THE HINDU EDITORIAL- MARCH, 20, 2022
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IPR waiver push Will a conditional WTO nod to remove intellectual property rights
on the use of COVID vaccines help? JACOB KOSHY The story so far: At the World Trade
Organization (WTO) negotiations, a consensus is in sight on a pending
proposal championed by India and South Africa in 2020 that sought to remove
intellectual property rights restrictions on the use of COVID-19 vaccines,
drugs and diagnostic devices. The reprieve, however, will come with certain
conditions, which are still under discussion. What are the
terms of the proposal? -In October 2020, at the WTO’s Trade
Related Aspects of Intellectual Property Rights (TRIPS) Council, India and
South Africa proposed that the WTO do away with certain provisions of the
TRIPS Agreement for the duration of the pandemic to facilitate access to
technologies necessary for the production of vaccines and medicines. Such a
waiver would aid scaling up of local production, critical to ensure wider
access to affordable and effective vaccines. Most of these patents are held
by pharmaceutical companies in the U.S. and the European Union. The waiver
proposal was blocked at the TRIPS Council and the WTO ministerial Council
though there have been several rounds of discussions involving ministers of
several WTO member-countries. In the last year though 100 countries,
including the U.S., supported the proposal, the EU remained a stumbling
block. But now the EU too appears to be calling a truce. What is the
latest development? Reports have emerged that India, South
Africa, the U.S. and the EU have arrived at an agreement. A draft of this
agreement, which has been circulated among 164 members of the WTO, is likely
to be taken up for discussion this fortnight. A consensus of all members is
necessary for a proposal to be approved. The draft says all patent rights
that protect the manufacturing of COVID-19 vaccines will be waived of for
three-five years. Usually, there are multiple patents that cover even a
single COVID vaccine and the draft says all of these line-patents too would
stand temporarily waived. All member countries, through their governments,
can authorize the manufacture as well as export of vaccines produced in these
conditions. Is this a breakthrough? -There’s conflicting opinion on this.
On the one hand, the pandemic isn’t over, and despite the widespread adoption
of vaccines, (many of them employing very novel technology platforms such as
mRNA and adenovirus vaccine technology) the evidence is overwhelming that
vaccines are only protective against severe disease but ineffective at cubing
transmission. It is possible that vaccines developed using the early strains
of the virus may become ineffective over time and newer ones, potentially
employing newer approaches, may be necessary in the months and years ahead.
As relatively few countries have expertise in making vaccines, a waiver of
this sort could help improve global access. These same set of reasons,
critics of the draft say, could be used to argue that such a waiver for vaccines
is too little, too late. Global facilities such as COVAX, which are charged
with ensuring all countries get vaccines now, have too many vaccines – a flip
from merely three months ago - when there was a scarcity. India too has
multiple manufacturers and technology platforms, and more than 60% of the
population is fully vaccinated. All this, without patent waivers. While
pharmaceutical patents have historically been impediments to the manufacture
of affordable, high-quality drugs, the global nature of the pandemic has seen
that even though richer nations hoarded vaccines, prioritizing multiple
inoculations for their citizens, over even a single shot for African
countries, intellectual property rights on its own didn’t prove to be a
hurdle. There are other major lacunae in the draft agreement. What are some of
the hurdles in the draft agreement? -Critics say that central to the
process of vaccine manufacturing are ‘trade secrets’ that specify the
ingredients and chain of steps necessary to make them. The current waiver
doesn’t automatically compel patent rights holders to share this information
with a potential manufacturer for free. Another drawback is that this waiver
is limited to vaccines. The original proposal sought a waiver on therapeutics
and diagnostics and the agreement only says that a “discussion” on this can
be held after six months. Access to new drugs and diagnostic technologies are
necessary to keep people safe everywhere. What do India’s pharmaceutical
companies say? -Though no one has commented on the
draft, prominent drug and vaccine companies in India haven’t been very vocal
on the need for a waiver. But the Organization of Pharmaceutical Producers of
India (OPPI), comprising Indian subsidiaries of western pharmaceutical
companies, has been critical. Waiving of intellectual property rights will
neither lead to increased production of vaccines nor practical solutions to
fight the virus, as IP “is not the barrier” to vaccines. The Indian Drug
manufacturer Association, on the other hand, has supported it, with a caveat.
