Pharmaceutical companies are arguing that losing patent rights flexibilities will increase the cost of producing medicines.

In Nepal, pharmaceutical companies are permitted to manufacture pharmaceuticals without gaining patent rights, provided they pay royalties to the creators.

Under the WTO's Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), Nepal and other least-developed countries (LDCs) are granted this flexibility.

But after the LDC graduates, Nepal will no longer have this flexibility. November 2026 will mark Nepal's transition from an LDC to a developed nation.

Pharmaceutical companies in the country claimed that the loss of these flexibilities will result in higher drug prices due to higher production costs. It will also get harder to export.

They declared that Nepal needed to consider its options.

"To locate an API on a drug label, we have to work in accordance with the active pharmaceutical ingredients (API) in new medications and spend about Rs 40,000. The Association of Pharmaceutical Producers of Nepal president, Mahesh Prasad Pradhan, stated that this will affect how affordable the medication is. "It's time we gave these issues some thought."

The main component is the API. Raw materials with a certain strength and chemical concentration are used to make APIs.

In Nepal, the prevalence of noncommunicable diseases is rising.

A patient who has been exposed to a non-communicable disease must take medication on a daily basis. Speaking at an event jointly organized by South Asia Watch on Trade, Economics and Environment (SAWTEE) and Third World Network on the preparedness of Nepal's pharmaceutical sector to cope with the challenges of the country's LDC graduation, Pradhan stated that if it becomes expensive, it will have an impact on the public health system.

According to Pradhan, Nepal makes cheaper medicine than India, which enables patients to receive a more affordable course of treatment. India is one of the nations that produces the least amount of medicine globally.

According to Anil Bikram Karki, president of the Nepal Medical Association, "we are the only country in the world that produces paracetamol at around Re1 at the moment." However, these medications will cost more after LDC graduation. A patented pharmaceutical maker may have to pay the patent right holder twice or three times the amount. The health care system in Nepal will be impacted by the high cost of medications.

The Association of Pharmaceutical Producers of Nepal states that a minimum of Rs1 billion is needed to open a pharmaceutical facility in Nepal.

Approximately six of the 83 pharmaceutical companies in the nation are in the process of opening. Approximately 80 billion rupees have been invested in the pharmaceutical business, which directly employs 40,000 people. The industry taxes the government for almost Rs 5 billion.

The group added that the Nepali pharmaceutical industry's business transactions stand at roughly Rs67 billion yearly, including imported pharmaceuticals. 50% of the market is supplied by domestic pharmaceutical companies.

SAWTEE, a South Asian think tank, chairperson Posh Raj Pandey stated that just 10% of drugs in the country's pharmaceutical business are copyrighted, with 90% of medications being generic.

"Nepal's domestic industry can produce internationally patented medicines if API is easily imported."

All of the materials needed to make medications in Nepal are imported. China and India provide API imports to the nation. Merely 95% of medications are imported from India, with the remaining 5% coming from other nations.

There is no medicine exported from Nepal.

A draft IP bill was created in 2019 and the intellectual property (IP) policy was presented in 2017. Five years later, the bill's final text is bouncing between the industry and law ministries, according to officials in the business sector.

IP law must address patentable subject matter, according to a SAWTEE report on the pharmaceutical industry's readiness to meet the challenges of the nation's LDC graduation.

In order for generic manufacturers to conduct research on copyrighted pharmaceutical goods and submit their applications for marketing authorization prior to the patent expiration, the law must also address regulatory exclusions.

The concept that third parties can use a patent without the patent holder's permission in the event that negotiations for a voluntary licence fail will be reinforced by compulsory licensing. According to Pandey, these mandatory licenses could be issued even in the absence of previous discussions in order to address anti-competitive behavior.

In order to prevent spurious patents, Pandey recommended that the government, among other things, improve statistics on the production, import, and export of the pharmaceutical industry as well as openness and accountability procedures.

He stated that before introducing the measure to Parliament, there must be a thorough stakeholder consultation process in order to effectively incorporate the public health-related flexibilities in IP legislation.

According to Pandey, the pharmaceutical sector should keep pushing for allowances for recently graduating LDCs and communicating their concerns to the legislators drafting the IP legislation.