chlorpropamide (Diahinesc)
B r a z i l 8 4.59.
Panama $ 6.64;
Penicillin V
(V C i l l i n ) .
Brazil
88.67, Panama 8 15.00; Achromyc i n , B r a z i l 83.40 Panama 8 5.40.
A N N U A L NUMBER FEBRUARY 1962
T h e Committee gives several other
examples and in each case the
p r i c e i s higher i n Panama t h a n i n
Brazil.
Research Expenses Not a Factor in
High Prices
Research expenditure is often cited
as the p r i n c i p a l j u s t i f i c a t i o n f o r h i g h
d r u g prices, but the Committee shows
this contention to be u t t e r l y unfounded.
Detailed financial statements of 22 leading A m e r i c a n d r u g
companies for 1958 showed that they
spent as l i t t l e as 6.3 per cent on r e '
search and as much as 24,8 per cent
on advertising and sales p r o m o t i o n
of their $ 2.3 b i l l i o n income f o r the
year.
Eleven of these companies
spent 5 to 11 times as much on advertising and sales p r o m o t i o n as they
d i d on research. Even them most of
this small sum is directed to achieve
slight molecular modifications j u s t
enough to get a patentable derivative of an effective a n d already w e l l
established d r u g . N o t m u c h attent i o n is p a i d to basic research; as
l i t t l e as 1 per cent of the research
funds are directed to i t . The Committee says, in U S A resources are
directed at w r o n g objective'' w i t h
the result that the physicians are
snowed under large
number of
drugs o f miserable q u a l i t y w i t h
b u i l t in obsolescence which sell f o r
a l i t t l e w h i l e and then disappear
f r o m the market.
Advertising and Sales Promotion
The U n i t e d States d r u g industry
spent in 1958 as m u c h as $ 750 m i l l i o n on advertising and sales prom o t i o n , while the t o t a l budget of
a l l the medical schools in the U n i t e d
States in 1957 was o n l y $ 2 0 0 m i l l i o n . These very large amounts are
spent by d r u g firms on frequent
visits of salesmen to p r a c t i s i n g phy-'
sicians. p r i n t i n g of circulars and
brochures, advertisements in medical journals and on e x h i b i t i o n s . The
worst aspect of the whole advertisi n g business is that b a r r i n g the
literature of a few companies- the
brochures, circulars etc are misleadi n g i f not u t t e r l y false. A s many
as 300 medical journals published
in the U n i t e d States are sustained
almost entirely by d r u g advertisements. They readily seem to publish almost a n y t h i n g sent to them on
behalf of advertising companies. A
witness said that some drug companies get a j u n i o r physician to
make observations on the use of a
THE ECONOMIC WEEKLY
new d r u g and his sketchy a n d unc r i t i c a l data are t u r n e d over to the
company. There a medical w r i t e r
e m p l o y e d by the Company writes the
paper w h i c h is sent back to the o r i g i n a l physician f o r p u b l i c a t i o n . A s
soon as the paper is published its
contents become a u t h o r i t a t i v e in the
eyes of most physicians, they are
extensively used by companies
in
their brochures a n d circulars. The
postage alone costs the companies
$ 12 m i l l i o n a year. T h i s sum could
enable the U n i t e d States to b u i l d 3
large hospitals a year. Better s t i l l ,
i f p r i n t i n g o f these brochures and
circulars etc, was not undertaken at
a l l the U n i t e d States could b u i l d
50 large new hospitals a year f r o m
the money so saved. A n d a l l this
wasteful expenditure i s i n d u l g e d i n ,
not to i n f o r m the physicians b u t to
mislead them.
T h e attempt is to
brainwash them t o t h i n k i n terms o f
b r a n d names of drugs. and to automatically prescribe in b r a n d names
rather than in generic names of
drugs, and thereby e x p l o i t the patent
monopolies to charge v e r y h i g h
prices.
Patent System Detrimental
Even his o w n investigations led
Justice
A y y a n g a r to say
that
"Although
the
Patent
System
in
India has been in existence for over
100 years it has failed to serve its
object which is to benefit the trade
and industry of this country and the
System has been generally detrimental to the national economy.
Over
85%
of the patents granted (almost
100% for essential drugs) are owned
by foreigners" (Italics m i n e ) . A n d
in spite of his considered view that
the considerations w h i c h are said to
constitute quid pro quo for the errant
nf patennt monopoly do not benefit
I n d i a , he suggests that the patent
system should not be abrogated but
continued w i t h s u i t a b l e m o d i f i c a t i o n ' '
because according to h i m "notwithstanding the
handicaps which
the
Patent System involves in underdeveloped countries, the system
con-'
tinues to be still the best method of
encouraging.
inventions and has been
universally adopted"
(Italics m i n e ) .
