What the US Wants From India’s Drug Patent System—and Why It Matters

India’s pharmaceutical patent regime has once again come under fire from the United States. Washington flagged concerns over weak intellectual property (IP) protection, lack of data exclusivity and gaps in enforcement—issues that could spill into future trade negotiations.

In its latest Special 301 Report released on April 30, the Office of the US Trade Representative (USTR) retained India on its “Priority Watch List”, pointing to provisions such as Section 3(d), the country’s approach to compulsory licensing, and the absence of statutory protection for clinical trial data. The report also flagged delays in patent processing, concerns around piracy and counterfeiting, and the lack of a dedicated trade secrets law.

A report by the Global Trade Research Initiative (GTRI) noted that while the listing has no direct legal consequences, it acts as a pressure tool that often shapes bilateral negotiations and future trade demands.

A Familiar Standoff

India’s presence on the lisy is not new—it has remained there since the 1990s, reflecting long-standing differences with the US over pharmaceutical IP norms.

At the core of the disagreement is India’s refusal to adopt “TRIPS-plus” standards such as extended data exclusivity and broader patentability. The US argues these measures are essential to protect innovation, while India maintains that its regime is fully compliant with WTO rules and designed to prevent misuse of patents.

Section 3(d), a key flashpoint, disallows patents on new forms of known drugs unless they demonstrate enhanced therapeutic efficacy—aimed at curbing evergreening. Similarly, compulsory licensing provisions, though rarely used, remain another point of contention.

High Stakes for Generics

The debate carries global implications. India supplies nearly 20% of the world’s generic medicines, making its patent framework critical to drug affordability.

According to GTRI, past cases highlight how this balance has played out. In the Novartis case, the Supreme Court rejected a patent for a modified cancer drug, enabling significantly cheaper generics. In another instance, a compulsory licence granted in a Bayer case sharply reduced the price of a life-saving treatment while ensuring royalties to the innovator.

The think tank cautioned that accepting US demands could weaken India’s generics industry—often called the “pharmacy of the world”—and raise medicine costs globally.

For now, the latest report does not trigger immediate action. But as India negotiates new trade agreements, the pressure to recalibrate its IP regime is likely to intensify, keeping this long-running dispute firmly in focus.