Role of Government in Price Regulation

of Patented Drugs in India

Submitted by
Sanitta Maria Stephen
LL.M Batch 2012-14(Reg no: 12LM19)

Under the supervision and guidance of

T.R. Rujitha Shenoy
Assistant Professor of law

GUJARAT NATIONAL LAW UNIVERSITY

Attalika Avenue, Knowledge Corridor,
Koba, Gandhinagar, Gujarat. PIN 380007
2014

INTRODUCTION
The health of people is the foundation upon which all their happiness and all
their powers as a state depend
Benjamin Disraeli, British Prime Minister.
1.1 Introduction:
As per the 2011 census Indian population has crossed 1.21 billion,
there by become the second largest populated country. It shows the
requirement of good and affordable public health care. The practice
of public health has been dynamic in India and has faced man y
hurdles in its attempt to affect the lives of the people of this
country. India several times was successful in eradicating the
diseases individuall y but so far could not reach the aim of complete
public health.
Government of India needs to balance its core responsibilit y to
protect the health and welfare of the Indian people and the Nations
interest in sustaining the continued development of a world -class
Indian life sciences capabilit y 1.There are many factors which
cruciall y affects the public health. Lack of healthcare infrastructure,
low healthcare insurance service coverage and unavailability and
unaffordable medicines are the major challenges hampering the
public healthcare sector. Accessibilit y and availabilit y of drugs are
the main objectives of all health policies. Despite all this health
problems faced by Indian citizen one thing to be noted is our
country is the hub of major pharmaceutical industries and has a
major share of cont ribution to market econom y. When we look India
from two different angles in one side we could see a major
population of citizen with no access to essential drugs and on the
other hand we will be surpris ed to know the successful story of
1

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pharmaceutical comp anies in our market. It is important to remind

that India has the largest manufacturing facilities approved by the
USFDA and EDRM. This shows the huge gap of our citizens to
access to essential medicines. There are several factors which
creates the gaps. First and for most reason behind this is huge prices
charged for medicines which is in no case unaffordable for Indian
masses.
Health is a state of complete physical, mental and social well being and not merely the absence of disease or infirmit y 2 Every
sovereign state has plenary power to do all things which promote
the health. Maintenance and improvement of public health have to
rank high as these are indispensable to the very physical existence
of the communit y and on the betterment of these depends th e
building

of

the

societ y

which

the

Constitution

makers

envisaged. Right to health is brought under as a fundamental right

under Article 21 of the Indian Constitution .The Constitution
makers imposed this dut y on state to ensure social and economic
justice. Apart from the constitutional rights we have several
Supreme Court and high court decisions reaffirming the right to
health of its citizens and the dut y of state to provide it without any
failure. As a liberal interpretation of Article 21 3 right to health is
now widel y discussed and many aspects like access to medicines,
right to health insurance are being brought under this Article. The
Supreme Court, while widening the scope of art 21 and the
governments responsibilit y to provide medical aid to every person
in the country held that in a welfare state, the primary dut y of the
government is to secure the welfare of the people . Several Articles

P rea mb l e to t h e Co ns ti t ut io n o f t he W o rld He al th Or g a ni zat io n a s ad o p ted b y

th e I n ter n at io nal H ea lt h Co n fere n ce, Ne w Yo r k , 1 9 -2 2 J u ne , 1 9 4 6 ; si g ned o n
2 2 J ul y 1 9 4 6 b y t he r ep r ese n ta ti v es o f 6 1 S ta te s (O ffi cia l Re co rd s o f t h e W o rld
Hea lt h Or ga n iza tio n , no . 2 , p . 1 0 0 ) a nd e n tered in to fo r ce o n 7 Ap r il 1 9 4 8
3
P r o tect io n o f l i fe a nd p er so na l l ib ert y : No p erso n s ha ll b e d ep r i ved o f hi s
li fe o r p er so na l l ib er t y e xc ep t acco rd i n g to p ro ce d ure e stab li s h ed b y l a w

under the constitution make the state mandate to provide right to

proper health. 4 Provision for just and humane conditions of work
and maternit y relief - The State shall make provision for securing
just and humane conditions of work and for maternit y relief, 5 Dut y
of the State to raise the level of nutrition and the standard of living
and to improve public health 6 are the clear examples of making the
right to health as a state dut y. The Apex Court has held that
maintenance of public health and sanitation was dut y on the
municipalit y which shall be complied without undue delay. Further,
various duties have been cast under directive principles of s tate
policy that are though non -enforceable but forms an integral part of
policy decisions and governance such as Articles 38, 39 & 47.