They are more interested in “voluntary licences” by the patent holders to
Indian companies with sufficient expertise in this field, and transferring
technology to Indian companies against “reasonable” royalties. |
Overlooking ‘reasonable accommodation’ In the Karnataka High Court ruling on
the hijab, what principle used in disability rights was not considered? K. VENKATARAMANAN The story so far:
The Karnataka High Court has ruled in favour of the State’s
circular that students in educational institutions should only wear
prescribed uniforms, and where no code was prescribed, they should wear “such
attire that would accord with equality and integrity and would not disrupt
public order”. The decision effectively upheld the denial of entry to
students wearing the hijab. The court rejected an argument in support of
permitting Muslim girls wearing head-scarves that was based on the principle
of ‘reasonable accommodation’. This meant that the court did not favour
making any change or adjustment to the rule that could have enabled the
students to maintain their belief or practice even while adhering to the
uniform rule. What is it? -‘Reasonable accommodation’ is a
principle that promotes equality, enables the grant of positive rights and
prevents discrimination based on disability, health condition or personal
belief. Its use is primarily in the disability rights sector.
Article 2 of the UN Convention on the Rights of People with
Disabilities (UNCRPD) defines reasonable accommodation as “necessary and
appropriate modification and adjustments not imposing a disproportionate or
undue burden, where needed in a particular case, to ensure to persons with
disabilities the enjoyment or exercise on an equal basis with others of all
human rights and fundamental freedoms”.
The International Labour Organization (ILO), in its recommendation on
HIV/AIDS and the world of work, defines it as “any modification or adjustment
to a job or to the workplace that is reasonably practicable and enables a
person living with HIV or AIDS to have access to, or participate or advance
in, employment”. How does the principle work? -The general principle is that
reasonable accommodation should be provided, unless some undue hardship is
caused by such accommodation.
In 2016, the ILO came out with a practical guide on promoting
diversity and inclusion through workplace adjustments. The need for workplace
accommodation may arise in a variety of situations, but four categories of
workers were chosen for the guide: workers with disabilities, workers living
with HIV and AIDS, pregnant workers and those with family responsibilities,
and workers who hold a particular religion or belief. Theses categories of
workers come across different kinds of barriers at work. These may result in
either loss of employment or lack of access to employment. “The provision of
reasonable accommodation plays a major role in addressing these barriers and
thus contributes to greater workplace equality, diversity and inclusion,”
says the ILO guide.
A modified working environment, shortened or staggered working hours,
additional support from supervisory staff and reduced work commitments are
ways in which accommodation can be made. Suitable changes in recruitment
process – allowing scribes during written tests or sign language interpreters
during interviews – will also be a form of accommodation. What is the legal position on this in
India? -In India, the Rights of People with Disabilities Act, 2016,
defines ‘reasonable accommodation’ as “necessary and appropriate modification
and adjustments, without imposing a disproportionate or undue burden in a
particular case, to ensure to persons with disabilities the enjoyment or
exercise of rights equally with others”.
The definition of ‘discrimination’ in Section 2(h) includes ‘denial of
reasonable accommodation’. In Section 3, which deals with equality and
non-discrimination, sub-section (5) says: “The appropriate Government shall
take necessary steps to ensure reasonable accommodation for persons with
disabilities.”
In Jeeja Ghosh and Another v. Union of India and others (2016), the
Supreme Court, while awarding a compensation of 10 lakh rupees to a passenger
with cerebral palsy who was evicted from a flight after boarding, said:
“Equality not only implies preventing discrimination …., but goes beyond in
remedying discrimination against groups suffering systematic discrimination
in society. In concrete terms, it means embracing the notion of positive
rights, affirmative action and reasonable accommodation. “The Supreme Court
elaborated on the concept in Vikash Kumar v. UPSC (2021). This was a case in
which the court allowed the use of a scribe in the Union Public Service
Commission examination for a candidate with dysgraphia, or writer’s cramp.
