Abstract:

Should competition be promoted in the case of pharmaceutical drugs? Pharmaceutical drugs are highly-priced in India mostly because they are imported from developed countries. Even for the indigenous medicines, manufactured in India, the active Pharmaceutical Ingredient (API) is mostly imported from China. This increases the cost of the drug in India. These factors, by definition, makes these medicines out of bounds for millions of Indians who live below the poverty line. It is anti-competitive as in India, a significant portion of the population cannot afford these expensive drugs. Therefore, we go back to the age old question of whether patent and competition law are conflicting. The Indian pharmaceutical industry is one of the fastest growing industries in the world. It is one of the biggest contributors to the world economy. The only unique industry in which the normal processes of competition does not work in a textbook manner is the pharmaceutical sector. On the demand side, as is observed in other industries, individual consumers do not have the right to exercise their freedom to choose between competing products, based on their features and relative prices, except perhaps standard overthe-counter medicines. The pharmaceutical industry is the most regulated in the world. Yet the regulations do not aptly justify the rewards. The incentive theory goes further. The objective of granting IP rights is not only to compensate the inventor but also, by providing a “spectacular prize”, to give incentives to other potential inventors to make the necessary efforts to innovate. Where there is a conflict between competition and intellectual property policies, developing countries like India are inclined towards competition rather than exclusiveness. However, as the invention capability of domestic drug makers grows, a new balance will be needed.

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