People living with Aids in developing nations will continue to have access to cheaper generic drugs manufactured by Indian pharmaceuticals following an extension by the World Trade Organisation of a waiver on a controversial patent policy on medicine.

In their meeting in Nairobi, WTO ministers agreed to uphold a rule that allows poor countries to import cheaper copies of patented medicines until further notice.

“The waiver, which was due to expire in January 2016, has now been extended until two-thirds of WTO members ratify the proposal to remove the waiver,” said a WTO official in Nairobi, adding that this could take another 20 years.

Drug patents last 20 years to give drug manufacturing companies time to recoup their investment in research and development and turn a profit. Once the patent protection period ends, other drug companies can then copy the drug and sell it as a generic medicine. These generics are much cheaper than branded drugs.

About half of the population of these poor countries live on less than $1 a day and suffer a much higher disease burden, especially from infectious diseases such as HIV and malaria, than those living in rich countries.

All other countries, including developing countries such as India and China, are still bound by the WTO’s agreement on trade-related intellectual property rights (or TRIPS) with respect to drug patents.

READ: African states to back India’s push to remain ‘pharmacy of developing world’

Nelson Ndirangu, director of economic affairs and international trade in Kenya’s Ministry of Foreign Affairs and International Trade, said the WTO’s transitional waiver makes sense. By temporarily allowing least developed countries to ignore patents on drugs, it gives them time to develop their own pharmaceutical industries. And we are already seeing evidence of this happening.

“African countries are therefore required to take advantage of the WTO’s temporary waiver and begin creating capacity to manufacture these drugs in their own pharmaceutical companies,” said Mr Ndirangu.

In East Africa only CIPLA-Quality Chemicals Ltd, an Indian pharmaceutical company based in Uganda, manufactures antiretroviral and anti-malarial drugs for the East African market, but the cost of production is high, which results in lower quantities that are not enough for regional consumption. It is the only company in Africa that makes triple-combination antiretroviral drugs.

READ: Uganda leads push for permanent waiver on drug patents

“Developing and strengthening manufacturing capacities in Africa is important,” said Mr Ndirangu.

Protecting drug firms

The US has been contesting this flexibility in a bid to protect its multinational pharmaceutical companies. US pharmaceutical companies such as Roche, BMS, Bayer and Pfizer, and trade lobby groups have been at the forefront of the push for a review of India’s intellectual property rights (IPR) law so that it complies with international trade norms — a move that could deny poor countries access to the cheaper generic drugs manufactured by Indian firms.

Before 2005, India did not grant product patents on medicines. This allowed for the production of low-cost generic versions of medicines that were patented in other countries.

Competition among generic producers in India has seen the price of medicines to treat diseases such as HIV, hepatitis and cancer fall by more than 90 per cent

For instance, India’s patent office allowed Hyderabad-based Natco Pharma to make a generic version of German pharmaceutical company Bayer’s cancer drug Nexavar. Bayer’s Nexavar reportedly costs about $4,500 a month for 120 pills while Natco’s generic version costs about $145 for a month’s dose.

The price of branded Glivec was $92,000 per patient, per year in the US, while in India, the drug was being sold for around $21,171.

India has many large generics firms within its borders and, although it ratified TRIPS in 1995, it only brought its patent laws in line with the treaty in 2002. It now has to respect international drug patents.

It costs pharmaceuticals companies about $2.6 billion to develop a new drug. If these companies were not allowed to protect their investment with patents, it is doubtful that any new drugs would be developed. So patents are an important incentive.

“Patent protection doesn’t work for poor countries. Intellectual property rights, like patents, aren’t an effective incentive in countries that have not reached an adequate level of economic development because they have no intellectual property to protect. The exemption could be dropped once countries that have benefited from it have developed enough, and the industry reaches a self-sustaining size,” said Mr Ndirangu.

Although developing a home-grown pharmaceuticals industry is not a requirement of the WTO waiver, a strong local industry would give poor countries direct access to much needed cheap medicines.