Patents Do Not Encourage
Inventions in Drugs
The Kefanver Committee after a
very exhaustive enquiry such as was
not w i t h i n the reach of Justice
Ayyangar, emphatically controvert
238
his v i e w .
The
Committee says:
"The conclusion would appear to be
warranted that in this industry the
mere existence of patent protection
is not a guarantee of invention, nor
is its absence much of a
barrier"
( I t a l i c s m i n e ) . The Committee lists
and groups i n t o t w o classes a l l the
drugs invented since 1875 w h e n the
patent system was first introduced,
that is those made in
countries
w i t h o u t a n d w i t h patents. I t f i n d s
that "drugs discovered in foreign
countries w i t h o u t p r o d u c t patents
outnumber those discovered in countries w i t h such protection, i n the
order of 10 to I" They f u r t h e r
find it " s u r p r i s i n g that a large "number of the most i m p o r t a n t drugs
and the most w i d e l y used (drugs)
i n the w o r l d were discovered i n
countries w h i c h have never awarded
patents on pharmaceutical products".
W h a t i s s t i l l more significant, a l l
the great d r u g break-throughs of
modern times such as i n s u l i n , v i t a mins, the first sulpha d r u g (sulphan i l a m i d e ) a n d the first a n t i b i o t i c
(penicillin)
were discovered in
public
laboratories by
scientists
who were not w o r k i n g for monetary
gain, and d i d not take out patents.
As regards the U n i t e d States the
C o m m i t t e r notes that the U S A
has made some outstanding discoveries in drugs only since 1939.
I t raises the i s s u e that " i f patents
are in fact the key to the u n l o c k i n g
of new d r u g discoveries w h y has it
functioned effectively in this, c o u n t r y
only for the
last 20 years? F o r
over a century foreign countries
w h i c h do not grant patent protection
have been m a k i n g i m p o r t a n t new
discoveries.
T h e fact that they
were d o i n g so p r i o r to the last 20
years white the U n i t e d States, w h i c h
has granted f u l l patent protection
since 1790, was f a i l i n g to develop
an i m p o r t a n t d r u g industry of its
o w n o n l y serves to cast further
doubt on the essentiality of patent
grants to scientific progress in this
country."
No Reward for the Inventor
T h e beneficiary of the patent
g r a n t ' has become the c o r p o r a t i o n .
not the i n d i v i d u a l
inventor. T h e
situation today is very different f r o m
w h a t it was three hundred years ago
when E n g l a n d introduced the natents system to encourage inventions
b y r e w a r d i n g inventors. T h e n there
were no p u b l i c laboratories and no
THE ECONOMIC WEEKLY
ANNUAL NUMBER FEBRUARY 1962
239
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THE ECONOMIC WEEKLY
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THE ECONOMIC WEEKLY
b i g industries. Inventions were made
by i n d i v i d u a l s at their o w n expense
of time, effort and money. T h e y were
given the monopoly r i g h t t o e x p l o i t
their inventions to their o w n financial advantage for 15 years or so
b o t h to encourage them to make
m o r e inventions and to induce them
to disclose the secret of their i n ventions by m a k i n g them file patent
specifications.
Today technology is
so h i g h l y developed and the cost of
p u t t i n g up plants so huge that no
i n d i v i d u a l scientist can undertake
research or manufacture on his o w n .
He has to take up a j o b w i t h one
of the b i g corporations or in a public
l a b o r a t o r y and has to agree in
w r i t i n g to assign all his inventions
to his employers. T h u s his
work
becomes a p a w n in the business
s t r u g g l e ; and the nature and q u a l i t y
of his w o r k — i n c l u d i n g the lines
of enquiry he m a y f o l l o w — are
largely dictated by the expectations
of businessmen untrained in science,
as to what areas appear to h o l d the
greatest
promise
of
commercial
gains.
The extent to w h i c h the patent
has been transformed in the drug
i n d u s t r y f r o m a r e w a r d to the ind i v i d u a l inventor to an instrument
of market
control can be seen
through a delineation of the various
ways in w h i c h patents have been
used to l i m i t c o m p e t i t i o n . In some
cases the exclusion of competition
is total, in others it licenses one
other firm establishing a " d u o p o l y " .
In still others several large firms
become licencees creating oligopoly,
when several firms apply for a
patent, and they m u t u a l l y agree to
work together. Patents are also used
to establish
international
cartels.
Only Solution
Senator Kefauver public hearings
have started
public agitation in
America for the abrogation of d r u g
patents. Indian scientists have been
recommending
s i m i l a r action for
several years.
