India should favor more international cooperation against fake drugs

The fake pharmaceutical trade highlights the need for more international cooperation in combating counterfeit drugs. India’s reputation as a drug producer is on the line, since some of the fakes appear to come from India. Yet the country has long opposed cooperating internationally to combat counterfeit drugs and is viewed as the most significant obstacle to international cooperation. This allows Chinese-made counterfeits of Indian drugs to damage the global reputation of the Indian pharmaceutical industry. India should take a more nuanced position on this issue.

 Pharmaceutical Threats. India faces pharmaceutical threats from Europe and China which both require India to formulate a thoughtful response to counterfeit drugs.

In the last three years, European officials have: (1) detained and/or confiscated shipments of Indian-made generic drugs in transit; (2) lobbied African countries to rewrite their laws to criminalize importing Indian-made generic drugs, and; (3) devised a Council of Europe treaty that could be interpreted to criminalize Indian-made generic drugs in the European market. In none of these cases did Europe demonstrate that the drugs in question contained deliberately falsified ingredients and were medically dangerous. Instead, Europe acted in the guise of “fighting counterfeit drugs” to strangle India’s burgeoning legitimate pharmaceutical industry. These actions have been criticized in the media and prompted India to file suit with the World Trade Organization (WTO) against the European Union.

India’s pharmaceutical industry is also under attack from China. African authorities have repeatedly intercepted Chinese counterfeit medicines labeled “Made in India” to hide high volumes of fake drugs since Indian drugs dominate many markets. The packaging for these compounds is excellent; only experts can tell them apart and patients often find out too late. Indians suspect this is a ploy to deflect responsibility and undermine India’s drug industry. In 2009, India protested and China admitted its companies were counterfeiting ‘Indian’ drugs, but the problem recurred in 2010 because of weak Chinese enforcement. China’s past inaction suggests either a deliberate policy to destroy the reputation of Indian-made generics or, more likely, Beijing’s inability to reign in the fake-drug trade that benefits some politically powerful players.

Diagnosing Underlying Threats to India. In both cases, India is a victim because no globally accepted definition of “counterfeit drugs” or international laws against counterfeits exist. Some European officials interpret “counterfeit drugs” too broadly, blocking Indian goods on often bogus intellectual-property grounds to protect European companies. China exploits the lack of rules to export counterfeit drugs and pin the blame on India. Since there are no international rules and both Europe and China compete against India’s pharmaceutical industry, each embraces the view on counterfeit medicines that most benefits them.

If this is correct, India ought to create global rules on its terms, limiting Europe and China’s ability to engage in abuses.

Global Rules India Could Encourage. In 2004 Indian officials opposed a WHO suggestion for a treaty against counterfeit-drug products. At the time, India feared a counterfeit-drug treaty would be used by developed countries and their powerful pharmaceutical industries to marginalize Indian-made generic drugs. Instead, this has happened perhaps because there is no treaty. Some European officials have filled the vacuum by interpreting intellectual-property law in a way that pushes Indian drugs out of valuable markets. Europe has prioritized acting against medicines that might infringe a trademark or patent over combating dangerous falsified medicines that may kill, partly because doing the latter is much harder under most laws. Without a mandate to address the health dangers of counterfeit drugs, the WHO has remained a peripheral figure in these efforts.

India should reverse course and champion a global treaty against counterfeit medicines. As the proponent of such an initiative, India would be in a strong position to influence the treaty negotiation process. The Council of Europe has already prepared an intra-Europe treaty and Argentina has proposed a treaty through the United National Office of Drugs and Crime; it is only a matter of time before a global WHO treaty is proposed by a nation state. India should initiate negotiations to maximize its influence and ensure such a treaty will benefit its growing pharmaceutical industry.

To date, the process has stalled due to infighting within the WHO Intergovernmental Working Group on Public Health, Innovation, and Intellectual Property. Bickering between Western countries and Brazil and India have resulted in a stand-off; quality drugs.

