The pharmaceutical industry's dependence on intellectual property rights (IPRs), especially patents, to exclude competitors and thereby recoup past expenditures, incentivize future investments in research and development (R&D), and maximize profits is well known. Although initially content to solidify patent rights in the rich-country markets of North America, Europe, and Japan, in the last quarter of the 20th century the industry has increasingly turned its attention to emerging markets in Latin America, Asia, and even Africa as sites of future market expansion. Big middle-income countries like Brazil, India, China, and Indonesia have growing middle classes that increasingly favor allopathic medicine over the more traditional medicines of their elders. Obtaining monopoly rights in these growing markets could help the pharmaceutical industry weather the storm of increased consumer, business, and government blow-back against supra-competitive drug prices charged in rich country markets.

On December 6, 2005, shortly before the World Trade Organization (“WTO”) Ministerial Conference in Hong Kong, WTO member states agreed to accept a protocol of amendment to the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPs Agreement”). This amendment sought to provide a permanent solution to implement paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (“Doha Declaration”). If ratified, the new article 31bis of the TRIPs Agreement will allow countries with insufficient or no manufacturing capacity to import generic versions of on-patent pharmaceuticals.

To facilitate the supply of essential medicines to countries with insufficient or no manufacturing capacity, article 31bis(3) creates a special arrangement not only for the affected countries, but also for those belonging to a regional trade agreement. Such an arrangement allows less developed countries to aggregate their markets to generate the purchasing power needed to make the development of an indigenous pharmaceutical industry attractive.

The goal of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement is to harmonize the intellectual property rights of World Trade Organization (WTO) member countries to a certain minimum standard. As a WTO member, the organization required India to enact legislation that enforces TRIPS by 2005. Part of India's motivation to pass its 2005 Patents Act stemmed from its obligations as a WTO member nation, as well as the government's desire to stimulate greater foreign investment, innovative research and economic growth.

India's implementation of the TRIPS Agreement has generated a great deal of controversy. Disagreement exists about whether the Indian Patents Act overzealously protects intellectual property rights and whether the Patents Act goes beyond the spirit of the TRIPS Agreement. Many health officials and non-governmental organizations (NGOs) are seriously concerned about what the Patents Act implies for people suffering from diseases in less developed countries. Nonprofit and some World Health Organization officials argue that the new law prevents India from producing and supplying generic drugs within its borders and to other developing countries.