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Unit 29 : Functions of WTO/GATT

Government has to be very cautious. There is no doubt that the government has a period of 10 years Notes
to shift to product patent regime in drugs, but the multinationals can create situations even before
that so as to force the government to amend the Patents Act earlier or create conditions of artificial
scarcity. The drug market is even now facing this phenomenon of the disappearance of a particular
drug for sometime in the market and its reappearance later at a higher price. During 1994-95 and
2000-2001 taken together, price index of drugs and medicines increased by 87.1 per cent as against
the overall increase in price index by 35.9 per cent. This rise is taking place despite drug price control,
but in case freedom is given to multinationals, there is a fear that drug prices would rise at a much
sharper rate, hitting the health cover of the common man. In a very angry comment, Mr. B.K. Keayla
writes : “The argument that the new patent regime would affect only 10-15 per cent of turnover is
totally wrong and silly.
Mr. Bibek Debroy does not share the pessimism of Mr. B.K. Keayla. He believes that there is a lot of
exaggeration about the supposed increase in drug prices. Arguments based on cross-country
comparisons should not be taken seriously. The Essential Drugs List published by the World Health
Organization (WHO) has a little over 250 entries. Less than 10 per cent of these are covered by patents
world-wide. The rest have all become generic and there is no need to grant a fresh round of patent
protection to these. Mr. Bibek Debroy, therefore, concludes : “The price rise will be pertinent for these
existing drugs, but not for the new drugs that arrive on the international market every year. If the
patent protection is not changed, these new drugs may not be marketed in India at all.
However, the critics do not agree to the defence given by the Government or certain economists.
Multinationals do have the capacity to create scarcities or withdraw the existing drugs and get them
registered under new product patents. The Government has, therefore, to continue with the Drug
Price Control Order so far as essential drugs are concerned. It has also to regulate the prices of other
drugs, failing which medical treatment in many ailments will be beyond the reach of the poor and
middle classes. Already, the situation has been changing in this direction with the growing trend of
privatization in health.
Patent or Patent-like Protection in Agriculture

Dunkel Final Act has made important changes concerning patenting or granting patent-like protection
in agriculture. The principal feature of the TRIPs text demands that protection be extended to micro-
organisms, non-biological and micro-biological processes and plant varieties. Article 27 of TRIPs
Text states that India may provide for protection of plant varieties either by patent or by an effective
sui generis system or by a combination thereof. This system shall be enforced at the end of the
transitional period of 10 years.
It may be emphasized that traditionally, under GATT, most patent systems have excluded sectors
such as agriculture, food and health outside its orbit. Some developed countries created a separate
sui generis system which granted intellectual property rights to plant breeders. This was codified in
1961 under the International Union for the Protection of New Varieties of Plants (UPOV). In 1978,
USA was allowed to join UPOV members union without changing its laws. However, UPOV has
continued to be an organisation mainly of the developed countries.
Under the UPOV convention of 1978, the plant breeder of a new variety had an almost total monopoly
of producing and marketing his variety of seeds through trade channels. His right under TRIPs was
subject to only two exceptions : (1) The Breeder’s exemption, which permitted any other breeder to
use the protected variety for breeding purposes; and (2) the Farmer’s Exemption which gave the
farmer the right to retain protected seeds from his harvest to plant the next crop. This convention was
limited to 24 plants and the period of protection ranged from 15 to 18 years.
This convention was modified in 1991 and the revised UPOV treaty empowers higher standards of
protection to plant breeders, thereby strengthening the monopoly rights of the breeder of a new
variety. Under the revised UPOV treaty (1991), the breeder had to pay royalty to the Plant Breeder
Right (PBR) holder, if his new variety resembled the protected variety in any trait. Similarly, the
farmer was not automatically permitted to use farm-saved-seeds of protected variety to sow the next
crop. He had either to pay compensation for use of seeds or obtain the approval of the breeder. Most

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