Drug Deals: How Big Pharma and the Indian Government Are Letting Millions of Patients Down

Fellows 2015

By Vidya Krishnan

March 01, 2016

Also published by Caravan

THE DELHI OFFICE of the controller general of patents, designs and trademarks is situated in the neighbourhood of Dwarka Sector 14, a 45-minute drive from the capital’s centres of power. There is a placid air about the place, and on winter afternoons you’re likely to spot the odd group of junior employees sunning themselves on the front lawn after lunch. Past the lawn are two wide buildings, inside which sit 30 officials who examine the patent applications submitted to the office.

Most applications that pass through this office are rejected or approved without attracting much attention. Every so often, however, one will draw intense scrutiny from the media, the corporate world and the general public, usually because vast sums of money are at stake in the verdict. Some cases, though rarer, can even determine the fates of tens of millions of people around the world.

Sofosbuvir, a drug manufactured by the US pharmaceutical company Gilead Sciences, revolutionised the treatment of hepatitis C.

David Paul Morris / Bloomberg / Getty Images

One such case came up for hearing in July 2014, before an official named Hardev Karar. The US pharmaceutical company Gilead Sciences had filed a patent application for its drug sofosbuvir, also known as “sofo,” which it sold under the brand name Sovaldi. The drug was approved for use by the United States government in December 2013, and had since revolutionised the treatment of hepatitis C, a viral disease that can lead to liver cirrhosis and cancer. According to estimates by the World Health Organisation, hepatitis C affects between 130 million and 150 million people across the world, and causes approximately 500,000 deaths each year. Sovaldi was far more effective against the disease than anything that had come before. It also did not cause the side effects that earlier drugs did, which were so brutal that patients often chose to forgo treatment altogether.

But Gilead had come under sharp criticism for the price it was charging: Sovaldi was launched in the United States at $1,000 per pill, or $84,000 for the standard 84-day course that cured most patients. This exorbitant price had worked well for the company. In 2014, Sovaldi earned Gilead $10.3 billion, and powered its revenue to nearly $25 billion—more than double the figure for the previous year. The drug was sure to bring in many billions more in the years to come.

Now, Gilead wanted to sell Sovaldi in India. If Karar awarded the company a patent, Gilead would have exclusive rights to make and sell the drug in the country, which, according to the WHO, has around 12 million people who are infected with hepatitis C.

On 14 January 2015, Karar delivered a verdict rejecting Gilead’s application. The decision made headlines, and sent tremors through boardrooms in India and across the world. It opened up the field for Indian pharmaceutical companies who wanted to manufacture generic versions of the drug—that is, ones with the same active ingredients—and sell them at any price they chose. Indian companies would also be free to export the drug to other countries, including places where Gilead was aiming to corner the sofosbuvir market.

It wasn’t just the huge commercial stakes of the case that riveted people. Its outcome was also expected to indicate how welcoming India, under the Narendra Modi government, would be to international business. For decades, the country had been accused of having weak protections for intellectual property rights—or IPR—and of thus being unsupportive of innovative foreign firms. Western countries, which had hoped for change after the 2014 election, were likely to see the rejection of Gilead’s patent application as yet another sign that India wasn’t serious about strengthening its IPR regime. (While activists welcomed the decision, some experts criticised Karar’s verdict as being unclear.)

His timing was inconvenient, too. The president of the United States, Barack Obama, was due to visit India on 25 January, less than two weeks after the verdict, as the chief guest at the country’s Republic Day celebrations. India’s IPR protections were certain to feature in his discussions with Modi.

Gilead’s lawyers acted swiftly, and moved the Delhi High Court against Karar’s verdict. Two weeks after the verdict, on 30 January, the court accepted Gilead’s argument that Karar had made key errors of procedure. Setting his decision aside, the court ordered the patent office to reassess Gilead’s application and arrive at a “fresh decision.”

A FEW MONTHS BEFORE KARAR’S VERDICT, thousands of miles away, Greg Jefferys woke up to find that he could not get himself out of bed. Jefferys, a 60-year-old resident of the Australian city of Hobart, in the southern island-state of Tasmania, had been experiencing fatigue for a few days. He had also noticed that his urine had turned a darker colour, and begun emitting an unpleasant odour. But, since he had been in robust health for four decades, he didn’t pay much heed to these changes. However, on that particular morning, in August 2014, when his exhaustion confined him to his bed, Jefferys grew seriously worried. He decided to consult a doctor.

A first set of tests confirmed what Jefferys feared—there was something wrong with his liver. More tests followed, and he learnt, to his dismay, that he had hepatitis C. Jefferys couldn’t understand how he had contracted the virus. He hadn’t recently been involved in any activity that might have involved blood-to-blood contact—the virus’s primary mode of transmission—such as donating or receiving blood, or getting a tattoo or body piercing. He realised then that he had probably contracted the virus more than 40 years ago, during a period when he used intravenous drugs, and that it had lain dormant in his body in the intervening decades.

Jefferys looked up his options for tackling the disease. They were not promising. Twenty-five years after the virus was first identified, in 1989, the primary method of treatment consisted of a weekly injection of a kind of drug known as a pegylated interferon, along with a daily course of tablets. Jefferys shuddered at the list of side effects these drugs caused: nausea, depression, breathing trouble, aches, fever, chest pain. Like many hepatitis C patients, he decided to spare himself this ordeal and try to manage the disease instead, by giving up alcohol and sticking to a healthy diet.

Jefferys was just getting used to this new lifestyle, when a relative told him of a new drug, being put through trials in Australia, which had been found to cure hepatitis C in three months. The drug, Sovaldi, was prohibitively expensive in the countries where it had been launched, but if Jefferys was chosen for one of the Australian trials, he would receive the treatment for free.