The court ruled that benchmark disability, that is a specified disability to
the extent of 40%, is related only to special reservation for the disabled in
employment, but it need not be a restriction for other kinds of
accommodation. It also said failure to provide reasonable accommodation
amounts to discrimination.
In the recent Karnataka verdict on wearing the hijab, the High Court
did not accept the argument based on a South African decision that reasonable
accommodation can be made for allowing minor variations to the uniform to
accommodate personal religious belief. The appeal against the verdict in the
Supreme Court provides an opportunity to see if the concept can be used in
the realm of belief and conscience too. Will the war in
Ukraine rattle India’s banks? Could a distant war have a domino
effect on Indian lenders? What are some of the challenges? K. BHARAT KUMAR The story so far:
S&P Global earlier this week forecast that banks in India
would face ‘headwinds’ as fallout of the Russia-Ukraine conflict. The rating
agency flagged rising inflation and borrower ‘stress’ that could affect
companies’ ability to fully pay back loans. How does a war in eastern Europe affect
India? -The war has impacted the production
and movement of a wide range of raw materials and commodities. Ukraine, for
instance, is the main source of sunflower oil imported into India. Supplies
have naturally been hit and are bound to further push up the retail prices of
edible oils.
The conflict has also forced Ukraine to shut two neon factories that
account for about 50% of the global supply needed in the manufacture of
semiconductors. As semiconductors become scarcer, user industries bear the brunt.
Already, the global chip shortage has led to the waiting period for delivery
of new premium cars in in India being extended to several months,. And with
major carmakers having reported declines in sales for January and February,
the profit outlook for these companies and their component suppliers looks
significantly clouded. The domino effect on the automobile and other
industries’ supply chains could impair the ability of businesses, especially
medium and small enterprises, to fully service their loans. What are the other factors that may
undermine a company’s ability to repay loans? -Oil has been on the boil ever since Russia invaded Ukraine on
February 24. After zooming to $139 a barrel – near historical highs – Brent
crude prices were at the $106 level as of Friday. With India’s state-run oil
marketing firms certain to raise the retail prices of petrol and diesel
sooner than later, the higher cost of transportation is bound to feed into
prices of goods from agricultural produce to raw materials for factories and
to finished products headed to store shelves, thus quickening inflation
across the board.
Higher input costs for manufacturers and service providers would leave
them in a tough spot as they would have to choose between passing on the
price increases to consumers – thus risking the already tenuous demand – and
hurting their profitability if they opt to absorb the impact. Here again
smaller businesses, that are most dependent on bank credit, are bound to be
hit the hardest. If the war in Europe is prolonged, Indian banks could end up
facing delays in the repayment of loans or possibly even having to write them
off as ‘bad’.
Separately, with the dollar benefitting from a global flight to less
risky assets, as well as the start of the U.S. Federal Reserve’s calibrated
monetary tightening to rein in inflation from a 40-year high in the world’s
largest economy, the rupee is expected to weaken against the U.S. currency.
With the exchange rate impacted, importers would have to shell out more
rupees for the same dollar value of imports than before Unless demand
expands, allowing then to sell more, a weaker local currency eats into their
profits, leaving them with lesser cash available to service loans.
Official data for February show that overall goods imports are growing
faster than exports compared with a year earlier, widening the current account
deficit (CAD). Widening CAD is likely to cause the rupee to weaken further to
77.5 to a dollar by March 2023, from 75, Crisil Ratings said on March 17.