Indian government has several times taken steps to ensure the

proper health of citizens. After post independence to till the date we
could find several policies and schemes regarding this matter. As
mentioned earlier several unsolved problems like high prices for
drug makes all most all our public health policies reach nowhere. As
a matter of fact we should not forget that till date India is lagging
behind the goals set to reduce HIV/AIDS, Malaria and many other
diseases. Since the unaffordable of prices stands as a hurdle before
patients and the authorit y and thereby makes public health as a
herculean task for state.
This paper anal yses the price control mechanism of patented drugs
and the role of government in accessibilit y of drugs in cheaper
rates. The study will be done in three different parts. First part will
deal with legislations dealing with price control of drugs in India.

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All laws so far made will be studied and anal ysed. Second part wi ll
compare the drug price control laws related with patented drugs in
different countries. Eight OECD countries are taken for this. Last
part will discuss the possibilities of compulsory licenses under
Indian Patent Act and the latest cases related to C L w ill be
discussed.
1.2 Significance of Study :
The purpose of study of this topic is to find out how a sovereign
state like India can make affordable access to medicines to the
patients. The implementation of new National Drug Pricing Policy
and the new changes brought to the NLEM are some of the policies
adopted by government to achieve the goal of cheaper drugs. As of
present the pricing policy adopted by government has been criticall y
anal ysed by many economists. Here a comparative study of different
pricing policies will be done. This may help to find out the
drawbacks of new policy if it has any.
Another area were the central government has done changes in
relation to bring down price hike is inclusion of more drug
combinations to the list of essent ial medicines list, where state can
control the price hike. A thorough study will be done in the
inclusion and exclusion of medicines from essential medicines list
and this study aims to find out whether this change would actuall y
help patients or will ret urn to them as a double burden.
The

study

will

look

into

the

possibilities

of

provisions

of

compulsory licenses which are under the Indian Patent Act 1970.
The discretionary power given to government under the patent Act
discusses the possibilities of gove rnmental control over price hikes.
Study of recent cases filled in courts in relation to this may give us
the

possible

future

developments

pharmaceutical industries.

which

may

happen

in

1.3 Objectives of Study

The objectives of the research are to:
1. To study the new National Drug Pricing Policy and to anal yse
the different methods of drug pricing methods
2. To explore the possibilities of compulsory license provisions
for the lessening of drug price
3. To examine the ways through which government could con trol
price of patented drugs

1.4 Hypotheses
The hypotheses for research are:
1. The new pricing policy adopted by government will keep
major portion of patented dru gs beyond the price control .
2. Compulsory license is a powerful sword in the hands of
government to reduce the price hike for patented medicines .

1.5 Scope of Study

The study will focus on the government role in making essential
medicines available and affordable for patients. Study will examine
the possible ways open for Indian govern ment to reduce the price
hike of drugs. The policies implemented by central government for
price fixing of patented drugs will be compared and anal ysed with
other developed and developing countries.
The study will be limited to the National Drug Pricing P olicy 2012,
New NLEM list and Indian Patent Act. The area of discussion will
be limited to the reduction of patented drugs and essential drugs and
the role of government in that. For the need of better understanding
and research other nation al acts, report s and similar foreign
legislations will be considered accordingly.

1.6 Research Methodology:

The methodology adopted for research is purel y Doctrinal in nature.
The present research is done with the help of Primary Resources
such as statutes, regulations and notices issued by competent
authorities.

Secondary

sources

such

as

books,

journals

&

periodicals, speeches, legal encyclopaedias and more was also been

referred. Various study reports submitted by recognised universities
and research groups are also us ed as secondary data.