He shot off emails to doctors to try and secure a place in a trial, but had little luck even getting any information. He managed to book an appointment with a doctor in Sydney, and flew to the city to meet him. To Jefferys’s disappointment, the doctor told him that there was intense competition for places in the trials, and that those who were severely ill were being given preference. Even when the drug was launched later, the doctor said, Jefferys probably would not qualify for a planned government subsidy programme, since it was likely to be limited to patients with an advanced form of the disease. If Jefferys wanted to be cured, it appeared, he would have to get much sicker first.

Jefferys had given up on getting hold of the new drug until, a few weeks later, his hope was rekindled by news from India: Karar’s rejection of Gilead’s patent claim. Jefferys scoured the internet, looking for cheaper Indian versions of the drug. He found that Indian manufacturers did make sofosbuvir, but that those drugs were not available in Australia. The only way to get hold of the drug would be to travel to India and buy it himself.

Jefferys dug deeper. If he procured the drug in India, he found, Australian law permitted him to fly back into the country with a three-month supply—just the quantity he needed. He totted up the figures. The price of a full course of the medicine in Australia was $84,000—the same as in the United States. The cost of it in India, along with the money needed for travel, stay and other expenses, for the period it would take him to organise his purchase, came to a little over $3,000.

This was a larger sum than Jefferys had easy access to, but he could cobble it together by using his credit card and taking some help from his friends. He didn’t hesitate. His exhaustion was getting worse, and he had begun having excruciating cramps—and still, he wasn’t sick enough to qualify for the Australian government’s programme. He decided he would make the trip, and chose Chennai—a city he also happened to have an academic interest in—as his destination.

Greg Jefferys travelled to India in 2014 to buy a generic version of sofosbuvir. He now helps run a buyers club—a group of people who work together to purchase hard to procure or expensive drugs at affordable prices. Photo: Nikki Davis Jones / News Pix

BUT EVEN AS JEFFERYS WAS PLANNING HIS TRIP, Gilead was working to tighten its control over the sale of sofosbuvir in India. Central to the company’s strategy were agreements it had signed with 11 Indian companies, between September 2014 and March 2015. These granted the Indian firms “voluntary licences,” or VLs, to make and sell the drug in a fixed list of countries, and no others, at the heavily discounted price of $900 for 84 tablets—a little more than 1 percent of the American price. The agreements also laid down a number of other terms, including a royalty of 7 percent of sales to Gilead.

It was a controversial plan. Some analysts believe that such arrangements are a useful compromise, allowing generic-drug manufacturers to access markets in some countries, while patent holders retain their monopoly over others. But activists argue that these agreements deny patients in the latter countries their right to affordable drugs. Further, some pointed out, with Sovaldi, since Gilead hadn’t even been granted a patent in India yet, these licences effectively allowed the company to charge rent on a property it didn’t own.

Among the Indian companies that signed an agreement was the Hyderabad-based Natco—a firm that had, in the past, successfully challenged foreign companies’ attempts to dominate the Indian market through IP claims. Most significantly, between 2011 and 2014, it fought, and won, a high-profile battle to make an affordable version of a cancer drug called Nexavar, which had been patented in India by the German company Bayer. Its commitment to that case had given Natco a reputation as a company that looked out for the interests of patients. Activists, journalists and pharmaceutical analysts were, therefore, surprised when it gave in to Gilead’s plan.

What made Natco’s move even more unusual was the fact that the company was among four entities that had filed challenges to Gilead’s patent application in Delhi ahead of the verdict. Effectively, that had been a formal assertion that the company did not think the drug deserved a patent under Indian law. But in April, the month after it signed the voluntary licence agreement with Gilead, Natco withdrew its patent challenge.

Some experts believe that such a move should have drawn the attention of the Competition Commission of India, the regulatory body meant to ensure that corporations do not damage the competitive environment in India. “Every pharma licence that results in the putative licensee withdrawing a patent challenge must be scrutinised by a competition authority,” Shamnad Basheer, a leading IPR expert, and the founder of the well-regarded and widely read blog SpicyIP, told us. “For this withdrawal of the patent challenge will have a likely impact on public health as well as the competitive fabric of the market.”

There may well have been hidden forces behind Natco’s decision. A health activist whose job entails following key developments in the pharmaceutical industry told us that Gilead had “requested” that another major pharmaceutical company, Mylan—which had already signed a licensing agreement with Gilead—approach Natco on its behalf.The activist claimed to have been told of Mylan’s role by a senior official at one of the companies. Mylan, the activist said, was in a position to influence Natco because it is among Natco’s biggest clients. The two companies have a history as marketing partners for another billion-dollar drug, Copaxone, which is used to treat multiple sclerosis.

“Mylan is a huge client for Natco,” the activist told us. “They contacted Natco to get them on the negotiating table with Gilead,” and “Mylan’s management influenced Natco’s decision” to sign the voluntary licence agreement. “Essentially,” the activist said, “they brokered the deal.”

The implications of such a discussion would be serious—in essence, that two companies who would otherwise have been competing in the open market reached a private agreement that could make a vital drug inaccessible to millions of people.

Between September 2014 and March 2015, Gilead signed agreements with 11 Indian companies, granting them conditional licences to make and sell sofosbuvir at a highly discounted price. Photo: Sajjad Hussain / AFP / Getty Images

We emailed Natco to ask why it had chosen to sign the agreement, and to seek a reaction to the activist’s claim that the deal had been “brokered” by Mylan. A company representative replied: “We do understand the fact Natco signed a VL would have been a surprise.” While Natco did not specifically deny Mylan’s role in bringing it to the negotiating table with Gilead, the representative said, “We also completely disagree on you using the term ‘brokered’ as the VL was signed between Gilead and Natco.” The reply continued: “Gilead has signed the VL with ten other companies as well in the absence of ‘brokers.’ Therefore using this term is not apt.” The representative said the decision was motivated by the “business interests of the organisation.” (Mylan did not respond to our emailed questions, and Gilead only suggested we talk to Natco about the matter.)

