April 02, 2013
The Post told readers that drug companies would try to punish India for a Supreme Court ruling that denied Novartis, a Swiss drug company, a patent for its cancer drug, Glivec. The court determined that the drug involved only a minor modification of an earlier invention and therefore was not entitled to a patent monopoly. As a result, generic producers in India are able to produce and sell the drug for less than one-tenth its patent protected price.
In discussing the implications of the decision, the piece told readers:
“Many international drug companies have said that the Novartis trial was crucial to addressing the rapidly growing perception around the world that India’s patent protection system for drugs is weak. Such perceptions, many patent advocates say, will adversely affect foreign investment in India, especially by global drug companies that are eyeing the huge market in this nation of 1.2 billion people.”
There is no economic reason that this court decision would affect the drug industry’s investment at all. Drug companies will get the exact same patent protection for their drugs in India and every other country in the world regardless of where they conduct their research. If India was the most profitable place for a drug company to conduct its research before this patent decision then it is still the most profitable place for a drug company to conduct its research.
The only basis for shifting investment would be to punish India, presumably with the hope that if enough investment shifts India may change its patent laws. This means that drug companies and their shareholders (e.g. university and foundation endowments and public sector pension funds) are foregoing profits today in the hope that they can inflict enough punishment on India to change its patent laws. That is a striking claim and the Washington Post did its readers a service by calling it to public attention, even if the Post may not have understood the implications of what it printed.
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