On March 24, 2005, the lower house of the Indian parliament passed a controversial patent bill making it illegal for domestic pharmaceutical companies to make generic copies of patented drugs. The bill was passed to bring India into conformance with the World Trade Organization's Agreement on Trade-related Aspects of Intellectual Property Rights, or TRIPS. The bill now goes to the Rajya Sabha, the Indian upper house, where it is expected to be passed into law, since the government enjoys parliamentary majority.

The new law includes coverage of combination drugs, even though "The WTO obligation does not require India to grant patents on new uses of known drugs, or combinations of known drugs," according to Anand Grover, project director, Lawyers Collective HIV/AIDS unit.

Last-minute amendments were added to prevent drug companies from winning new patents by making minor changes to existing drugs. The law also allows patents to be challenged even before they are granted - a move opposed by multinational corporations but long demanded by the domestic industry.

Generic drugs represent about 15 percent of India's $10 billion pharmaceutical industry. A significant proportion of these are copies of patented drugs.

India has 300 large and moderate-sized firms, plus 10,000 small companies, making 8 percent of the world's drugs. According to pharmaceutical industry statistics, about a third of that is exports, which are rising 25 percent a year.

India's pharmaceutical industry has thrived in the past three decades, since India's current patent law has allowed patented drugs to be copied, as long as a different manufacturing process is used to make them. Indian pharmaceutical companies such as Cipla and Ranbaxy have been making AIDS drugs and exporting them to African nations at a cost as low as 5 percent of that charged by multinational pharmaceutical majors. The impact has been that Indian drug companies have supplied drugs for about 50 percent of nearly 1 million HIV patients taking antiretroviral medicines in developing countries.

Overall, multinational drug companies are delighted with the new law.

There was clamor at the new law from international health aid groups, decrying that the law would deprive millions of people across the world from inexpensive life-saving medicines.

The Paris-based Doctors Without Borders characterized the law as "the beginning of the end of affordable generics."

"Because India is one of the world's biggest producers of generic drugs, this law will have a severe knock-on effect on many developing countries which depend on imported generic drugs from India," said Samar Verma, regional policy adviser at Oxfam International.

Jairam Ramesh, the governing Congress party's economic adviser, declared that more than 90 per cent of essential medicines currently sold in India are generic products with expired patents.

Indian government officials have issued assurances that the expected price rises can be moderated if deemed necessary. India's Commerce Minister Kamal Nath asserted, "All safeguards have been put in the regime and the government will have enormous powers to deal with any unusual price rise."