1.7

Tentative chapterization:

1. INTRODUCTION
This chapter gives a basic outline of the area of the research by
giving a brief idea of what is being dealt in the research. Along with
the

significance

of

research,

objectives,

hypothesis,

research

question, scope and limitations, etc

2. ANALYSIS OF NEW PRICING POLICY BY GOVERNMENT
The chapter will look into the policies adopted so far by
government for price fixing of drugs.
2.1Overview of all govt. policies for price fixing
2.1.1Various government policies at glance
2.2 Study of new National Drug Pricing Policy
2.2.1General Introduction
2.2.2Objectives of policy
2.2.3Principles of policy
2.2.4Principles for Drug Price Control
2.3Drug Price Control Order (DPCO), 2013
2.4 Study of committee reports on price control of patented drugs
2.5. Critical study of NPPP 2012 and DPCO 2013

3. COMPAR IT IVE

STUDY

OF

POLIC IES

ADOPTED

BY

DIFFERENT GOVERNMENT FOR LESSENING PATENTED

DRUG PR ICE
3.1Introduction
3.2Comparison of laws
3.2.1 USA
3.2.2 Australia
3.2.3 Canada
3.2.4 China
3.2.5 France
3.2.6 Germany
3.2.7 United kingdom
3.2.8 Japan
4. COMPULSORY LICENSE IS A POWERFUL SWORD
4.1 Introduction and objectives of compulsory license
4.2 Study of Compulsory license under section 84 and 92 of
Indian Patent Act
4.3 Compulsory license cases in India
4.3.1 Natco Pharma Limited v Bayer Corporation first case
of C L in India
4.3.2 Present position of CL cases filled in India (Drugs:
Transtuzumab, Ixabepilone and

Dastanib)

5. CONC LUS IONS AND SUGGESTIONS

1.8 Review of literature:

REVIEW OF LITERATURE
BOOKS
Daniel gives a different perspective of impact of TR IPs agreement
on

WTO

member

countries.

It

discusses

the

problems

and

advantages of WTO agreement in a thorough manner. It gives a

clear and simple understanding of emergence of TR IPS from
Uruguay round and its interference with other international norms.
It comes with a broad empirical anal ysis of impact of TR IPs and
discusses the various national and regional aspects. Author suggests
an anal ytical model based on a narrative concerning the place of
TRIPs implementation, as part of a broad knowledge oriented
economic strategy.
The researcher found this book as a helping hand in understanding
the various national aspects. Author deals in a very broad and deep
manner about the position in different co untries, i.e. from African
countries to Latin American countries, Arab countries to America
and European Union. The author while anal ysing the various
economic impact he successfull y intersected the human right aspect
of intellectual propert y rights. The a uthor covers wide topic so the
book is not covering the compulsory license of patent in depth.
(Daniel Gervasis, Intellectual Property Trade and Development strategies to optimize economic development in a TRIPs plus era
(2 n d edn Oxford 2007))
This book gives the complete intellectual propert y information from
various countries this gives the crisp of the legislation of different
countries by stating the objectives in brief manner. This book did
not help the researcher much on topic of pharmaceutical patent and
compulsory licenses.

(Prof. Dr. Joanna Schimidt -Szalewski &

Dr.Nicolas Bouche, International Encyclopaedia of Laws volume 1,

2, 3 Intellectual Property Wolters Kluwer (India) 2008))
The authors here took a different approach of explaining th e subject
intellectual propert y rights. The teaching method adopted by authors
helped the researcher to study and understand the very technical
provisions of patent laws related to European Union. This book
discusses the general concept and international l aws in relation to
IPRs and connecting them to the European law. The chapters dealt
with Doha declaration and pharmaceuticals helped to rethink on the
various aspects of human rights attached to patent laws. The book
covers all IPRs but successfull y covere d extensivel y on all topics
that help the reader to do comparative study for the research in
quick time. Contemporary presentation and lay out of the book in
discussing various topics of intellectual propert y rights is a
distinguishing attraction of this b ook. Researcher finds this as good
guide for the working of paper. ( Hector MacQueen , Charlotte
Waelde,Graeme Laurie and Abbe Brown ,Contemporary Intellectual
Property Law and Policy (oxford 2008))
The

