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Debate: Liberalizing international drug patent laws

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Should the pharmaceutical patenting system be liberalised?

Background and context

Whilst every country has its own patenting laws, international regulation for WTO members has since c1994 been organised by TRIPs (Trade Related aspects of Intellectual Property rights), which sets minimum standards for such laws. Patents are issued to new, inventive products with an industrial application for twenty years, whether domestic or imported. Most members should have complied by 2000, but the poorest have until 2005 as the system is costly to implement. TRIPs allows breaking of patents in certain circumstances by government use of alternative manufacturers, so long as the patent holder is compensated, a system termed ‘compulsory licensing’ – involuntary patent transfer. Importation of generic drugs is only possible under emergency conditions, so debate hinges on how liberally this loophole is interpreted. It is necessary to remember that patent holders are unwilling accept liberal interpretations not because they do not wish to donate drugs to the poorest, but because of the international precedents and implications this holds, and because unilateral action might damage a single company, and so they await general agreements. It is estimated that the average drug takes ten years to bring to market, costs $1bn and has a 10% chance of success. Its generic equivalent tends to cost 66% of the original price, falling eventually to c20%.Whilst this debate might well focus on drugs given to less developed nations, a more innovative spin would be to consider EU and American patenting systems. In the latter, the Hatch-Waxman amendments allow a suit to be filed at the point where marketing a generic drug is requested, which automatically imposes a 30 month delay (often justified by changing drugs from fast to slow acting, or altering their colouring). The Senate has passed a bill limiting this, although it may not pass the House, and is reportedly circumvented by payments to generic competitors encouraging less competition – but proving the latter is clearl

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Argument #1

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Yes

The monopoly power given to Western, multinational companies by patents is economically and morally misguided. Such power allows companies to potentially manipulate markets to their own advantage, and exploit legal loopholes to remain dominant.

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No

Protection of intellectual property rights, both nationally and internationally under the TRIPs system, is a legal necessity if companies are to continue to develop new products. Cheap generic alternatives simply would not exist without the original costly research having been carried out. It is just to compensate and reward such innovation, as in any industry.

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Argument #2

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Yes

Free market pricing would allow greater cross border trading, and thus drive costs down to minimum levels. This would benefit both poor countries, whose low GNP places limits on health budgets, and rich ones, where national health care systems are coming under increasing strain. Lower prices of some drugs would allow newer, more expensive ones to be purchased.

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No

The pharmaceutical market is not suited to wide competition, as research and development will be naturally dominated by a few companies, between whom competition rather than collusion is natural. Variant prices across single markets, such as the EU, are a product of monopsony (the government as the sole buyer) rather than monopoly distortion – it is this that must be changed.

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Argument #3

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Yes

There is a moral imperative on richer countries to help their poorer neighbours, by reducing the costs of new drugs, to treat e.g. HIV or malaria, and which can only be carried out through international agreements - no one company will be likely to do this alone. This will allow faster economic development and so raise gross global product.

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No

Even were drugs to be made cheaper, they might still be unaffordable in the quantities and for the long-run needs of countries. Even given a scenario whereby drugs were provided free, delivery would be hampered by poor supply chains, particularly in rural areas, and in a lack of understanding of traditional practices and customs. Research into the distribution of particular diseases would allow better targeting - it is not simply a question of money.

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Argument #4

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Yes

Raising the problems involved in treating diseases will act as a spur to innovation and to sponsorship. Awareness of the medical needs of the poor is a long-term issue too often lost amongst more shocking emergencies naturally emphasised in the media.

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No

It is right that long-term medicinal questions receive a higher profile, yet recent publicity over patents still focuses on a small number of instances, notably AIDs, and with especial regard to South Africa. Spending more, more efficiently, on basic hygiene and on treating diseases not prevalent in Western society can be valuable to more people, often more affordably.

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Argument #5

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Yes

Companies should be made aware of concerns regarding ‘biopiracy’, where customary remedies and indigenous knowledge are (seen to be) exploited in the interests of profits. Patenting living organisms is a sensitive topic per se, but industrial patents take too little account of knowledge made public by oral history and non-written accounts to adequately compensate the original owners.

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No

Again, patents can be successful if used in the right way - were indigenous populations properly considered, then patents would act as a necessary protection against exploitation. Patents on drugs clearly involve an industrial process, and are therefore less contentious than direct patenting of genetic material.

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Argument #6

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Yes

Opportunities for research are centred in richer countries, and encouraging the brightest entrepreneurs there disadvantages innovation locally. Higher wages for scientists, and locating more production in poorer countries would prevent unnecessary vilification of pharmaceutical companies.

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No

Believing that poor countries can afford to put resources into developing, rather than buying, new drugs seems unduly utopian. Whilst generic alternatives might be possible in India and Brazil, the resources and infrastructure needed for production are better provided for as at present.

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