As the pharmaceutical industry attempts to navigate through waves of tariffs, industry observers point to one more character that could play a significant role in this narrative of transactions and deal-making — especially for India.
In all the noise over tariffs, intellectual property (IP) has not yet been stated out loud as a negotiating tool, but it most certainly waits in the wings, say economists and industry consultants, who’ve seen the evolution of trade and IP ties between countries for several years now. And their observations come even as the clock ticks on the annual Special 301 report, brought out by the office of the United States Trade Representative (USTR).
The Special 301 report is an assessment by the US of its trading partners’ handling of IP across sectors. The process involves submissions and in-person hearings of different industry platforms from across the world, and the deadline ended late last month. The report is expected by end-April.
The pharmaceutical industry is one of the sectors named by US President Donald Trump in his ongoing tariff onslaught on countries. And with less than two months to go for the release of the Special 301 report, the uncertainty grows.
“This time the context is significantly more important,” says Biswajit Dhar, Distinguished Professor, Council for Social Development, adding that “all these years the situation did not come to a boil”. For several years now, India has been on the ‘priority list’ and ‘priority watch list’, as outlined by the Special 301 report, which also mandates bilateral consultation and action, he points out. But there has never really been major retaliatory action, he says, though that could change now.
India is among seven countries in the ‘priority watch list’ in last year’s Special 301 report. “Trading partners placed on the ‘priority watch list’ are the focus of increased bilateral attention concerning the problem areas,” says a USTR note.
In fact, Dhar points to the strong China references in the US President’s ‘America First Trade Policy’, saying “It is not just about tariffs, it is also about IP.” As India’s administration attempts to stay focused on bilateral talks with the US, Dhar says IP will be an issue. But the real action could unravel, he says, come May, when the Special 301 report is out.
Pointing to the Presidential memorandum ‘Reciprocal Trade and Tariffs’ (dated February 13), Krishna Sarma, Managing Partner, Corporate Law Group, says, “The US government will evaluate the harm to US entities from any tariff and non-tariff barriers (NTB). While the NTB is a non-exhaustive list, the definition includes burdensome regulatory requirements on US businesses, unfair limitation on market access, structural impediments to fair competition, lack of IP protections…” As per the memo , the report is due on April 1, and a ‘Fair and Reciprocal Plan’ is expected by Aug 12, she says, also pointing to the role of IP.
TRIPS flexibilities
On domestic industry concerns, an insider explains that if IP concessions are given to US drug-makers during bilateral negotiations, it could soften safeguards in the Indian IP framework, likely resulting in drug monopolies that could affect medicine access and affordability.
A regular participant in the Special 301 process, making presentations to the USTR, is the Indian Pharmaceutical Alliance — a platform of top Indian drug-makers. Pointing to IP-related actions in the Indian ecosystem, IPA calls for removing India from the ‘priority watch list’.
“Unlike many jurisdictions where stringent patent laws limit access, India’s IP regime prioritises equity and affordability, particularly in the healthcare sector. The integration of flexibilities under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement, such as those embedded in Section 3(d) of the Patents Act, has been instrumental in preventing practices like evergreening and patent thickets, which can delay the availability of generics and affordable treatments.
“India has always maintained an optimal balance between encouraging and protecting innovation along with the public’s access to medicines not being hampered,” IPA said in its submission to the USTR.
Dhar recalls “calmer times”, when India used flexibilities in the TRIPS agreement to make medicines accessible to patients. But that could change, he cautions, if IP plays a bigger role in a prevailing tense relationship.
