Many basic, life-saving medications remain unaffordable in low- and middle-income countries. Spurred on by that fact, Yusuf Hamied, chairman and managing director of Cipla Pharmaceuticals, has steered his enterprise to the forefront of global pharmaceutical development by manufacturing low-cost drugs for diseases like AIDS, diabetes and arthritis, among others.

Cipla has faced challenges in India and abroad from multinational pharmaceutical companies looking to protect their patents on particular medications, including antiretroviral drugs used to combat HIV infections in countries like South Africa, where access is severely limited by the annual per-person cost of US$10,000 to US$15,000. Most recently, the Delhi high court awarded Cipla the right to continue selling a low-cost generic equivalent of the lung cancer drug Tarceva following a patent-infringement suit by the drug’s manufacturer, Swiss pharmaceutical company Hoffman-LaRoche.

Born in Lithuania but raised in Mumbai, Hamied received a PhD in chemistry from Christ’s College, Cambridge University. In 2005, the Indian government gave him the Padma Bhushan award, one of the country’s highest civilian honors.

In an interview with India Knowledge at Wharton, Hamied describes his company’s skirmishes with multinationals looking to protect their patents on particular medications and explains why rules governing intellectual property rights in industrialized nations should not apply to poorer countries.  

India Knowledge at Wharton: What are the key lessons to be learned by Indian lawmakers from the controversy in AIDS-ravaged South Africa?

Yusuf Hamied: The controversy in AIDS-ravaged South Africa gives you a glimpse of what’s in store in a monopoly. India must seriously examine its Intellectual Property Rights (IPR) position and see how best TRIPS (Trade Related Intellectual Property Rights) can be interpreted, as IPR laws are national laws. India should cull the best points from various laws to suit her future needs. For example, American patent laws include the Bolar Provision, so that generic companies can have products ready for sale as soon as a patent expires. Compulsory licensing is valid under TRIPS and can be invoked when there is a national emergency. But diseases like malaria, tuberculosis and leprosy are permanent, perpetual and even perennial emergencies in countries like India, and I’d say that we need a system of automatic license of right for a fixed royalty to the patent holder (typically, about 2% to 4% of net sales).

In fact, many of these issues were raised in the I.K. Gujral Committee Report in 1993. The committee was of the opinion that India should insist on automatic licensing in certain circumstances, besides recognizing the need that countries at different stages of development need to be treated differently.

India Knowledge at Wharton: Are you suggesting that India reconsider TRIPS itself?

Hamied: I’d suggest a “TRIPS north” and a “TRIPS south,” where the north comprises 600 million people in the developed world while the south comprises the 3 billion people of the Third World. The rules of industrial nations should not necessarily apply to poorer nations. Ninety percent of the profits of multinationals are made in the north and not the south, and that’s what constitutes the R&D component [for these companies]. In fact, I would go so far as to say that if TRIPS is not changed, India and other like-minded countries should walk out of the WTO and form the TWTO (Third World Trade Organization).

India Knowledge at Wharton: The WTO supports legal protection of intellectual property rights of multinational pharmaceutical patents, as does the U.S. government, which is strongly lobbied by the multinational pharma industry. Then we have the UN, which is slow when it comes to fighting for the have-nots to ensure that they have access to reasonably priced generic medication. On the other hand, we see World Health Organization endorsing your generic drugs for quality and approving processes used in generic factories. Where do you stand in this difficult situation?

Hamied: Only once a patent expires in a particular country can that product be manufactured in the country. “Generic” is “post-patent” — or, by extension, off patent, and therefore non-monopolistic. This question of monopoly of drugs in the future — if the Americans, Europeans and Big Pharma get their way — could be a disaster for the third world.

India Knowledge at Wharton: With the re-introduction of patent rights in 2005 in India, what happened to the companies that sprouted up after 1972, when generic copies were legalized? What happened to Cipla’s production of generic drugs? Did it come to a grinding halt? If you are still producing, is it now illegal?

Hamied: No. The cut-off point is 1995: It is legal to replicate any drugs invented and patented in India pre-1995, but post-1995 it is not permitted. However, the drugs invented after 1995 will only enter the market around 2012-2015, which is when we will begin to feel the pinch. Currently, in the Third World, older drugs don’t die. They coexist with newer ones. As patents expire, we acquire the legal right to manufacture off-patent drugs, making it a continuous process.

