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Views and Suggestions of the

Pharmaceutical Research and Manufacturers of America (PhRMA) and the European

Federation of Pharmaceutical Industries and Associations (EFPIA)

in response to the Invitation of the Government

of India on Compulsory Licensing

PhRMA and EFPIA would like to thank the Department of Industrial Policy & Promotion (the

Department) of the Government of India for permitting the submission of views and suggestions

by interested stakeholders on the draft Discussion Paper on Compulsory Licensing. PhRMArepresents the United States' leading pharmaceutical research and biotechnology companies,

which are devoted to inventing medicines that allow patients to live longer, healthier and more

productive lives. EFPIA is the representative voice of the research-based pharmaceuticalindustry operating in Europe with a direct membership of 31 national associations and 40

companies.

When considering the Discussion Paper, several broad themes emerged, including:

concerns relating to the availability of medicines and other products in the Indian market; concerns relating to the affordability, as measured by prices, of medicines and other

products in the Indian market; and

concerns relating to the potential impact of foreign acquisition of Indian pharmaceuticalcompanies.

Compulsory licensing of patented inventions, including innovative, life-saving medicines, is nota sustainable course of action to address these concerns, and its widespread use would

unnecessarily compromise the development of new medicines; an outcome which negatively

impacts patients. It could also undermine incentives to make and introduce new

biopharmaceutical products in India.

While the compulsory license concepts of the Paris Convention for the Protection of Industrial

Property (Paris Convention) and the World Trade Organizations Agreement on Trade-Related

Aspects of Intellectual Property Rights (TRIPS Agreement)1

exist in Indias laws, widespread

use of compulsory licenses is not good public policy. Alternatives to this exceptional measure

exist that may address concerns relating to pricing of pharmaceuticals in the domestic market,while retaining the integrity of intellectual property rights. For example, purchasing

arrangements, differential pricing, and, where appropriate, resort to foreign aid or international

1 Compulsory licenses would be subject to Indian law concerning expropriation of property as well as requirementsof international agreements, including the TRIPS Agreement.


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credit programs are available to help drive down prices in the local market.2

In that light, we

share the view of many governments and experts that compulsory licenses should be used only in

exceptional circumstances and only as a last resort.3

Intellectual property protection, including patent protection, is important to the development

and availability, of new medicines that represent life-saving treatments for the Indianpopulation. Local patent laws that provide effective incentives to develop products, including

those adapted to specific local needs, e.g., formulations which are specifically adapted to Indian

climatic and infrastructural conditions, are essential to promoting sustainable access to

medicines and economic growth. We note that empirical data from a recent study demonstrates

that biopharmaceutical firms were more likely to invest in research for anti-malaria treatments,

for example, following improvements in intellectual property protection in countries subject to

malaria outbreaks.4

A reliablepatent system provides:

incentives for technology transfer to, investment in and partnerships with localenterprises;

an environment that enables companies (including biopharmaceutical companies) toinvest in R&D facilities; and

a system that assures companies that their inventions will be protected, and, therefore,that they will have a chance to recoup their fixed costs for long and costly R&D

investment and earn a return on that investment which is essential to encourage

investment in further medical advances, including advances addressing needs specific to

the local market.5

2See Richard A. Epstein and A. Scott Kieff, Questioning the Frequency and Wisdom of Compulsory Licensing for

Pharmaceutical Patents, The Law School of the University of Chicago: John M. Olin & Economics Working Paper

No. 527 (2010) (available at http://www.law.uchicago.edu/files/file/527-rae-pharma-patents.pdf) [hereinafter

Epstein and Kieff]. The paper examines several alternatives available to governments that seek to improve access to

medicines in the domestic market.

3See, e.g., Letter from Peter Mandelson to Dr. Mongkol Na Songkhla, Minister of Public Health, Thailand (July 18,

2007), stating that compulsory licenses, while allowed by the WTO rules, are exceptional measures. See also,

Commission of the European Communities, Commission Staff Working Document: IPR Enforcement Report 2009,

SEC(2009) 1360, section 5.4, p. 7, stating that compulsory licenses should remain a last resort. (Available at

http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc_145204.pdf)

4Jean O. Lanjouw and Iain Cockburn I,Do Patents Matter?: Empirical Evidence after GATT, National Bureau of

Economic Research Working Paper No. 7495, Jan. 2000 (summary available at http://www.nber.org/papers/w7495).