author

discusses

the

challenges

faced

by

patenting

of

nanomedicine. It covers minute details of nano medicines in ma n y

countries. It Anal yses the law in international and national level.
The author is not criticall y anal ysing the possible problems that
may arise after the promotion of patenting of nano medicines in
health industry. The book dedicates only few pages to discuss the
disadvantages

of

the

drug

patenting

rather

focussed

on

the

advantages and suggestions of promoting the patenting of drugs. (

Eliana

Souto

Patenting

Nanomedicines -

legal

intellectual and grant opportunities (Springer 2008))

aspects,

The series of book provided the researcher with widest array of

useful information in consistent format in relation to all IPRs. But
this book is mainl y focussed on the procedures of IPRs. Not widel y
discussing the contemporary issues. This was h elpful because it
codified of laws in a uniform manner. ( C.Adrian Zapatero, World
Manual on Patents vol 1to 4 (Oxford 2012))

The book is a compilation of various articles on the IPRs, WTO and

developing countries. The article written by Jawaharlal, Ranjan
Sharma and Pramod kumar on impact of IPRs on developing
countries: an evolution find helpful for the work by researcher. The
anal ysis made by authors on pre and post era of pharmaceuticals
helped researcher with some statistical data. ( Talwar sabanna ,
Intellectual Property Rights in WTO and Developing Countries
(century 2008))
The book gives onl y a the primary level understan ding of IPRS but
the first chapter of book covers the evolution of all legislations and
agreements related to IPRs in the light of globalisation researcher
find it the first chapter as helpful for the better understanding of
topic . But this book does not cover any topic in minute so the rest
chapter were not finding helpful for the concerned topic research
(E.T lokanathan, TRIPs agreement and Indian laws (Centuary
2012))
ARTICLES
The article published in JIPR discusses about the various provisions
of government sovereign power for compulsory licensing under
Patent Act. Article cover the topic related to pharmaceutical drugs
(Gopakumar .G. Nair & Andreya Fernandes Patent Policies and
Provisions Relating to Pharmaceuticals in India (JIPR))

The author traces the relevant legislative history pertaining to

compulsory licensing of patented pharmaceuticals from the TRIPS
(Trade-Related Aspects of Intellectual Propert y Rights) Agreement
of 1994 to the 2003 waiver to, and later proposed amendment of,
article 31. It ends by defending the legalit y of recent measures
taken to promote public health in developing countries, and b y
reminding developed countries that unilateral retaliation against
such measures is demonstrabl y illegal under WTO foundational law
and jurisprudence. The whole article is helpful in the working of
research. ,( Jerome H. Reichman Compulsory licensing of patented
pharmaceutical inv entions: evaluating the options(Duke Law))

This article examines the international law on compulsory license to

access to drug from the scope of developing and least developed
countries and discusses how these countries can make use of the
technological advancements in the developed countries. The author
argues that even with the available provisions of TRIPs an d national
legislations better health can be made available which substantiall y
support the view point of researcher. (Radhika Gupta Compulsory
licensing under TRIPS:

How Far it Addresses public health

concerns in Developing Nations ( heinonline))

The article discusses the Vienna convention treat y and compuls ory
licenses. This gives better and clear view of VC LT and TRIPs and
further connecting it with Doha Declaration. The interconnection
drawn by author is helpful for the researcher in connecting the
different aspects of human rights and several other jurisprudential
aspects of these international agreements. (Divya Murthy The
Future of Compulsory Licensing: Deciphering the Doha Declaration
on the TRIPs Agreement and Public Health (American Universit y
International Law Review ))

The author has discussed the compulsory license in light of Doha

Declaration. Author focussed the area of international human right
and access to medicines .the discussion of health as a human right
and a fundamental right by studying the several national legislations
helps the researcher to discuss the concept of health and the need of
international agreements like TRIPs in achieving the goal of public
health. (Philippe Cullet Patent and Medicines: The Relationship
between TRIPs and the human right to health (International
Affairs))