Patents, Pharmaceuticals, and the Third World
This special issue of the TIIP newsletter was prompted by the report issued by the United Kingdom Commission on Intellectual Property Rights, “Integrating Intellectual Property Rights and Development Policy.”
The developed nations have used trade negotiations to leverage an unprecedented extension of patent rights in the Third World. The World Trade Organization’s TRIPS (Trade-Related Aspects of Intellectual Property Rights) treaty offers a bargain: in exchange for access to the markets of developed countries, Third World countries must offer strong patent rights, including patent protection for medicines. This threatens to drastically limit the generic drug industry, currently the main source of affordable medicines in many poor nations.
This issue of the newsletter discusses the report and specifically how patent policy can be tailored both to encourage firms to develop new drugs needed by poor nations and to provide those drugs affordably.
UK Commission Report
F.M. Scherer provides some brief background on the Commission, summarizes the report’s main policy conclusions, and its significance.
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Response to Professor Scherer
John Barton, who chaired the U.K. Commission on Intellectual Property Rights, responds to Scherer’s assessment. He then goes on to examine two important issues that were not resolved by the Commission, but which may be quite important for making medicine affordable in the Third World.
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A Proposed Solution
Jean O. Lanjouw makes a timely and innovative policy proposal that addresses both the incentives for pharmaceutical companies to invest in the development of new drugs and the need for poor nations to obtain affordable medicines.
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Inequality and Patent Policy
Keith E. Maskus raises an important complication: economic inequality affects the outcome of patent policy. He presents evidence that pharmaceutical firms charge relatively high prices for drugs in poor nations, selling mainly to the wealthy and ignoring the indigent majority. If the goal of policy is to make medicines affordable for most or all people, then policy may need to adjust for the nation’s degree of inequality.
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Counterfeit Drugs
Kristina M. Lybecker points out another problem with the current policy. TRIPS imposes requirements for patents, but provides no funds for enforcement of patents and drug laws. In financially-strapped poor nations, this means that generic drug manufacturers may be eliminated, but not drug counterfeiters. Such an outcome makes both consumers and pharmaceutical firms worse off.
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