5 Epstein and Kieff, supra note 2 at p. 6.. The paper, inter alia, explains that compulsory licenses aiming to forcelower pricing cannot be applied universally because marginal cost pricing makes it impossible for firms to recover

their fixed costs of development. Imposing compulsory licenses thereby may result in delays of new drugs or

abandonment of projects, where impacts are especially large for those drugs targeting so-called orphan diseasesmost prevalent in those countries that champion CL.


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Although concerns regarding the impact of intellectual property on prices persist, for the reasons

above, adopting policies that seek to expand or regularize compulsory licensing will likely

reduce the availability of medicines in India and diminish Indias economic growth clearly an

undesired outcome.

Additionally, actions which reduce the security of intellectual property may discourage the

integration of and partnerships between Indian and multinational stakeholders in the domestic

market. Partnerships with multinational corporations provide needed foreign direct investment

in India, encourage scientific cooperation and greater technology transfer with Indian partners

thereby facilitating the establishment of a world-class research-based Indian industry. For

example, conducting research and development and clinical trials locally creates spillover

effects by building local capacity to conduct trials in support of local or domestic drug

development programs and can promote development of competitive capabilities in clinical

investigation and basic research over time, and improved healthcare capacity locally. Sucheffects may be less likely when the intellectual property system is deemed weak by external

stakeholders.

We thank the Department for inviting the views of stakeholders on specific questions identified

in the Discussion Paper. As an association of interested stakeholders, we comment on the

Issues for Revision listed in Section XVII of the Discussion Paper in the following pages.

Our comments are grouped along the lines of themes in related questions. We also provide

comments at the end on statements in the Discussion Paper that appear to be based on

misunderstandings. We welcome the opportunity to work with the government of India to

discuss our views further.


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Issues for Revision (Section XVII)

Question 1: Are guidelines necessary or required for the issue of compulsory licences?

Can it be argued that it is inadvisable to fetter the discretionary power of government

relating to the circumstances in which compulsory licences should be issued, and thus

such guidelines should not be applied to Category I CLs but be restricted to Category IICLs? Even the latter are issued through the exercise of quasi judicial powers by the

Controller. Will the issue of guidelines to trammel her subjective satisfaction be desirable?

Should therefore such guidelines be restricted to the royalty payment to be awarded while

issuing a CL?

Question 3: How should recourse to issue of a compulsory licence under section 92 and

recourse to use by the Central Government of an invention under Section 100 be

differentiated in the matter of use? Under what circumstances should each be invoked?

Question 4: Can products manufactured under a Category I licence be effectively

distributed solely through government channels? Does issue of Category I CL envisage sale

of the compulsory licensed goods outside the ambit of government and in the market?

Question 7: How should the essential elements of a Category II CL outlined in Para 54

and 55 above be proved by the applicant to the satisfaction of the Controller?

Question 12: Should the Controller be obligated to examine and take a final view on all

CL applications within a specified time period? What should be this time period? Should

this time period be the same for Category I and Category II CL applications?

Response

Compulsory licenses should only be used in exceptional circumstances, which, by their nature,

will be rare and arise in highly unpredictable situations. Attempting to detail unforeseen events

in guidelines may actually restrict the ability of the government to act when genuinely needed.

In our view, detailed guidelines are not needed as it is simply not possible to predict situations

where compulsory licenses should be used.

Should the Government of India decide to formulate guidelines, however, we recommend that

the process be openly collaborative and that the procedures in the guidelines ensure transparency,

rule of law, and due process. The process for formulating any guidelines should include

opportunities for stakeholders to comment on the proposed guidelines as this assists in ensuring

an effective balance of interests and will better serve patients and the healthcare system. Any

procedures adopted that govern the application for, and consideration of, compulsory licenses,

including relevant timelines, should be clear and accessible to interested parties. Additionally,

procedures for appeal of determinations, consideration of factors for appropriate remuneration,

and requests for terminating licenses in the rare circumstances that a compulsory license is

actually granted should also be clearly set forth. We remain willing to participate constructively

in the process.


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As noted above, the use of compulsory licences is rarely the best policy option. They are not a

suitable tool to deal with the long-term healthcare issues confronting India. These issues need to

be addressed in partnership with all stakeholders, including the innovative biopharmaceutical

industry. PhRMA members are committed to be a valued partner with India and share the Indian

governments goal to address access issues in a meaningful way. An active compulsory

licensing policy will not promote such a partnership and is not in the best interest of Indian

patients or promoting a sustainable system for accessing healthcare.

