EU may relax generics drug transit shipment regulations

India’s dispute with the European Union over the passage of generics drugs through EU territory is close to a resolution, or so it appears. The dispute dates back to 2008 when the EU began seizing drug shipments, of generic drugs being shipped to countries via the EU. India’s position as a leading supplier of generic drugs saw it being one of the worst affected.

India and Brazil (which was one among the countries these consignments were intended for) went to the World Trade Organisation to settle the dispute, as their initial approaches to the EU regulatory authorities met with little success. Subsequent to this, both parties appear to have moved towards reconciliation and have worked out what India’s commerce ministry calls an informal settlement. Interesting, India and the EU are also in talks for a bilateral free trade agreement, which would confer benefits on both parties, but open India’s markets for imports from the EU.

According to a release from the commerce ministry, the European Commission sent them a letter on 17 June 2011, proposing a settlement by confirming the agreed upon principles pertaining to enforcement of intellectual property rights at the border by customs authorities. It has also agreed to include these principles as part of a proposal to amend the existing regulations, Regulation 1383/2003.

The core principle that India wants to see in the regulation is that mere transit of medicines through an EU country, even if these medicines have patent protection in that country, should not be sufficient grounds for suspecting patent infringement. That is, the customs officials cannot confiscate the goods merely because they violate a patent valid in that country. But this is not an absolute rule. If there is reason to believe that the goods could be diverted into the EU market, then they can be suspected of patent infringement and action taken, including seizure.

The change to the regulations has been proposed and has been sent to the European parliament for approval. Once it comes back, it will become law.

But it is implementation that counts, especially because a call needs to be taken whether the officials believe there is scope for diversion. Still, the fact that the officials may have to exercise more diligence in determining patent infringement should lower the incidence of such cases.

Read the press release from the Ministry of Commerce & Industry here, read a story on this issue from a website dealing with on trade-related issues here, and the review process initiated by the European Commission here.

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