Instead, India should develop a proposal to improve access to medicines by developing and strengthening national drug regulators and criminalizing drug counterfeiting. India could also table a resolution at the WHO Executive Board declaring that counterfeit medicines are a global scourge and mandating that the WHO establish a secretariat to carry out consultations on the modalities for negotiating a Framework Convention against Counterfeit/Falsified Medicines. India or Brazil should offer to host the draft secretariat in New Delhi or Brasilia. India and like-minded countries could then press for a special session of the UN General Assembly (where developed countries are the minority) to reach diplomatic consensus on the global problem.

By taking a leadership role in this process, India could avoid ceding to Europe on intellectual property and defend its interests against Chinese infringement.

India would benefit commercially and diplomatically by spearheading this treaty. India’s best generic companies dominate emerging markets, which are most harmed by fakes. In my analysis of drugs in 17 emerging markets, large Indian producers were second only to Western companies in consistent quality and are much cheaper on average. By championing better oversight for drugs, India will enhance the quality reputation of its goods and the market share of its drug companies. Taking leadership at the UN for a treaty to stop a worldwide scourge like deadly counterfeit drugs  would enhance India’s international reputation and benefit India’s long-term campaign for permanent membership in the UN Security Council.

Furthermore, an Indian-initiated treaty could unite Brazil and other countries that face the same overall threats while still providing Indian companies with a commercial advantage. India’s companies make a wide array of high-quality bioequivalent products, so improving standards globally would allow Indian pharmaceuticals to flourish. The same cannot be said for many companies in China, Brazil, Thailand, or South Africa, and cannot be said with any certainty for companies elsewhere in Africa. Thus, India could build a successful coalition and reap great commercial reward by proposing such a treaty.

J. Lynn, “India, Brazil Challenge EU at WTO over Drugs,” Reuters (12 May 2010), available at http://www.alertnet.org/thenews/newsdesk/LDE64B1O6.htm (accessed November 26, 2010).

http://timesofindia.indiatimes.com/business/india-business/Chinese-passing-off-fake-drugs-as-Made-in-India/articleshow/4633377.cms (accessed May 25, 2011).

PTI, “Fake ‘Made in India’ Drugs: China Admits Its Cos’ Involvement,” Times of India, August 11, 2009, http://timesofindia.indiatimes.com/india/Fake-Made-In-India-drugs-China-admits-its-cos-involvement/articleshow/4881726.cms (accessed May 25, 2011); and P. T. Jyothi Datta, “Chinese-Origin ‘Made in India’ Fake Medicines Seized in Nigeria,” Hindu Business Line, July 23, 2010, http://www.thehindubusinessline.com/2010/07/23/stories/2010072352600200.htm (accessed May 25, 2011).

Amir Attaran, Roger Bate, and Megan Kendall, “Why and How to Make an International Crime of Medicine Counterfeiting.” Journal of International Criminal Justice (2011). Available at: http://www.aei.org/files/2011/02/11/Why-and-How-to-Make-an-International-Crime-of-Medicine-Counterfeiting.pdf (accessed December 27,2011).

Roger Bate, Lorraine Mooney, and Julissa Milligan, “The Danger of Substandard Drugs in Emerging Markets: An Assessment of Basic Product Quality.” Pharmacologia 3 (2): 46-51, 2012. Available at: http://www.aei.org/files/2011/06/28/Pharmacologia-Published.pdf (accessed December 27, 2011).

Roger Bate, Lorraine mooney, Julian Harris, Barun Mitra, “A Safe Medicines Chest for the World,” International Policy Network (May 2010). Available at: http://www.aei.org/files/2010/05/18/SafeMedicinesChest2010.pdf (accessed December 27, 2011).

 

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About the Author

 

Roger
Bate
  • Roger Bate is an economist who researches international health policy, with a particular focus on tropical disease and substandard and counterfeit medicines. He also writes on general development policy in Asia and Africa. He writes regularly for AEI's Health Policy Outlook.
  • Phone: 202-828-6029
    Email: rbate@aei.org
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    Name: Katherine Earle
    Phone: (202) 862-5872
    Email: katherine.earle@aei.org

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