India – Patent Used To Block Drugs Shipment

Countries trying to tackle the menace of counterfeit drugs are taking various steps to check the entry of unauthorised drugs. However one problem arising from this is that counterfeit drugs are defined differently in various jurisdictions. Many countries consider products that are not registered there as being counterfeit.

International trade means that medicines may reach their destination from neighbouring countries or by transshipment. According to news reports, the European Union recently attempted to prevent the marketing and sale of Indian generic drugs citing patent infringement. The Council Regulation (EC) no 1383/2003 is invoked to confiscate drugs, which are believed to violate patents registered in member-countries, even if they are in transit.

Top Indian drug companies such as Ranbaxy Laboratories and Dr. Reddy’s Laboratories are facing hurdles in transporting generic drugs as the patent holders in the US and EU use litigation to block them. There had been reports of a seizure of shipments of Dr. Reddy’s drugs in Netherlands while in transit to Brazil. The drugs being shipped have no patent issues in Brazil and can be freely imported there. This shipment was later released by the authorities. Similarly Lupin Ltd and Torrent Pharma were also sued by US companies for marketing their generic versions of diabetes and anti-depressant medications respectively.

India has regarded such actions as being against the spirit of free trade as envisaged in the WTO including free movement of goods across borders. The present restrictions on Indian drugs are from the Indian perspective a form of non-tariff barrier, which threatens the export of generics.

The countries which are not able to afford high priced patented drugs often import the cheaper generic versions from countries that manufacture them and where the patent protection in the drug has expired, allowing for their commercial exploitation in the market. This is legal and provided for by the Indian Patents Act 1970 under Section 107A.

As to the export of generic drugs, the Patents (Amendment) Act of 2005, has amplified the scope of Section 107 A, and allows a person who is authorized under the law to sell or distribute genuinely produced drug to export that drug to another jurisdiction. The term “patented product” therefore refers to a patent held only in India and not one protected outside India. This is an obvious result of the fact that the Indian law on infringement is more liberal and is accommodating to generic drugs.

There is, however, now an emerging issue of whether goods in transit can be blocked on the grounds of infringement of IP.