When we asked why Natco withdrew its patent challenge, the representative replied that “it was not feasible for us to initiate litigation in multiple countries which otherwise are included in the VL.” Signing the agreement, the representative said, “ensured a certainty of launch and continuity in product availability” in many markets.

Indeed, the voluntary licence did allow the company to immediately sell the drug in several countries—including most of Africa. But many pointed out that the list of countries that licensees could not sell to was carefully chosen.

“Gilead allowed its Indian competitors to sell in markets that it knew were not very profitable in exchange for their staying out of bigger and more lucrative middle-income countries such as China and Brazil,” said a November 2014 story published by Al Jazeera. “The agreements thus promoted competition controlled by Gilead, not open competition between Gilead and manufacturers of generics, which is necessary to bring down prices.”

According to a calculation by Hep Coalition, a group that advocates for better access to hepatitis C diagnostics and treatment, Gilead’s list of countries open to Indian licensees excluded more than 73 million hepatitis C patients around the world from accessing generic sofosbuvir.

The contracts also imposed limitations on the Indian companies’ export of sofosbuvir’s active pharmaceutical ingredients, or APIs—the raw materials needed to manufacture the tablets. Indian licensees were only allowed to sell APIs to other licensees, whether in India or abroad. Since four of the Indian licensees—Laurus, Hetero, Aurobindo and Mylan—are major suppliers of affordable APIs for hepatitis C drugs, this effectively cut off supply to generic producers across the world. Gilead, itself a major manufacturer of sofosbuvir APIs, thus cornered a significant portion of the global market for them.

Gilead also sought to impose harsh restrictions on sales within India, laying down rules to determine who could buy the drug. The company justified these measures as being part of an “anti-diversion programme”—essentially, a plan to ensure that drugs only went where the company wanted them to go. According to Médecins Sans Frontières, an international health-aid organisation that has interacted closely with Gilead to buy sofosbuvir for its projects in Africa and Asia, the company insisted that the drug, which comes packaged in bottles, only be sold to patients who could provide “proof of identification, citizenship and residence.” This, MSF said, could lead to the exclusion of vulnerable groups, such as refugees and economic migrants. Further, patients would have to turn in used, empty bottles before they could buy new bottles of the drug. MSF described this as a “coercive” measure, akin to “policing.” The organisation described these strictures on sales as “unprecedented.”

When we spoke to the senior Gilead executives Nick Francis and Aaron Brinkworth over the phone in January, Brinkworth claimed there had been a “lot of misinformation,” and that the company “did not prescribe specific things they”—the licensees—“should do.” Gilead, Brinkworth said, had “only asked the Indian companies to share with us what their plans are to limit the diversion. The reality is that we are never going to entirely prevent diversion. It is not ever about restricting access. We really do believe that this should be produced in the countries licensed, and used appropriately where it can be exported as per the VL.”

Accounts from some generic manufacturers, though, suggest that Gilead was determined to enforce the measures outlined by MSF. Denis Broun, Cipla’s director of public access and global affairs, told the Financial Times, a British daily, that Gilead was trying “to say, ‘keep tabs on every patient’ and pushing pretty hard on how to do anti-diversion.”

Activists have urged Indian companies to resist. “Gilead is forcing medical providers to introduce policing measures that could lead to dangerous treatment interruption for patients,” Manica Balasegaram, a doctor and senior official at MSF, told us. “We are urging all Indian companies that have signed a licence with Gilead to refuse to implement this controversial anti-diversion programme, so more people in desperate need of this treatment can access it without having to first submit to an unacceptable set of rules and invasion of their privacy.”

As it turned out, despite signing the agreements, Indian companies did not comply with the anti-diversion programme. The matter came to a head in March 2015, when Gilead flew Nick Francis to Jaipur, to host a meeting with representatives of the 11 manufacturers it had signed the licensing deals with, including Cipla, Mylan and Natco.

The meeting did not go well for Gilead. An internal memo by MSF, which followed the developments closely, said that Gilead’s proposals on anti-diversion were “ridiculed by all the companies,” which “led to the discussion being cut short.” A representative of one of the licensees, who was present at the meeting, told us that, “initially, there was a pushback on the anti-diversion programme. But Gilead let go of that very quickly because they realised it was not possible for companies to keep track of every pill sold in a country the size of India.”

In the early 2000s, Yusuf Hamied, the chairman of Cipla, decided to sell a three-drug “cocktail” therapy for HIV to patients in Africa for just $1 a day. Until then, the treatment cost around $1,000 a year. Photo: Adeel Halim / Bloomberg / Getty images

GREG JEFFERYS LANDED IN CHENNAI IN MAY, in the middle of the city’s sweltering summer. He had planned to stay for a week, assuming that would comfortably allow him to get a prescription and buy the stock of sofosbuvir he needed. But the trip soon turned tense, as he struggled with communication and red tape, and the unexpected obstacles of Gilead’s anti-diversion programme.

Jefferys checked into a hotel in T Nagar, a busy central shopping district, and, on his first evening, tracked down a doctor recommended to him by an activist he had met through an online support group. He needed the doctor to examine him, look over his tests and write him a prescription. Instead, the doctor informed Jefferys that he was missing the papers from a key liver test, and that he would have to have it done if he wanted a prescription for sofosbuvir.

