M. S. Siddiqui
According to the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, Bangladesh, as an LDC (Least Developed Country), enjoys a pharmaceuticals waiver. Graduation from LDC on November 24, 2026, it’s status will result in the loss of key policy flexibilities to maintain a patent-free regime for pharmaceutical inventions, access duty-free markets in key destinations, export subsidies, and produce patented drugs without paying royalties to original inventors.
At present, taking the advantage of weaver and entrepreneurs in Bangladesh with active patronisation of drug law and policy, the pharmaceutical sector supplies 97% of the country’s domestic demand. Others like vaccines, anti-cancer products, and hormone drugs account for the other 3% of the national demand- met by imports.
The flexible intellectual property protection due to LDC weaver currently enjoying by Bangladesh has also allowed firms to build their technological base by imitating or reverse engineering foreign technologies. It is critical to economic catch-up in a range of industries, not just pharmaceuticals. Rather than starting from scratch, developing-country firms can take advantage of what others have learned.
The impact of Bangladesh’s graduation from LDC status on access to medicines presents a multifaceted landscape with varying scenarios. After the graduation and a transition period of 3 years up to 2029, Bangladesh would have to let foreign companies take legal action for manufacturing their patented medicine without paying royalties.
According to World Bank report, prepared by Daniel Gay, most of the hundred or more pharma companies operating in Bangladesh make ‘so-called’ generics, or non-branded medicines, the patents of which have often expired. Around a fifth of drugs produced in the country are patented in other countries, something which is made possible by the waiver, which until 2033, allows LDCs to produce patented drugs without first asking holders.
The overseas pharmaceutical industries will probably come to Bangladesh and take over smaller local companies. These possible new foreign investments may bring new technologies and working practices, with a knock-on impact on production. Such a takeover of local companies will reduce competition in the market and prices may go up.
In the study namely “LDC Graduation and Bangladesh’s Pharmaceutical Industry: Implications for Medicine Prices, Accessibility, and Affordability” conducted by Research and Policy Integration for Development (RAPID) finds that access to most medicines currently in use in Bangladesh is unlikely to be affected by LDC graduation. The study claimed that Bangladesh is highly dependent on imported active pharmaceutical ingredients which is important in drug production. Prices will not rise but structural challenges in the health sector and rising energy costs may have an impact.
Regarding readiness of Bangladesh, The Bangladesh Patent Act (BPA 2023) has been updated and getting ready to face the challenges of LDC graduation. It incorporates critical TRIPS flexibilities to address challenges such as evergreening, national emergencies, and high drug prices. The exception of experimentation facilitates reverse engineering, empowering domestic firms to develop generics as patents expire, ultimately enhancing accessibility and affordability.
Rigorous patentability criteria now define an invention, preventing patents on minor modifications of existing substances. Under this provision, Bangladesh will not grant patents for medicines already patented or invented before its graduation from LDC, as they fail to meet novelty criteria.
Accessibility to patented medicines that Bangladesh cannot domestically produce is expected to remain unchanged, as these are now primarily sourced through expensive imports. This scenario highlights the persistent challenge of affordability for essential treatments, such as cancer therapies and advanced biological medicines. Researcher observed that LDC graduation will have no direct impact on these medicines, as Bangladesh does not currently manufacture them.
The econometric analysis indicates in the study find a one-to-one relationship between API import costs and the production costs of corresponding medicines. That is, a 10 per cent increase in API costs is estimated to result in a 10 per cent rise in production costs. Given the inelastic nature of demand, manufacturers are likely to pass these additional costs onto consumers. The potential increases in production costs for generic medicines due to higher API import prices post-graduation prove to be valid, such cost increases could lead to higher retail prices, particularly impacting low-income groups reliant on affordable treatments.
Medicines patented after November 2029, given that Bangladesh graduates as scheduled, will require royalty payments for local production. The new patent law includes provision with a royalty capped at 4 per cent in case of use of patented products by the government and allowed flexibility of parallel imports. These royalties will introduce cost implications that could affect affordability. The successful negotiation of royalty will play a crucial role in determining the extent of price increases. The study results indicate that with a 4 per cent royalty fee for producing generic versions, medicine prices would be approximately 2 to 3 percent higher compared to a regime with no royalty payment.
Finally, the study claimed that relaxation of import restrictions on off-patent generic medicines post-graduation presents an opportunity for increased competition and potentially lower prices. Allowing the import of off-patent generic medicines could also expand the range of options available to consumers. This would necessitate stricter quality standards for locally manufactured drugs to ensure their efficacy and reliability.
The compulsory licensing provisions of patent law will allow the government to authorise local production or import of patented medicines during emergencies or in response to anti-competitive practices. Before issuing a compulsory license, the TRIPS agreement mandates that an effort must be made to secure a license from the patent owner on fair commercial terms.
It is obvious that addressing cost efficiency, local production capacity will be a challenge after graduation. To counter the potential rise in production costs after LDC graduation, Bangladesh must fully operationalise the much talked and long waiting active pharmaceutical ingredients (API) Industrial Park, ensuring the provision of essential utility services at rationalised costs. Developing robust petrochemical plants and advancing synthetic chemistry skills will further reduce dependency on imported APIs, improving production capacity and cost efficiency.
Out-of-pocket healthcare expenditure in Bangladesh is one of the highest in the region with the patients needing to spend almost 70 per cent of the bill. Some more study on the impact of LDC graduation is required to come into conclusion about our preparedness to face the change of healthcare.
A WB report and the study of RAPID have different views over the impact of LDC graduation on pharmaceutical sector. But there are some common observations. Bangladesh’s transitions to stricter compliance with global patent regimes post-LDC graduation, it will require further strengthened regulatory, legal, and judicial capacity to address challenges such as a surge in patent applications, including those not qualifying as novel inventions, patent infringement cases, and disputes with multinational corporations, all of which could potentially affect drug prices and accessibility.
The writer is a CEO, Bangla Chemical