Question 2: Do the requirements for issue of a notification by the Central Government

(national emergency; extreme urgency; public non commercial use) under Section 92

require amplification through issue of guidelines? Further are these grounds sufficient to

meet all the circumstances and exigencies that may necessitate issue of a compulsory

licence? Does the term public non commercial use necessarily imply free distribution?

Should such distribution be confined to government channels? Should drugs for treating

diseases like cancer or diabetes should also fall within the ambit of CLs? Should such

notifications be confined to public health emergencies? Are there other valid circumstances

when such provisions can be invoked?

Question 2 asks about the meaning of the term public non-commercial use, particularly

whether the term implies free distribution of patented good. Moreover, paragraph 51 of the

Discussion Paper appears to equate the term with the distribution of patented goods without

profit. The plain meaning of the public part of the term relates to use for the people as a

whole or that which belongs to, affects, or concerns the community or the nation.6

This would

include government purposes.7

According to WTO jurisprudence, commercial use pertains to

the trading of goods in the market, even where the pricing is without profit or perhaps even at

a loss (or even for free).8

Thus, distribution through commercial markets affects commercial

relationships and competition and, therefore, cannot be said to be non-commercial use even if

it is funded by the government and without charge to patients accessing that system.

Question 5: The Competition Act 2002 does not explicitly provide for issue of Compulsory

Licences as a remedy for anti competitive practices. However, Section 27(g) empowers the

Competition Commission to pass such other order or issue such other directions as it may

deem fit. Further Section 90(ix) of the Patents Act recognizes that CLs can be granted to

remedy a practice determined, after judicial or administrative process to be anti

competitive. Should CLs be issued on the basis of anti competition law if it is determined

6 Definition of public found at www.oed.com

7 See, e.g., TRIPS Agreement, Article 31(b), which provides that public, non-commercial use includes use by or

for the government.

8 WTO Dispute Panel Report on China -- Measures Affecting the Protection and Enforcement of Intellectual

Property Rights, WT/DS362/R, para. 7.535. The panel determined that commercial means, basically, engaged inbuying and selling, or pertaining to, or bearing on, buying and selling.


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that companies have abused their dominant position in the market or engaged in unfair

competition?

Response

Some countries provide for the grant of licenses to remedy anti-competitive acts and condition

approval of mergers and acquisitions on acceptance of compulsory licenses. The two practices

are very different from each other and neither is similar in commercial or policy implications to

compulsory licensing contemplated by the Division Paper (see final section of this paper for

additional detail). We read this question as being directed to remedies for violations of

competition law, not conditions for merger approval.

No evidence or examples are given in the Discussion Paper of situations where it is felt that a

compulsory licence might be an appropriate remedy for a competition law violation. We are not

aware of any current practices in India that would constitute abuse or merit the imposition of

compulsory licenses as competition law remedies. Indian authorities can, as we understand

Indias legalsystem, address on a case by case basis remedies appropriate to particular

circumstances that arise and the statutory provisions cited appear to give adequate power for

these purposes. Consequently, additional guidelines in this area are unnecessary.

Question 6: Should working of a patent in the territory of India be interpreted to mean that

it should be manufactured within the territory of India? Under what circumstances should

the provisions of Section 84(7) (e) regarding working of the patent being prevented or

hindered by importation from abroad be applied?

Response

As a WTO member, India is not permitted to require manufacturing in India as the only methodof working a patent in India. The TRIPS Agreement makes it clear that WTO Members must

permit working requirements to be met not only through local manufacture but also through

importation of patented products TRIPS specifically requires that patent rights be enjoyable

without discrimination as to whether products are imported or locally produced.9

Thus,

contrary to the assertion at paragraph 66 of the Discussion Paper, the local working provisions of

the Patents Act must be interpreted so that imported products are sufficient for working of an

invention in India. Otherwise, paragraph 66 would be discriminating against imported products

which the TRIPS Agreement does not permit. This is also supported by a WTO dispute panel

decision.10

9 TRIPS Agreement, Article 27(1).

10 The Discussion Paper states, in paragraph 66, that local working stipulations are valid and enforceable under the

TRIPS Agreement. This may be the case where the working requirement includes importation. The Discussion

Paper, however, goes further and cites a paper, in the same paragraph, that alleges TRIPS Articles 30 and 31override the general stipulations in TRIPS Article 27. This allegation is inconsistent with the views of the WTO

Dispute Panel Report on Canada Patent Protection of Pharmaceutical Products, WT/DS114/R (Mar. 17, 2000),


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Question 8: What should be the basis for royalty payments to compensate for CLs? Should

a uniform stance be taken for Category I CLs; Category II CLs and Central Government

use of inventions? Or should a differential approach be adopted?