The next day, after completing the test, which showed that the condition of his liver had worsened, Jefferys returned to the doctor and obtained his prescription. Then, following the advice of his activist friend, he began to contact various pharmaceutical distributors to try and set up an appointment to buy the drug. But the distributors struggled to understand his Australian accent over the phone, and he their Tamil accents. After a few days of frantic emails and phone calls, he managed to set up an appointment to buy a course of Sovaldi—which he chose over generic equivalents. He had just two days left before his time in the city ran out.

The next morning, Jefferys sat in his hotel and waited, watching the hours tick by with no sign of the distributor. His phone calls went unanswered. Finally, late in the afternoon, someone arrived—not the distributor, but another delivery man, bearing troubling news with a casual smile. He had brought only one bottle of Sovaldi, he said, because Gilead was not allowing distributors to sell more than a single bottle at a time to any buyer.

Jefferys panicked. He hadn’t known about the anti-diversion measures. One bottle of Sovaldi would only last him a month, and it seemed unlikely that he would be able to procure two more in the little time he had left. He decided to try and get hold of a full supply of a generic version of the drug instead. A few calls later, he managed to place an order for three bottles of Myhep, Mylan’s variant of sofosbuvir. Later that evening, as Jefferys sat down to dinner in the hotel, a manager interrupted him to say that someone had come with a package for him. He dashed to his room and returned with the Rs 30,000 he needed to pay for the medicine.

Back in his his room, Jefferys marvelled at the pills. “Three little plastic jars, each with 28 little tablets in them,” he wrote in a blog entry dated 19 May. “I had traveled half way around the world, spent nearly a week jumping through seemingly endless burning hoops, all for these three little jars.” It seemed absurd to him. “These little jars held the difference between health and sickness, life and death, years of good life or years of suffering. It was like some kind of weird magic, some kind of genie in a bottle.”

Jefferys’s quest for the drug had affected him deeply. On his blog, he wrote of being “overwhelmed by the enormity of this experience.” He felt both blessed and guilty: “Guilty because there are so many other people in the world who should have these little bottles, millions and millions of people who are now suffering terribly because they cannot get what these three little bottles contain. It is cruel, it is insane. How can any human withhold that which will ease another’s suffering?”

Prime Minister Narendra Modi was heavily criticised for his joint statement with the US president, Barack Obama, pledging to create a “highlevel” intellectual property group with “appropriate decision-making and technical-level meetings.” Photo: Prabhat Kumar Verma / Pacific Press / Lightrocket / Getty Images

GILEAD’S VOLUNTARY LICENSES, which led to Jefferys’s struggles to obtain sofosbuvir in Chennai, marked a strikingly new kind of relationship between India’s pharmaceutical industry and a Western corporation. For decades, Indian companies have been known not for submitting to the conditions of companies from the West, but, rather, for taking a confrontational stance, and arguing that they should be allowed to supply affordable drugs to anyone who needed them, anywhere in the world.

That conflict played out most prominently in the global fight against HIV—a story retold in the 2013 documentary Fire in the Blood. In the late 1980s and the 1990s, as HIV spread rapidly, Western pharmaceutical companies began to develop treatments to combat it. Though the prices of these treatments dropped from more than $10,000 per year to as low as $1,000 per year, they still remained out of reach for millions who were infected with the virus.

In 2001, Yusuf Hamied, the chairman of Cipla, announced that he would offer a three-drug “cocktail” therapy to patients in Africa, the continent with the highest number of HIV-infected individuals, for the price of $1 a day. These drugs were copies of what Western companies such as GlaxoSmithKline and Boehringer Ingelheim were already selling in parts of Africa. For manufacture and sale within India, the law was on Hamied’s side. A remarkably progressive legislation enacted by Indira Gandhi in 1970—which Hamied helped shape—barred the patenting of medical products in the country. But Western corporations warned Cipla that it would be breaking the law if it sold the drugs in other territories, including countries in Africa, where they held patents.

After lobbying hard at various government and industry forums across the world, activists and Hamied gradually began winning victories, such as one where the South African Competition Commission ruled that GlaxoSmithKline and Boehringer Ingelheim, both of which held patents in Africa for different drugs in the cocktail, were abusing their dominant position. The commission ordered the companies to permit generic drug manufacturers to sell their versions of the HIV drugs. By the mid 2000s, Hamied was shipping millions of pills to Africa, helping stem the tide of death that was sweeping the continent. His work earned him a reputation among some as a saviour, and among others as a pirate.

But though they conceded some ground, big pharmaceutical companies were simultaneously working to change the very nature of international trade relations. “They, particularly Pfizer, aggressively began pushing their governments to link intellectual property to trade discussions,” James Love, the director of Knowledge Ecology International, a leading IPR organisation, told us.

An early turning point had come in 1994, when 162 countries, including India, signed the Trade-Related Aspects of Intellectual Property Rights, or TRIPS, agreement. The pact mandated, among other conditions, that patents had to be granted to all “inventions,” including medicines. It was the first time that an international trade agreement linked IPR with trade. Developing countries, including India, were given an additional ten years to fully comply with the TRIPS conditions.

But India managed to bargain for the inclusion of a crucial clause—the right to grant “compulsory licences.” Essentially, when governments felt that public health interests were not being adequately served by a patent holder, they could override the patent and allow others to manufacture the drug. India has since exercised this right once, in the case of a kidney- and liver-cancer drug, Nexavar, for which the government granted Natco a compulsory licence in 2012.

When 2005 rolled around, India amended the 1970 legislation to meet its obligations under the TRIPS agreement. The law now provided for a more stringent IP regime, under which medicines could also be patented. But Left parties who were part of the ruling United Progressive Alliance coalition were displeased with this, and fought hard to add a provision into the new legislation: section 3(d), which stated that a substance, such as a medicine, could not be patented if it did not result in “the enhancement of the known efficacy of that substance.” This provision has since been used innumerable times to reject patent applications.

