Free Trade Zone Between India and EU Will Raise Prices and Profits for Big Pharma

Posted on March 29, 2011


Free trade often comes at a high price.  The one between India and the EU that had been slated to be signed in April is one such example. It has citizens of India who rely on inexpensive generic drugs produced by small firms such as generic drugs for HIV patients. These would in effect be cut off while big Pharmaceutical companies would have their patents honored along with the ability to  garner windfall profits. How could this be?

From al Jazeera, this video tells most of the story:

India is the second largest producer of generic drugs.  Many of them find their way to the US.  The poor count on these drugs.  But many are knock offs of drugs under patent in the US:

This is a complicated issue, which is why it gets little attention in the mainstream press. Trade rules and agreements are tough going for any but the dedicated and the nerdy. But essentially, for some years now Big Pharma has been trying to use its influence over politicians in the US and in Europe (who don’t want to lose the investment, jobs and taxes that drug companies bring at home) to demand tighter rules on the Indian copycats. Patents normally last for 20 years, so drug companies can recoup the millions they spend on R&D. They want India to observe their patents, just as Europe and the US do.

India gets cheaper drugs if the generic whizzkids can knock off copycat versions of the blockbusters. While India is middle-income and getting richer, unfortunately a tough trade agreement with the EU would probably penalise the Indian poor. But it also threatens the poorest of the poor, in Africa and other parts of Asia. Look in an African health centre and all the drugs are Indian-made. With a growing need for new and better HIV drugs in sub-Saharan countries, it may be no time to curb the Indian generic manufacturers. [the Guardian]

There are other areas of the British economy and its society that will be impacted by this agreement:

Britain’s efforts to limit migration of professionals from outside the European Union is likely to be neutralised by an India-EU trade agreement that may allow Indian professionals to bypass British immigration laws and take up work in UK. [Economic Times]

These are indeed complicated agreements and need to be watched carefully.  This whole globalization of economic sectors in various countries with large corporations in the lead is troublesome because if the difficulties of keeping up with key issues that will impact our lives is critically in need of monitoring

While the big Pharmaceutical companies in the US and in India and Europe will reap huge profits, you and I as well as millions of the uninsured will be paying more for our drugs.

However, there will be a bit of a reprieve.  This week we learned that the Trade Agreement may not be signed until 2012:

The prospect of an imminent of India-European Union Free Trade Agreement has suffered a setback according to officials who said they now believe it may not be signed before the end of the year or early 2012. [The Telegraph]