Question 9: Should payments to the patent holder include a component of solatium as

indicated in Para 62? How should such a solatium be arrived at? Should the aggregate

royalty and solatium be fixed at say 10% of the generic price?

Response:

The TRIPS Agreement requires that a right holder be paid adequate remuneration in the

circumstances of each case, taking into account the economic value of the authorization.11

Attempting to fix a percentage or standard (such as the Tiered Royalty Method (TRM) noted in

the Discussion Paper) would not be consistent with the international standards that require that

the circumstances of each case be considered. Such standards would not take into account what

is adequate remuneration nor the economic value of the authorization as these will vary

according to the facts. Instead, remuneration must be assessed on a case-specific basis to ensure

that the full economic value of the authorization is considered. There is no need to differentiate

between categories of compulsory licenses when determining value. As a practical matter, in

the rare instances where a compulsory license may be considered, the principles required by the

TRIPS Agreement can be applied in a manner taking into consideration the facts of each case.

Question 10: How can the operational constraints in the implementation of the August 30

decision be resolved during the course of issue of CLs under Section 92A?

Response:

The August 30, 2003 decision of the World Trade Organization, which is read in light of several

key shared understandings contained in a statement made by the Chairman of the WTO

General Council,12

constitutes a delicately balanced solution to WTO Members that identify a

need for a compulsory license in response to a particular public health need and that lack

manufacturing capacity.

7.91, and should be completely discounted. Even the authors of the paper cited, while disagreeing with views statedin the Panel Report, admit their view is inconsistent with the Panel Report.

11 TRIPS Agreement, Article 31(h).

12 General Council,Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public

Health, World Trade Organization, WT/L/540 (Sep. 2, 2003) [hereinafterImplementation Decision]. See also

General Council,Minutes of Meeting, World Trade Organization, WT/GC/M/82 (Nov. 13, 2003); paragraph 29reproduces the Chairmans Statement.


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The solution has been used once since its inception. Despite concerns cited in the Discussion

Paper regarding complex procedures created by the solution, triggering the solution is

straightforward. All that is required is that the eligible importing WTO Member has made a

notification to the TRIPS Council that:

(i) specifies the names and expected quantities of the product(s) needed;(ii) confirms it has established insufficient or no manufacturing capacities in

the relevant pharmaceutical sector (note: this is waived for LDCs); and

(iii) confirms that, where a pharmaceutical product is patented in its territory, ithas granted or intends to grant a compulsory licence in accordance with

Article 31 of the TRIPS Agreement and the provisions of this Decision.13

As noted, compulsory licenses have not proven to be an appropriate solution when considering

supply or access to medicines issues. Thus, it is not surprising that the August 30, 2003solution has only received one notification. The complexity or burden of the system is not

the issue. The reason for the lack of use of the solution is because compulsory licenses have not

proven to be effective of in addressing supply and access issues.

Question 11: While originally applying for a patent, the applicant is required to disclose

complete specifications of the invention, as well as the best method for working it.

However, there may be an incentive for the patentee to limit the description in the patent

resulting in critical portions of the technology remaining undisclosed. This may cause

delay in working of the CL.should such a problem of insufficiency of information in the

Patent application arise in relation to the issue of a CL, how should it be addressed?

Response

TRIPS Article 29.1 requires that patent applicants disclose their inventions in a manner

sufficiently clear and complete for the invention to be carried out by a person skilled in

the art.14

Failure to do so would result in an invalid patent. We understand that these

international requirements have been translated into Indian law. Thus, we believe that

the current system provides significant incentives to ensure that a full and complete

disclosure is submitted. Moreover, Indian companies are readily able to produce generic

versions of innovative products on the basis of the descriptions in patent documents and

their own skills. Thus, we see no justification to consider a potential remedy when there

is no substantiation that such a problem exists in the first instance.

13Id.

14 TRIPS Agreement, Article 29(1).


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Question 13: Should publicly funded Indian research organizations stipulate while selling/

transferring patents to Indian private sector companies that the ownership of patents will

revert to these organizations in case the ownership of those companies passes on to foreign

hands?

Response

We suggest the Department avoid what will be perceived as protectionist measures when

considering the integration of multinational corporations in the Indian market.

