International Property Rights and Health Care
A brief history of intellectual property rights… Development economists claim that international properly law is crucial for the individual development of countries, specifically those which are still going through the development process; that a countries economic success is often based around how much creativity it generates and can turn into property rights. In this spirit the World Trade Association in 1994 attempted to implement homogeneous laws in order to defend these rights. This original agreement makes it possible for laws to be suspended during emergencies. This agreement was abandoned two years latter with the realization that developing countries, especially those without a manufacturing sector, are always in a state of emergency. Indeed, the WTO now states that any country that falls under the poorly defined heading of being without “manufacturing capacities” can import generic drugs; 50% of them coming from none other than India itself. (Although in 2005 India began created stricter International Property law) So the questions is… what is the effect of International Property law and how must it be revised in order to ensure that human rights are satisfied, without hampering the innovation that allows for the creation of vital drugs. Alas, this is the same dilemma which faces the American health care system but taken to the extreme. Morally, can we let people suffer and die without medication so that money can be put (hopefully) into Research and Development? Certainly, there should be barriers to keep fairly well of countries to simply make a profit out of distributing generic drugs. Perhaps as an alternative approach aid should go into creating make shift drug companies within the focus country, while more well off countries are in effect forces to “share the wealth” of the US’s R&D burden. But alas, if it were that easy it most likely would have already been done, and government corruption still remains a problem. A realization of patent law would be more possible if the US government would spend more on R&D, with the plusses being that international patent law could be relaxed slightly without causing too much harm, and that the United States would begin attracting more jobs (granted the work supply of scientists is developed along with it.) More help also needs to come from developed countries as far as developing infrastructures to allow for the development of international industries, and with distributing immediate help. Bush’s five year plan to combat HIV and aids being one example of this type of aid. Current US foreign policy could also be reshaped from its current position where free trade agreements are based around weather or not a country enforces international patent law. Until, we begin implementing (successfully) more of the things listed above, it IS necessary that countries like India keep manufacturing generic drugs without being fearful of loosing out on trade agreements.
Jessica Holmes said,
October 26, 2006 at 1:53 pm
Your posting highlights the eternal trade-off that haunts the health care sector— affordability vs. innovation. Patents safeguard the pharmaceutical industry’s ongoing investment in R&D but also give drug companies the market power to charge prices above marginal cost. Certainly drug prices would be lower without patents, but there would also be fewer drugs. Not surprisingly though, developing countries would like to see lower drug prices and/or the ability to produce/import generic versions of brand-name drugs prior to patent expiration. If you live in a country like Zimbabwe or Botswana where some estimate that ½ of all 15 year olds may be infected with the AIDS virus, this is not hard to understand: AIDS anti-retroviral cocktails can cost $15-20,000 a year (less than the average annual income in these countries). But if we either relax patent law in times of emergency or lower drug prices for low-income countries, we face several problems: 1) Opportunities for arbitrage are created and black markets will emerge (a few years ago, $15 million worth of free AIDs cocktails destined for Africa never made it to Africa—they arrived on the black market in Germany and the Netherlands). 2) If drug companies know that prices will be lowered and/or patents will be lifted on drugs that primarily treat low income diseases (e.g., AIDS, malaria, tuberculosis, etc) they will shift resources away from investment in these public health disease burdens and instead allocate R&D toward curing “rich man’s disease”. In fact, we are already seeing that. Look at what drug companies are pouring money into: drugs that treat baldness, impotence, depression, high blood pressure, etc. Lifestyle drugs, not life-saving drugs. About 5% of global R&D is currently directed at the health problems of developing countries (yet these health problems account for 90% of the global disease burden!). We need to create incentives (e.g. subsidies?) for drug companies to increase R&D for diseases affecting developing nations. Relaxing patents or lifting trade sanctions on countries that import patent-infringed generics solves the affordability problem in the short-run but stifles innovation in the long-run.