The Pharmaceutical Research and Manufacturers of America (PhRMA) says it is "dismayed" at the response of the US Trade Representative (USTR)'s latest annual report on intellectual property rights (IPR) protection to the "deteriorating protections for patented medicines" in India.

The USTR's latest Special 301 Report, which assesses the adequacy and effectiveness of US trading partners' protection and enforcement of IPR and of market access, is critical of India and retains it on its Priority Watch List. In 2012, India made "limited progress in improving its weak IPR legal framework and enforcement system," it says, but adds that recent actions by the government "have raised serious questions about the innovation climate in India and risk hindering the country's progress towards an innovation-focused economy."

In the pharmaceutical sector, some innovators are facing serious challenges in securing and enforcing patents in India, says the Report, adding; "the US urges India instead to adopt policies that support both cutting-edge innovation to address important health challenges and a robust generic market."

The US is concerned that the Supreme Court of India's recent decision concerning the country's prohibition on patents for "certain chemical forms absent a showing of 'enhanced efficacy' may have the effect of limiting the patentability of potentially beneficial innovations," says the Report.

The US will also continue to monitor closely developments concerning compulsory licensing in India, it goes on, particularly following the recent decision to restrict patient rights of an innovator, based partly on the innovator's decision to import its products rather than manufacture them in India.

This decision "establishes a troubling precedent," says the USTR's Office.

However, PhRMA says it is dismayed that an out-of-cycle review (OCR) has not been granted for India. The USTR uses OCRs to "encourage progress on IPR issues of concern" and provide "an opportunity for heightened engagement with trading partners to address and remedy such issues,” and PhRMA feels that such a review is warranted, given the "deteriorating protections for patented medicines in India."

"Over the past year, the government of India has issued several IP decisions that have disproportionately impacted US biopharmaceutical companies and a number of other innovative sectors. The IP regime in India has been structured and applied in ways that prop up local industries to the detriment of US jobs and the world's patients," says the industry association.

PhRMA is also disappointed that the latest Special 301 Report moves Canada from the USTR's Priority Watch List to its Watch List.  The Report welcomes Canada's "long-awaited progress on concerns identified in past reports," but also notes that the US "continues to have serious concerns about the availability of rights of appeal in Canada's administrative process for reviewing regulatory approval of pharmaceutical products."

The US is also seriously concerned "about the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently," the Report adds.

But PhRMA is critical of Canada's change of designation, pointing that its policies and judicial opinions “continue to harm international innovators to the benefit of domestic industries. Canadian regulators have for example created a discriminatory right of appeal regime under which Canadian medicine manufacturers challenging the validity of a medicine patent may appeal an adverse decision through an administrative proceeding, while innovative international biopharmaceutical companies cannot."

"We also are concerned that the heightened standard for patentable utility for pharmaceutical patents is inconsistent with Canada's trade treaty obligations," the industry association adds.

- The Special 301 report also notes that US industry has expressed concerns about the policies of several of the US's developed trading partners on issues related to innovation in the pharmaceutical sector and other aspects of health care goods and services. These nations include, Finland, Germany, Greece, Hungary, Italy, Korea, New Zealand, Poland, Portugal, Romania, Spain, Turkey and Taiwan.