The main impact of including measures which will deprive Indian companies of their intellectual

property if these companies are acquired by foreign entities would be to reduce the value of these

Indian private sector companies and to severely undermine their ability to attract foreign

investment and partnerships that are critical to the growth of the Indian research-based

biopharmaceutical sector, as well as other industry sectors, in India.

Moreover, the type of stipulation proposed will strike at the heart of the mechanism to developinnovative products with incentives provided by Indian research funding and to introduce such

products into the local market. The benefits of systems which permit secure private ownership

of patents for inventions developed with the assistance of public funding are well-proven around

the globe.15

Instead of undermining them, these mechanisms should be strengthened.

II. Other Issues Raised in the Discussion PaperIn addition to the issues specifically raised in the questions recited in Section XVII of the

Discussion Paper, we would like to provide comments on certain statements made in earlier

sections of the Discussion Paper that provide inaccurate information. We have not exhaustivelyaddressed all statements and claims made in the Discussion Paper, but will mention examples of

statements that are misleading, focusing on statements contained in Sections III and XVI.

A. Misleading examples of compulsory licensingSection III of the Discussion Paper regarding recent instances of compulsory licenses contains

misleading statements that, if not clarified, may result in ill-informed policy decisions. The term

compulsory license is used as a label for a broad range of actions that have materially different

economic and policy effects. For example, cases involving the Bayh-Dole Act are cited as

recent instances of compulsory licensing in the United States. This appears to be a reference tomarch-in rights available under the Bayh-Dole Act. However, Bayh-Dole Act march-in

15See Turning Science into Business: Patenting and Licensing at Public Research Institutions, Organization for

Economic Co-operation and Development, Directorate for Science, Technology and Industry(2003). This

publication includes an analysis of the success of enhancing social and economic benefits of publicly fundedresearch by permitting institutions to retain ownership over intellectual property related to their inventions.


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rights are not compulsory licensees as suggested by the Department. Instead, these are rights

reserved by the U.S. Government when a researcher voluntarily agrees to accept U.S.

government funding. Furthermore, we are unaware of the U.S. government ever exercising their

reserved rights.

This Section also conflates a number of other acts in different jurisdictions, all referred to as

compulsory licensing, that arise in entirely different circumstances. We have considered, in

more detail below, the examples given in the context of the United States and have found that the

cited examples are significantly different from a compulsory license as described in the

Discussion Paper and where unauthorized use is granted proactively by a government agency

without any finding of wrongdoing, such as the recent compulsory licenses granted in Brazil and

Thailand.

1. Cases involving merger reviews or remedies for anti-competitive practice are notcompulsory licenses

The Discussion Paper equates cases involving merger reviews and cases involving non-

merger remedies to anti-competitive practices with compulsory licenses. Merger reviews may

involve a companys agreement to transfer assets (including patents) to secure government

approval of a merger. This is not a compulsory license, but a voluntary act to secure the

approval being sought. In addition, while U.S. Government-initiated actions to enforce anti-

competition laws may result in remedies which can require transfers of assets, including patents,

to counter unlawful conduct, these are also not compulsory licenses in the sense used in the

Discussion Paper. Instead, these outcomes result only after an extensive proceeding or

adjudication resulting in a conclusion that an entity has abused significant market power.16Penalties for proven violations of anti-trust laws or the more common acceptance in a consent

decree of terms by a litigant, are not similar to compulsory licenses imposed by a government by

seeking to obtain a lower price for an innovative product.

2. Compensation under section 1498 of title 28 of the United States Code is not thesame as a compulsory license

Application of rules of compensation for government use of patented technology under 28

U.S.C. Section 1498 is also distinct from compulsory licenses as contemplated by the Discussion

Paper. There is no authorization for the government to use an invention protected by a patent in28 USC 1498. Instead, the statute sets out that, in the event that the U.S. Government uses a

patented invention without authorization from the patent owner, the remedy against the

Government will be an action by the patent owner in the U.S. Court of Federal Claims to recover

16 Epstein and Kieff, supra note 2.


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reasonable and entire compensation.17

Further reasonable and entire compensation entitles

a patentee to recover what he has lost. If one does draw an analogy, it must involve acceptance

that the patent owner subject to a compulsory license should be compensated to the full extent of

his loss over the period of the licence.