The 20 year old
Pharmaceutical and D r u g Research
Committee of the Council of Scientific and I n d u s t r i a l
Research of the
Government of I n d i a , on w h i c h
are represented i m p o r t a n t agencies
engaged in research on and the
manufacture of drugs, both in the
public and private sectors, have
d u r i n g the last several years unanimously passed
resolutions
asking
Government to abrogate d r u g pat-
ents. S i m i l a r l y the Panel of Scientists of the P l a n n i n g Commission
called to consider Justice A y y a n g a r ' s
recommendations expressed the view
that the m i n o r changes suggested by
Justice Ayyangar i n d r u g
patents
d i d not meet the situation and 47
out of 50 members attending considered that i n the new Patent B i l l
inventions
r e l a t i n g to drugs and
foods should be
made non-patentable,
both as regards the product
and the process, in the same way as
Justice Ayyangar has recommended
in the case of inventions in the field
of atomic energy.
A n y permissive
law w h i c h abolishes only product
patents no matter how strict, w o u l d
s t i l l leave the way open f o r powerful r i c h firms, who own 100 per
cent of the patents on
essential
drugs, to exact exorbitant royalties,
or to conduct protracted l i t i g a t i o n
in courts to delay and damage the
development of the d r u g industry.
There are no
international patents, Each country enacts patent
laws to suit its own needs. Thus
there is no obstacle to the abrogation
of d r u g patents and there are excellent precedents. Most countries of
the w o r l d do not grant product patents, while I t a l y does not grant
either product or
process patents,
and of course no socialist
country
does either.
Abrogation of Patents Imperative
Now is the time to set the matter
r i g h t . The country is m a k i n g a
great effort to attain self-sufficiency
i n drugs and a new Patents B i l l is
in the offing. We should see to it
that inventions relating to drugs and
foods are made non-patentable both
as regards the product and process.
If the d r u g patents are not abrogated we shall have to pay crores
of rupees every year as royalties to
foreign firms which own almost 100
per cent d r u g process patents. And
the licences they will issue w i l l for
certain impose onerous terms which
w i l l make as part of their drug
racket.
The new d r u g plants w i l l be
b u i l t w i t h Soviet know how to be
provided to us
entirely free of
charge and by our own efforts; the
patent holders w i l l contribute' nothi n g . We must avoid such unpardonable waste of foreign exchange as
is involved in the agreement entered
i n t o by the M i n i s t r y of Commerce
241
and I n d u s t r y w i t h M e r c k . W e shall
have to pay them almost 2 crores
of rupees in dollars for the supply
of know-how to produce streptomycin at Hindustan Antibiotics, P i m p r i ,
although no v a l i d patents exist to
entitle M e r c k to demand this royalty.
A n d w h a t is worse, under the terms
of the licence, we are debarred f r o m
e m p l o y i n g any scientist or a l l o w i n g
anyone to enter the plant unless he
is screened in accordance w i t h the
conditions dictated by M e r c k . T h i s
in spite of the fact that our Government accepted the collaboration of
W H O and the U N I C E F under
a solemn c o m m i t m e n t to keep the
plant open so that any
country
whatsoever either of its o w n or at
the i n i t i a t i v e of these i n t e r n a t i o n a l
bodies, could send their technicians
to the plant for t r a i n i n g w i t h o u t let
or hindrance. The Soviet U n i o n had
agreed to provide know how e n t i r e l y
free of charge long before M e r c k
was brought into the picture. Even
I was in a position to provide the
know-how as I provided it to f o u r
countries in 1052 and helped them
to take up the p r o d u c t i o n of streptomycin. However, the Soviet U n i o n
w i l l now help us to b u i l d a very
large a n t i b i o t i c plant at Rishikesh
which w i l l produce 300 tons of all
antibiotics i n c l u d i n g streptomycin
and w i l l provide all know how free
of charge and yet oddly enough we
shall s t i l l he paying royalties to
Merck.
If the d r u g patent' are abrogated
by the time the new d r u g plants in
the public sector begin to function,
and we are thereby freed f r o m the
obligation to pay royalties and to
comply w i t h the terms likely to be
imposed by foreign patent holders,
our plants w o u l d be in a position
to sell broad-spectrum antibiotics
and other modern life-saving drugs
mentioned at
something like 1 / 1 0
(one-tenth) of the present .selling
prices. Otherwise' the royalty we pay
w i l l add enormously to the cost of
drugs to o u r people. Drug: industry
w i t h o u t doubt is the one field of i n dustrial
endeavour
from
which
profit should be kept out.
more
p a r t i c u l a r l y in a poor country like
ours. Even in U S A, the richest
country, the
Kefauver
Committee
considers "profits might also be expected to be relatively smaller'' as
drugs "deal quite literally in matters
o f l i f e and death,"
ANNUAL. NUMBER FEBRUARY 1962
THE
242
ECONOMIC
WEEKLY

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