The most significant challenge to this new law came in the case of Novartis’s cancer drug Gleevec. After it was denied a patent for the drug by the Chennai Patent Office, the company appealed the decision in the Supreme Court. In April 2013, the court rejected Novartis’s appeal under the terms of section 3(d).

It was a landmark decision, hailed by activists and condemned by corporations. It demonstrated that the provisions of section 3(d) could offer a powerful protection to drug manufacturers in India—one that had the potential to save lives. To companies in the West, it seemed that India was misusing a loophole and evading the spirit of the TRIPS agreement; they also argued that weak patent protections would only damage India’s own pharmaceutical industry by discouraging innovation. Through governments and trade bodies, they continued to exert pressure on India to fall in line.

“There has been a sustained campaign by multinational pharmaceutical companies against India,” Anand Sharma, the United Progressive Alliance government’s commerce minister in 2013, told us when we met him towards the end of February. “They lobby intensely with their senate and congress and make demands. Their government then makes demands on us to put these issues on the bilateral agenda. Essentially, in my time, they wanted the 3(d) clause to be removed.” The United Progressive Alliance government publicly resisted these pressures.

Narendra Modi’s victory in the 2014 general elections was widely seen as a positive development for industry in India, and abroad. Modi had built a reputation as a business-friendly politician during his decade as chief minister of Gujarat. Corporate leaders and policy experts watched keenly to see how his government would negotiate the fraught terrain of IPR.

Even before Modi’s victory, the US government and industry lobbies fired off a few warning shots. In February 2014, India was the subject of a stern review in public hearings conducted by the United States Trade Representative—a government agency that conducts trade negotiations on behalf of the US government, and recommends trade policies to the country’s president.India has, for the better part of 25 years, been on the organisation’s “priority watch list”—of countries whose IP regimes it deems to be of concern. In 2014, lobby groups, such as the immensely powerful pharmaceutical organisation PhRMA—which has, in the past, been caught lobbying to derail a potentially stringent IP law in South Africa—called for India to be downgraded to a “priority foreign country.” This seemingly slight change of terminology could have had far-reaching implications, since countries that receive the latter designation are usually considered for penal action and sanctions.

On 30 April 2014, a few weeks before India’s general election results were declared, the office of the USTR released its annual review of IPR offenders around the world. Its list of complaints against India was familiar. “The United States is concerned that section 3(d), as interpreted, may have the effect of limiting the patentability of potentially beneficial innovations,” the report read. The document also criticised India for continuing to permit compulsory licences in health, as well as in agriculture.

But the report stopped short of downgrading India’s status. It seemed to hold out hope of significant change coming in with a new government. “In the coming months, the United States will redouble its efforts to seek opportunities for meaningful, sustained, and effective engagement on IP-related matters with the new government,” it read.

To ensure that the fear of trade sanctions loomed large over the incoming government, the USTR stated in the report that, in October 2014, it would conduct an “out-of-cycle review”—a mundane-sounding but ominous signal that a country was expected to show progress in updating its IP regime. It was with this threat looming over India that, in May 2014, Narendra Modi came to power.

In July 2015, Aaron Motsoaledi, the South African health minister, said that if India decides to dilute its patent policy, it will “end up killing a lot of people in Africa.” Photo: Stephane de Sakutin / AFP / Getty Images

ACTIVISTS AND ANALYSTS HAVE, SINCE THEN, obsessively tracked every statement and decision made by Narendra Modi and his government pertaining to IPR. On SpicyIP, its editor-in-chief, Swaraj Paul Barooah, studied a range of media reports on government statements on IPR and concluded that that there were “contradicting positions coming out of the government.”

In one instance that raised concerns, on 30 September 2014, at the conclusion of Modi’s five-day visit to the United States, the Indian prime minister and the US president issued a joint statement, pledging “to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making and technical-level meetings as part of the Trade Policy Forum.”

It was a typically dense diplomatic statement, but among activists and generic companies who had been tracking the details of the talks, it set off alarm bells. They argued that the United States should have absolutely no say in India’s IP policies, and warned India against caving under pressure.

A group of 58 activists and organisations wrote an open letter to Modi, cautioning him against compromising Indian sovereignty on the issue of patents. They argued that allowing any decision-making power to a group of which the United States was a part “could be at the risk of ingression of sovereign policy space. Bilateral arrangements should not have the power to supersede domestic democratic decision-making processes mandated by the Constitution of India.” The letter warned that “such bilateralism in the area of IP must be approached with an extremely high degree of caution.”

In another instance that caused anxiety, in April 2015, the newspaper Mint quoted Modi as saying, “If we don’t work towards bringing our intellectual property rights at par with global parameters, then the world will not keep relations with us. If we give confidence to the world on IPR, then we can become a destination globally for their creative work.”

Many observers were aghast. Barooah’s post on the remarks bore the headline: “Modi shames India, calls patent laws under-developed.” He argued that India was fully compliant with its obligations under TRIPS, and any suggestion that it was falling short was wrong. “It is indeed shameful for us that the prime minister now goes and makes a statement saying the exact opposite,” Barooah wrote, adding that such an assertion was “unhelpful for local innovation efforts” and put “the health of Indian patients at risk.”

At the same time, Barooah also noted that a stream of messages, many from the commerce minister, Nirmala Sitharaman, had asserted the opposite view, that India had adequate standards of IP protection. In May, The Hindu quoted her as saying that “India believes in a strong patent regime” and was “compliant with international standards.” The same month, the Economic Times quoted her as saying that, when it came to IPR, “there is no need for anyone to question us.”

