Pharmaceutical Industry: The Interface Between Competition Law And Patent Law
By Team Legistify / 2016-08-09
Until 1970, the Indian pharmaceutical market was dependent on imports and dominated by multinational corporations. Drug prices were amongst the highest in the world. The scenario changed dramatically after the Patents Act of 1970 allowed process but not product patents for pharmaceuticals, enabling Indian firms to imitate foreign drugs by making minor modifications to the manufacturing process. In the same year, a new and far more extensive Drug Prices Control Order was promulgated, bringing a swathe of medicines under stringent price controls. The interface between competition law and Pharma industry has become more important than ever before.

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Practices against fair competition in the pharmaceutical sector have emerged as controversial issues in recent years. The pharmaceutical sector is highly regulated, driven by R&D, and very dependent on patent protection.

Competition law is about competition and consumer benefits in general. The healthcare issue is sensitive in most part of the world. The balance between intellectual property law and healthcare costs is attained through compulsory licensing provisions. The compulsory licensing provision is considered as procompetitive.

Overview

In India, the Competition Commission of India ('CCI') is the authority which has established under the Competition Act, 2002 (Act) to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. It covers within its ambit all categories of 'markets' in India including the pharmaceuticals sector as well. Moreover, the Act is extra-territorial and assumes jurisdiction over acts even outside India that may affect a market within India

The pharmaceutical market can be divided into two subsets with respect to the competition:
1. Competition among different brand-name drugs designed to treat the same disease condition and
2. Competition from generic manufacturers of drugs that are equivalent to branded drugs that have already had success in the marketplace.

Until 1970, the Indian pharmaceutical market was dependent on imports and dominated by multinational corporations. Drug prices were amongst the highest in the world. The scenario changed dramatically after the Patents Act of 1970 allowed process but not product patents for pharmaceuticals, enabling Indian firms to imitate foreign drugs by making minor modifications to the manufacturing process. In the same year, a new and far more extensive Drug Prices Control Order was promulgated, bringing a swathe of medicines under stringent price controls. The interface between competition law and Pharma industry has become more important than ever before.

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