Rising inflation, which is already just beyond the RBI’s 6% upper
tolerance limit, may nudge the central bank into raising benchmark interest
rates. This means more interest will have to be paid by companies that would
likely face the prospect of lesser profit. Earlier this month, India Ratings
said that the increase in commodity prices could result in a stretched
working capital cycle for small and medium enterprises, weakening their debt
servicing ability. Why is the situation particularly
worrying for Indian banks? -India’s lenders
had already been struggling to cope with an overhang of non-performing assets
or bad loans even before the pandemic severely hurt overall economic
momentum. In its Financial
Stability report for December 2021, the RBI warned that from a Gross
Non-Performing Asset Ratio of 6.9% in September 2021, commercial banks were likely
to see the metric rise to 8.1% in a baseline scenario, and possibly soar to
9.5% under a ‘severe stress’ situation by September 2022. What is the NPPA’s
role in fixing drug prices? Why is the pharma
lobby seeking a 10% increase for scheduled drugs? How will it impact
consumers? BINDU SHAJAN
PERAPPADAN The story so far:
Consumers may have to pay more for medicines and medical devices
if the National Pharmaceutical Pricing Authority (NPPA) allows a price hike
of over 10% in the drugs and devices listed under the National List of
Essential Medicines (NLEM), this coming month. The escalation which is
expected to have an impact on nearly 800 drugs and devices is propelled by
the rise in the Wholesale Price Index (WPI). Lobby groups that represent domestic
pharmaceutical companies have been engaging with the Central Government to
ask it to extend the 10% annual hike to scheduled formulations under price
control. How does the
pricing mechanism work? -Prices of Scheduled Drugs are allowed
an increase each year by the drug regulator in lie with the WPI and the
annual change is controlled and rarely crosses 5%. But the pharmaceutical
players pointed out that over the past few years, input costs have flared up.
“The hike has been a long-standing demand by the pharma industry lobby. All
medicines under the NLEM are under price regulation. As per the Drugs
(Prices) Control Order 2013, scheduled drugs, about 15% of the pharma market,
are allowed an increase by the government as per the WPI while the rest 85% are
allowed an automatic increase of 10% every year. The pharma lobby is now
asking for at least a 10% increase for scheduled drugs too than going by the
WPI,” said an industry expert. Who regulates
prices? -The NPPA was set up in 1997 to
fix/revise prices of controlled bulk drugs and formulations and to enforce
price and availability of the medicines in the country, under the Drugs
(Prices Control) Order, 1995-2013. Its mandate is to implement and enforce
the provisions of the Drugs (Prices Control) Order in accordance with the
powers delegated to it, to deal with all legal matter arising out of the
decisions of the NPPA and to monitor the availability of drugs, identify
shortages and to take remedial steps.
The ceiling price of a scheduled drug is determined by first working
out the simple average of price to retailer in respect of all branded and
generic versions of that particular drug formulation having a market share of
more than or equal to 1%, and then adding a notional retailer margin of 16%
to it. The ceiling price fixed/revised by the NPPA is notified in the Gazette
of India (Extraordinary) from time to time.
The NPPA is also mandated to collect/maintain data on production,
exports and imports, market share of individual companies, profitability of
companies etc., for bulk drugs and formulations and undertake and/or sponsor
relevant studies in respect of pricing of drugs/ pharmaceuticals.
Prices are revised when there is a rise in the price of bulk drugs,
raw materials, cost of transport, freight rates, utilities like fuel, power,
diesel, and changes in taxes and duties. The cost rises for imported
medicines with escalation in insurance and freight prices, and depreciation
of the rupee. The annual hike in the prices of drugs listed in the NLEM is
based on the WPI. The NLEM lists drugs used to treat fever, infection, heart disease,
hypertension, anemia etc and includes commonly used medicines like
paracetamol, azithromycin etc. Why are inputs
high? -Speaking about the proposed move
Chinu Srinivasan, co-convener, All-India Drug Action Network (AIDAN), pointed
out that one of the challenges is that 60%-70% of the country’s medicine
needs are dependent on China. “Self-reliance for India also means
self-reliance in bulk drugs (Active Pharmaceutical Ingredients/APIs) and
chemicals/intermediates that go into making the drug.” Mr. Srinivasan also
said the method to calculate the annual ceiling price increase should be revisited.
“WPI is dependent on price rise in a basket of a range of goods that are not
directly linked with the items that go into the cost of medicines. More
importantly, the unrealistic simple average method of calculating ceiling
prices should be replaced by a cost-plus mechanism that was prevalent under
the earlier DPCO 1995,” he said. |
