December 20, 2002
Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Intellectual Property is fundamental to western notions of creativity and prosperity, and few would argue with its importance in the economics of the developed world. For some industries like pharmaceuticals, for example, IP protection is essential. But hotly debated is how well the IP system works in poor countries, where millions of people are dying of life-threatening diseases such as AIDS because they cannot afford the latest patented drugs.

Until the adoption of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) by the World Trade Organization in 1995, few poor countries had intellectual property laws, and countries like Thailand and India had spawned thriving generic drugs industries. Under the TRIPS rules, all WTO members must change their laws to conform to the strict American IP regimes (which extend patent rights for at least 20 years from the date the patent application was filed) - patent provisions the American pharmaceuticals industry was extremely influential in drawing up for the WTO.

How is this affecting the access of poor people to essential medicines? Does IP protection contribute to the research and development of drugs and vaccines that are of particular relevance to the third world? Can developing countries benefit from the TRIPS rules?

Take the HIV/AIDS epidemic as an example. The Joint United Nations Programme on HIV/AIDS recently estimated that a total of 42 million people are infected with HIV/AIDS, 95% of whom live in developing countries.

Existing treatments, which enable many people with HIV/AIDS in the United States and other developed countries to live relatively healthy lives, cost about $12,000 a year and are unavailable to all but a relatively few people in Africa.

Drug companies argue that if they can't get protection in poor countries for their inventions, then there is no incentive to research remedies for the diseases plaguing poor countries. However, the brutal facts of the market indicate there is little incentive anyway. These countries are not rich enough to buy the new remedies - the Southern African News Features reported that the entire combined purchasing power of South Asia and sub-Saharan Africa's health budgets is the same as the pharmaceutical drugs market in the United States just for the 15 million people who suffer from heart failure and angina.

The Commission on Intellectual Property Rights (CIPR), set up by the British government last year to look into the issue of IP rights and the developing world, produced a study that strongly challenged one of the original arguments drug companies used in support of strong IP - that the lack of protection in poor countries would harm research and development.

It is estimated that less than 5% of the money spent worldwide on pharmaceutical R&D is for diseases that predominantly affect developing countries.

Private industry is essential for pharmaceutical innovation, the report said, but industry research is driven by commercial considerations. If the effective demand in terms of market size is relatively small, even for common diseases such as tuberculosis and malaria, it is often not commercially worthwhile to devote significant resources to addressing the needs. Usually the large pharmaceutical companies are unwilling to pursue a line of research unless the potential outcome is a product with annual sales on the order of $1 billion.

In 2002, the Commission report said, the total world drug market is valued at $406 billion, of which the developing world accounts for 20%.

"In short we do not think that the globalisation of IP protection will make a significant contribution to increasing R&D expenditure by the private sector relevant to the treatment of diseases that particularly affect developing countries. The only feasible way to do this is by increasing the quantity of international aid resources devoted to such R&D," the Commission's report said.

IP protection in poor countries would therefore seem of little value to the drug companies. Why does it come into play anyway? Because of competition from generic industries in somewhat more advanced developing countries such as India and Brazil. By applying IP protection, drug companies can stop these countries from exporting cheap generic copies of patented medicines to the least developed countries such as Gabon and Senegal that have insufficient or no drug-manufacturing capacity at all.

It's generally agreed that the present TRIPS agreement favors commercial pharmaceutical companies, particularly in the United States, Japan, Switzerland, Germany and the United Kingdom; while for poor countries, it would bring few benefits.

As John Barton, Stanford University law professor who chaired the Commission on Intellectual Property Rights, said in an e-mail interview:

"Let me just suggest that the poorest nations -- who are only

consumers of technology-based products and unlikely to invent any --

are not helped by TRIPS. And the nations with substantial

scientific capabilities and large markets may well benefit from IP


In response to concerns like this, the WTO Ministerial Declaration on TRIPS and Public Health, was thrashed out at last December's WTO meeting in Qatar. It was an effort among developing countries to clarify that TRIPS should not prevent member nations from taking measures to protect public health. Though it isn't a relaxation of the agreement, the message was that TRIPS is not always appropriate and that poor countries should be allowed to set up levels of IP protection that are right for them. Different countries should tailor their IP system to fit their particular circumstances, in line with their levels of scientific and technological development. Applied in the right way and at the right moment in development, IP protection should offer opportunities to poor people, not a threat to their health.

Some middle-income developing countries, such as India and China, with their industrial-scale copying of other people's products, are sufficiently advanced to benefit from the sort of innovation that would be spurred by stronger patent protections. They should implement the IP protection required by TRIPS, for the sake of their own industry. But for the least developed countries, where life-threatening disease - not just AIDS, but malaria, TB and other scourges - are rampant, there have to be ways to bypass patents. Not only should these countries be allowed to make cheap generic versions of patented drugs themselves, but they should also be permitted to buy generics made elsewhere if they do not have the capacity at home.

Patents are important and must be respected in wealthy countries; but much of the time they also operate against the interests of the world's poor, who must be allowed some kind of escape clause. That doesn't mean IP should be abandoned in the developing world altogether. The IP issue is only one among many factors affecting access to medicine for poor people. The truth, as ever, is complicated. Many poor countries have no patents laws at all, but still cannot afford even the cheapest generic drugs. Most African AIDS sufferers need adequate food and clean water before they need drugs. And five major drug companies have pledged to slash drug prices of key antiretroviral AIDS medicines by about 85% to 90% in poor countries - albeit under intense international pressure and with looming competition from generic drug makers.

But if a sustainable and effective solution to combating diseases like AIDS in the developing world is the goal, then a blanket application of IP would be counter productive. A practical global IP system should be a flexible one that takes different countries' economic and social circumstances into account and makes sensible compromises.

Posted by Ting Shi at December 20, 2002 12:14 PM

Intellectual property is theft

Posted by: luther on April 21, 2003 12:28 PM
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