India Knowledge at Wharton: There have been a number of new judgments related to intellectual property protection that Cipla contributed to, such as your win over Roche that ensured an uninterrupted supply in India of a low-cost medicine for treating lung cancer. What do you think about the country’s evolving IP legislation?

Hamied: I’m told that the judges and staff at the patent office have been trained by American officials, which means that they will be blinkered. But I am particularly interested in these questions: How is it that so many health care patents have been granted in such a short time period? Are the patents properly examined? Just because a patent is granted in Europe or America, does that mean it passes the Indian Patent Law, which is different?

These questions are of particular relevance to the new clause 3d in the Indian Patent Act (which refuses patent protection to new forms, uses or minor modifications of existing drugs unless they differ significantly with regard to efficacy). Approximately 7,000 patents were filed before clause 3d [came into existence]. In the presence of this new clause, 60% of these patents are not valid. Why aren’t they voluntarily withdrawn? It is only fair that those who filed for these patents revise them.

India Knowledge at Wharton: Why do you think the Government is bringing changes to the IP regime?

Hamied: If you ask the Indian government, they have a ready answer: “We can’t upset the international community.” I told them, “But gentlemen, the patent law is a national law. How are you upsetting the international community when India’s overall international trade is 0.8% of world trade? We’ll reach 1% by 2010. What is the big deal? Who is benefitting?” While the world [pharmaceutical] trade market is pegged at US$700 billion, India stands at a mere US$7 billion…. I am not against patents, but India cannot afford them. I am against monopolies.

India Knowledge at Wharton: Can drugs from Big Pharma reach all of India?

Hamied: They can only do so in an aura of monopoly. That is why [multinationals] gave up India in 1972. We didn’t reach this position overnight. It took 10 to 20 years for Indian companies to grow. Right now, we are in a period of stabilization. The multinationals will stand to gain when we start losing out. The cutoff date is 2012 or 2015, when patents for older drugs die and newer drugs, which doctors will want to use, enter the market. And that is when I will say that the Indian government has committed selective genocide in India.

India Knowledge at Wharton: In your opinion, how does India balance the rights of a patent holder while providing affordable health care for all?

Hamied: The fact is that health care in India has always been in a state of perpetual crisis. The disease profile is frightening: 80 million cardiac patients, 80 million affected with mental illness, 60 million diabetics, 50 million asthmatics, 50 million hepatitis B cases, and one in three Indians is a latent carrier of TB. The World Bank has said that India will have 35 million HIV cases by 2015, approximately half of all the AIDS cases in the world. Given these facts, the patent regime in this country should be so devised that utmost priority is given to secure the people’s right to access affordable, quality health care without monopoly. This can be achieved by an automatic license of right with a suitable royalty payment on net sales to the innovator. Even a developed country like Canada followed this policy from 1969 to 1992, under the Canadian bill S-91.

Apart from this, if at all, the government should only allow patents filed after January 1, 2005, [to be considered] product patents. (As a member of the WTO, India set a goal to make its patent legislation TRIPS-compliant by January, 2005.) Also, problems such as “evergreening” (when innovator pharmaceutical companies abuse the patent and regulatory systems to delay the legitimate entry of generic competition) and frivolous patenting should be carefully reviewed. Compulsory licensing provisions have to be favorable for the indigenous industry, as also patenting by Indians internationally. Importation of a patented product alone should not be considered as operative of a working patent.

We need to take a closer look as to what is best for India. One cannot have the same laws for 600 million people in the developed world and 3 billion people in the Third World. Globalization of health care does not mean that the sick and needy are denied access to drugs at affordable prices.

India Knowledge at Wharton: How do you explain this to politicians and policy makers?

Hamied: I try. I’ll give you an example of what happened to me. All over the world, we [offer] a certain medicine that stops AIDS transmission from mother to child, free of cost. I showed it to an Indian politician several years ago. He asked me if I give this drug free of cost, and I said “yes.” Do you know what his response was? “You must have an ulterior motive.” I laughed and said, “Yes, I do have an ulterior motive. I want to do some good before I die. I am not going to take any of this [with me] when I die!”

You see the mindset?