3. Denials of injunctive relief in U.S. courts are not the same as compulsory licensesThe Discussion Paper also refers to cases subsequent to the decision of the U.S. Supreme Court

in eBay, Inc. v. MercExchange, LLC.18

However, those cases are not analogous to compulsory

licenses described in the Discussion Paper.19

The Discussion Paper compulsory licenses would

significantly alter the market circumstances between competitors in situations where the patent

owner is willing and able to sell the product for which a compulsory licence is sought. The post-

eBay decisions do not do that. In these cases, the courts have refused to stop infringers sales

because there was no competition between the parties. These cases merely deny a particular

remedy (an injunction) based on the specific circumstances of that case, after a finding ofinfringement. They awarded money damages sufficient to pay for infringement of a patent right

in the absence of direct competition.20

B. Section XVI: Questionable Support Regarding Compulsory Licensing Effect onDomestic Invention

As another example, Section XVI of the Discussion Paper cites a single report to the effect that

compulsory licensing has a strong and persistent effect on domestic innovation and then

concludes that it must be so. Again, we find this to be misleading and troubling. The

17 Subsection 1498 of title 28 of the United States Code (available at http:// www.gpoaccess.gov/uscode/).

18 In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the U.S. Supreme Court held that the traditional

four-factor test employed by U.S. courts of equity in determining whether a permanent injunction should be

granted applies equally to litigation arising under the U.S. patent laws. The four-factor test requires a plaintiff to

demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetarydamages, are inadequate to compensate for the injury; (3) that, considering the balance of hardships between the

plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a

permanent injunction. After the eBay decision, a U.S. patent owner is required to provide evidence of all fourfactors in order for a court to properly grant a permanent injunction in their favor.

19

Epstein and Kieff, supra note 2, subsection V.B, p. 10. Note especially, the eBay rule bears no resemblanceto the Thai [compulsory license] regime at p. 11.

20See Philip C. Swain and Ashley A. Weaver, Patent Injunctions One Year AftereBay v. MercExchange, Current

and Future Trends in Patent Law, Suffolk University Law School Center for Advanced Legal Studies (2007). At

pp. 12-13, Swain et al. conclude, after a lengthy review of post eBay cases, that [a]lthough the district courts will

grant injunctions where the patent owner practices its invention or otherwise competes with the adjudged infringer,

the district courts are denying injunctions where the patent holder does not practice its own invention or otherwisedoes not compete with the infringer, or where the patented invention is merely a small component or feature of a

larger commercial product.


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importance of patents to innovation, and to the development of new medicines in particular, has

been recognized at the global level.21

While compulsory licensing may be used in exceptional

circumstances, compulsory licensing as a general matter undermines the patent systems

incentives for innovation. The report cited in the Discussion Paper looked at a very unique time

in the history of the United States, during and immediately after the First World War At that

time, a statute was passed permitting confiscation of property, including compulsory licensing of

patents, by enemy persons, i.e., nationals of particular countries deemed enemies of the United

States at that time including Germany, Austria-Hungary, Bulgaria and Turkey (as well as the

occupied parts of Belgium, France, Russia and the Balkans).22

This legislation was clearly

motivated by hostilities relating to the First World War and, for that reason alone, is of

questionable relevance to modern Indias relationships with important trading partners.

In addition, it is notable that measure of the persistent innovation noted in the paper is based

on the number of patents applied for by compulsory licensees. Those patents were under no

comparable threat of compulsory licensing. Had they been, it is unlikely that the compulsorylicensees would themselves have engaged in innovation. A conclusion on the basis of this paper

to the effect that compulsory licences support domestic innovation cannot be sustained.

Conclusion

We hope that these comments are helpful. PhRMA appreciates the opportunity to comment on

the Discussion Paper and hopes that the Department will continue to provide opportunities for

stakeholders to participate in any further consideration of the issues presented in the Discussion

Paper.

21 See, e.g.,Declaration on the TRIPS Agreement and Public Health. Paragraph 4 states that we recognize that

intellectual property protection is important for the development of new medicines. See also, KAMIL IDRIS (formerDirector-General of WIPO),INTELLECTUAL PROPERTY: APOWERTOOL FORECONOMIC GROWTH, WIPOPublication 888.1 (2003), pp. 9-17, available at

http://www.wipo.int/freepublications/en/intproperty/888/wipo_pub_888_1.pdf. This report discusses several ways

in which patents provide an incentive for innovation and economic growth.

22 Petra Moser & Alessandra Voena, Compulsory Licensing: Evidence from the Trading with the Enemy Act,

National Bureau of Economic Research Working Paper 15598 (Dec. 2009) at p. 5 (summary available athttp://www.nber.org/papers/w15598).

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