India to File WTO Complaint on European Union

India is planning to file a World Trade Organization complaint that accuses the European Union of allowing multinational pharmaceutical companies to use the bloc’s strict patent laws to detain Indian generic drugs in transit to developing countries, reports the Wall Street Journal.

Since last year, customs officials in the Netherlands and Germany have seized Indian medicines on grounds that the broke EU patent laws. Indian pharmaceutical companies have been forced to pay more to move shipments to transit hubs outside the EU as well as hire legal help to allow the drugs shipped to their destination.

At the request of companies including Sanofi-Aventis SA, Novartis AG and Eli Lilly & Co., the drugs were then detained for periods that extended for as long as eight months, according to letters sent by the companies to customs officials and reviewed by WSJ.

“We see this as an attack on the Indian generics industry,” Rajeev Kher, joint secretary of commerce in India, was quoted by the WSJ.

The pharmaceutical industry is one of India’s top export earners. According to Global Trade Information Services, Indian pharmaceutical exports, consisting mostly of generics, reached US$4.9 billion last year. However, pharmaceutical exports to the United States suffered from depressed demand dropping close to 40 percent in the five months between October last year and the end of February.

EU officials maintain that their national customs agencies have the right to detain goods deemed to be violating their intellectual property laws. The EU is “complying with its WTO obligations,” spokesman Michael Jennings said in a statement.

An WTO investigation on the complaint could take nine months to investigate. Should the WTO rule in favor of India, it may be given the right to impose retaliatory tariffs on import of goods from the EU.