In its communication, then, the government has been less than clear about its stance. “Linkages, and dialogue at higher levels are often difficult to follow, given how much of this happens behind closed doors,” James Love, of Knowledge Ecology International, told us.

Nevertheless, some of the Modi government’s decisions have left people with a growing sense of unease. In July 2014, the Department of Industrial Policy and Promotion, or the DIPP, one of the key bodies responsible for the country’s IP regime, set up a new committee to draft a national IP policy. As a story in Frontline noted, the purpose of this exercise itself was unclear—many lawyers insisted that India already had an IPR policy in the form of its existing patent laws. “The IP policy is already spelt out in the Indian Patents Act and subsequent amendments which were unanimously passed by parliament,” the lawyer Anand Grover told the writer, Sagnik Dutta. “Subsequent judgments have laid out a framework for IP. What is the need to tinker with this policy?”

Shamnad Basheer, the IP expert, and founder of SpicyIP, was one of the three members on the committee. He told us that their task was to frame a “vision document” because Indian IP laws lacked a “cohesive fabric” and were “spread across ministries and departments.” The committee worked on the document for three months. “We were given a free hand, and we worked very hard and submitted what I believe was a sophisticated policy document,” Basheer said. “We travelled to Delhi twice to meet with DIPP officials before submitting our document.”

What happened next stunned Basheer. “They never acknowledged the receipt of the document and there was zero communication” from the government, he said. The very day after the document was submitted, the DIPP formed a new think tank to carry out exactly the same task. “I wrote repeatedly to DIPP and others asking why we were disbanded but didn’t get a single response,” he said. “Effectively, they completely shut us out and we don’t know what happened to the report we sent them.” (We emailed the DIPP for comments, but had not received a response nearly a month later.)

We asked Basheer why he thinks the government stonewalled the first committee. He suggested that the DIPP “did not know how to respond to our document. If their purpose was—and I strongly believe that is the case—was to make the United States believe that India is amending its practices, and it has an investment-friendly climate, then our document certainly did not serve that purpose.” It was a document that was “focussed on protecting national interest and was aimed at serving the interests of Indian citizens, not American businesses,” he added. “I think that vision did not suit them and they didn’t know what to do, so they set up a new committee in response.”

As the Frontline story noted, the new committee was not free of conflicts of interest. Most seriously, one member, a lawyer named Pratibha Singh, represents large companies including Gilead in IPR cases. Singh is also the wife of Maninder Singh, a lawyer who has worked as a junior in the legal practice of Arun Jaitley, the finance minister. Today, she retains her position on the committee, while also representing Gilead in its patent application for Sovaldi—even though the company could well stand to gain from any recommendations she makes as a member of the committee.

When we asked Singh about this impropriety, she said, “Rubbish. Where’s the conflict of interest?” She claimed that she kept the two roles distinct. “When I represent Gilead, I do it in my capacity as a lawyer—they are my clients,” she said. “When I sit on the IPR committee, I advise the government as an expert on IPR who keeps the interest of the nation in mind.”

The new committee submitted a first draft of the new policy to the commerce minister in December 2014, and, after receiving comments on it, handed in a final draft in April the next year. Experts were far from impressed. On SpicyIP, the IP lawyer Prashant Reddy described it as a “boring, unimaginative effort” that made “remarkably vague, unimaginative and unsubstantiated recommendations.” The DIPP secretary Amitabh Kant told Mint soon afterwards that the document was “only an input,” and would be finalised over the next six weeks. At the time this story went to press, the final document hadn’t yet been released.

Compulsory licences also remain a serious point of contention between India and the United States. The government has not granted any compulsory licences to any products since the Nexavar case in 2012. According to Love, “What the government is doing right now in terms of not granting compulsory licences is a direct response to the pressure exerted by the United States.”

In an interview to the financial daily Business Line, Mukesh Aghi, the president of the US-India Business Council, an advocacy body for US businesses in India, claimed that the Indian government had assured US companies that it would not issue any compulsory licences. Aghi said that “the government has reassured industry verbally in meetings that they will not use compulsory licences.” But that, he said, wasn’t enough, since “verbal assurance could be easily undermined if personnel or government officials change swiftly. Investor sentiment would be more confident if the government provides a written declaration.” These were extraordinary assertions, considering the government has made no public announcement about ceasing compulsory licences, and, in fact, would face intense opposition were it to do so.

Signals from the US side of the interactions also suggest that India has made some assurances about revisiting its IP policies. After the out-of-cycle review in 2014, the USTR issued a statement saying that India had made “useful commitments in recent months, including to institutionalize high-level engagement on IP issues, to pursue a specific work program and to deepen cooperation and information exchange with the United States on IP-related issues.” When the USTR held hearings in February 2015, a month after president Obama’s Republic Day visit, PhRMA boldly declared that the “Indian government’s openness and drive for innovation will yield progress on the IP challenges we have faced to date.” In an email to us, a PhRMA representative said, “Positive decisions from Indian government and the Courts, as well as Prime Minister Modi’s commitment to raising India’s intellectual property system to global standards, are a step in the right direction.”

Rumours of a shift in India’s stance were so strong and widely circulated that governments of African countries,many of which rely heavily on Indian generic drugs, grew seriously concerned. At the India–Africa Summit, held in October, several of the continent’s leaders asked India not to buckle under US pressure. “We are not asking for charity,” Michel Sidibe, the executive director of the Joint United Nations Programme on HIV and AIDS, said at the summit. “We need to protect the world’s most vulnerable populations.”

Perhaps the loudest African voice on the issue has been the South African health minister, Aaron Motsoaledi. In an interview with us in July, he spoke of his fears that India was gradually diluting its patent policy. “We are very scared and worried,” Motsoaledi said. “I heard a rumour that India wants to reverse its progressive laws and I am very shocked.” South Africa, he said, was following in India’s footsteps to try and protect its own interests in matters of intellectual property. “They were our heroes, and if they change their laws now, we will be in big trouble in sub-Saharan Africa, really big trouble. My message to India is that we really rely on them, and if they reverse their position now they will end up killing a lot of people in Africa, no question about it.”

The term “buyers club” became common currency after the release of the 2013 film Dallas Buyers Club, about an HIV-positive man’s efforts to smuggle antiretroviral drugs into the United States in the late 1980s.

WHILE MANY WAIT WITH BATED BREATH for developments in Indian policy, some, such as Jefferys, have taken matters into their own hands. Soon after he managed to obtain the life-saving dose of sofosbuvir in Chennai, Jefferys’s life veered in a wholly unexpected direction. When we spoke with him over Skype this January, he told us that, over the course of his journey, his blog had begun to be read by others who had hepatitis C and also faced similar problems in accessing affordable medicine. Many emailed him seeking advice on planning a trip to India, and what began as a slow trickle of queries grew into a flood.

Jefferys decided that he would “help out as many patients as I could,” he said. “If they could afford to travel to India, I would build a network of local contacts to assist them. And if not, we would have to find a way to get the medicines to them.”

Within days of making this decision, Jefferys had organised a small group of collaborators. One activist he had met online, based in a country near India, put Jefferys in touch with another activist in Delhi. As it turned out, the Delhi activist had already been helping out other patients, with hepatitis C and other diseases, and had some idea of the procedural sleight of hand that would be needed to carry out such a plan. The three decided to work with each other in a more systematic manner.

Over the eight months that we reported this story, we came across six such groups across India. Together they supply sofosbuvir to thousands of patients across the world, denying Gilead millions of dollars that it had tried to secure with its licensing agreements. These are India’s “buyers clubs”—groups of people who work together to purchase hard-to-procure or expensive drugs at affordable prices, possibly bending or breaking rules along the way.

The term came to popular prominence after the release of the 2013 Hollywood movie Dallas Buyers Club. The movie is based on the true story of an electrician named Ron Woodroof, from the US state of Texas, who was diagnosed with HIV in the mid 1980s. Woodroof first bribed people to access drugs that were on trial, and then set up a group through which he distributed unapproved drugs that he smuggled into the United States from Mexico.

Like the antiretroviral drugs that were developed in the 1980s and 1990s to treat HIV, sofosbuvir is also needed by—and out of the reach of—millions around the world. Of course, while Woodroof distributed unapproved drugs, Jefferys and his collaborators supply approved drugs to patients who cannot buy them because they are too expensive, or because companies have blocked access to them.

While Jefferys handles communications with the scores of patients who write in to him, the Delhi activist heads the operational side of things, buying and shipping the drugs. The activist outside India helps the team coordinate with some patients, who contact him with inquiries. Jefferys and the activists told us that, so far, they have helped patients from Australia, Austria, Brazil, Bulgaria, Cambodia, China, Costa Rica, New Zealand, Romania, Taiwan, Thailand, Turkmenistan, Ukraine, the United Kingdom and the United States.

In the third week of January, we met the Delhi activist at his residence, in an urban village in Delhi. On a desk in his room were a few bottles of hepatitis C pills, and an open laptop displaying an Excel spreadsheet listing patients around the world to whom he was supplying drugs. Every ten minutes, his phone beeped or rang with enquiries from patients about their requests.

At first, the activist was hesitant to share details of his work. After growing comfortable, however, he opened up, and in a two-hour conversation, over green tea and biscuits, he explained how he ran the operation. He even began to boast a little: pick any country, he insisted, and he would tell us how smuggling sofosbuvir into it was “as easy as putting butter on toast.” The activist made it clear that running a buyers club is a painstaking exercise in logistics and coordination.

After they set up the operation in August last year, the activist said, work expanded rapidly. In the first two months, they helped around 150 patients. Soon, they stopped keeping track of the numbers of people they were helping.

For each patient who contacted them, the activist needed a prescription to buy the drug. He called on his network of fellow activists and lawyers to identify two doctors who were sympathetic to the cause, and would be willing to write him prescriptions without seeing the patients. “These are well-meaning doctors, doing this to help out patients,” the activist said. “They are not corrupt. Ethically, there is a dilemma here. But the kind of agreements signed with governments are so evil, that we did get a few doctors to help us with prescriptions.”

Many patients have prescriptions from doctors abroad, he pointed out, but for those who don’t, he decided to “fuck it” and take the help of Indian doctors for prescriptions. “I started asking patients for their weight and body mass index and calculating the dosage they needed,” he said.

Aside from prescriptions, another major challenge was to find a way to access the money that patients would pay for the drugs. The activists decided that Jefferys would be the primary point of contact for patients and would receive the money, which he would then transfer to the Delhi activist. But each patient would be paying approximately $1,000, and if hundreds of patients lined up for the drugs, the sums moving into India would quickly grow so large as to attract unwanted attention from government authorities.

The activist even considered setting up an NGO that had the necessary approvals to receive money, and could then serve as a conduit for the operation. But he quickly changed his mind. “It would have taken close to three years to set up an NGO with necessary approvals,” he said. “By then all the patients would be dead.” Instead, he decided to look for an already registered organisation that could help him—one that had the necessary approvals to receive money from abroad under the Foreign Contribution Regulation Act. “I decided to bank on the relationships I have built over the years to move the money,” he said. “This works on trust.”

The first NGO he approached agreed, but then “chickened out” after looking at the sums of money involved. It didn’t help that the Narendra Modi government had been cracking down on NGOs since coming to power, cancelling the licences of 10,117 of them, in the first half of of 2015 alone, for violating foreign-funding norms. The fact that money would be coming in in an irregular stream could also draw suspicion. “These NGOs facing heat from the government got their funding quarterly or half-yearly or annually,” the activist said. “We, on the other hand, were all over the place.”

The activist identified three points where Jefferys could transfer the money he received. One was an existing account connected to a consulting firm in an Asian country. The company was willing to help because a few of its executives had relatives who suffered from hepatitis C. Another was an account belonging to a patient-support group in a mid-sized Indian city. Both the patient-rights group and the consulting firm already had bank accounts and the requisite approvals to receive payments from overseas. The activist also set up a third point to receive money, travelling to another Asian country—one with particularly lenient banking laws—and opening a new account there. In a few weeks, their buyers club was in full swing.

Most patients reach out to Jefferys directly, through an email address on his blog, to request a supply of sofosbuvir. He then passes their orders and delivery addresses to the Delhi-based activist, who obtains prescriptions and buys the required quantities of the drug from multiple pharmacies, at which he maintains monthly tabs. After this, the activist packs the medicines and ships them to their destinations, using a commonly available service that he asked us not to name, as he didn’t want it to come under scrutiny.

The group usually takes payments after deliveries are made. The activist told us that he charges “around $100 per order, mostly for administrative costs involved in arranging documents and shipping the drugs.” The money also goes towards paying a salary to a person whom he trusts enough to help him with the logistics in Delhi.

Jefferys usually holds on to the money paid to him until a substantial sum has accumulated. At any given time, he told us, he holds nearly 100,000 Australian dollars—about $70,000—for the activist. When the activist gives him a signal, he transfers the money into one of the three accounts. Making the transfers in large tranches helps cover up the steady stream of money that is paid to the group. “The system works on trust,” Jefferys said, echoing the activist’s words. “We have never met each other, and none of us makes any money from this. I did not want to be like the pharmaceutical companies, profiting from sick people.”

If Indian pharmaceutical companies give into pressure from the West, millions of people across the world could lose access to affordable drugs. Photo: Krishnendu Halder / Reuters

IN THE SECOND WEEK OF FEBRUARY, we drove to Dwarka Sector 14 to meet with three officials—two mid-level and one senior—of the patent office, and to learn about what had happened behind the scenes when Hardev Karar rejected Gilead’s patent application for Sovaldi.

That the highest ranks of the Indian government are under pressure from the United States to modify the country’s patent policies is clear. If that pressure transfers down the ranks, and affects those who actually make decisions to grant or reject patents, the consequences could be disastrous. This is particularly true of medical patents, which can decide whether millions of people who need a drug gain access to it. The fact that Karar had rejected Gilead’s application suggested that patent officials were not under any such pressure. But, as we discovered, this wasn’t the complete picture.

We sat in one official’s office. On his desk was a computer, piles of messy files, and a copy of the 1970 Patent Act. The officials were surprised that journalists were enquiring about the Gilead patent more than a year after it was rejected, though one remarked that he had been certain someone would come looking for details some day.

They would speak animatedly for some time, but then fall completely silent each time a peon entered the room to serve us tea or to take away our empty cups. They were clearly concerned about word getting out that they had spoken to journalists. (Karar declined to be interviewed about the matter.)

According to the first official, Karar was approached repeatedly by lawyers representing Gilead to “persuade and convince” him to grant the patent. “Gilead put pressure” on him, this official said. This in itself would constitute an impropriety. But though one of the officials described it as “unethical,” he also conceded that it was a “general trend” in the office.

What followed after the verdict was more surprising—Karar faced an immediate and intense backlash.

Bas, firing shuru ho gayi” (The firing began), said the first official. The day of the verdict, according to this official, Karar received a call from his boss, Chaitanya Prasad—then India’s controller general of patents, designs and trademarks, a Bihar cadre officer of the Indian Administrative Service. According to the official, Prasad yelled at Karar over the phone, saying, “Dimaag ka istemaal nahin kiya kya?”(Didn’t you use your head?) The official said Prasad also rebuked Karar for not keeping “the timing of Obama’s visit in mind.” The officials were not sure whether this was meant to imply that Karar’s verdict itself should have been different, or whether he should have waited before delivering it. Either way, the first official said, “These aren’t things we normally consider before making decisions about cases.”

Two days after the verdict, the second official said, Prasad called Karar over to his chambers. “He was shouting at Karar,” this official recounted, adding that the dressing-down was loud enough for the entire floor to hear. According to him, the showdown ended with Prasad threatening Karar with a transfer to Nagpur—generally seen as a less prestigious posting, and one that Karar had already been assigned twice. Though eventually Karar wasn’t transferred, according to the third official he did withdraw from the case. Karar, this official said, did so under Prasad’s orders, and was made to cite “bias” as his reason for recusing himself.

When we emailed Chaitanya Prasad to ask him about these allegations, he said, “I never interfered with the content or direction of the order of the controllers in the patent office in individual cases.” He also said that he “did not threaten Mr Karar with any transfer nor did I ask Mr Karar to withdraw himself from the case.” He added: “I don’t even remember that he withdrew himself from the case.”

By the time the file was reopened, Karar had been replaced by another official. “We were horrified at how this official, one of our best, no less, was being treated,” the third official said. “We had never seen such pressure brought to bear on our offices.”

Vidya Krishnan and Mandakini Gahlot reported part of this story with a grant from the International Reporting Project (IRP).

Correction: A quote from an unnamed activist was misinterpreted to mean that he writes fake prescriptions for hepatitis C drugs. In fact, he obtains prescriptions from doctors in India for patients abroad.