- What is ‘intellectual property’?
- Who benefits from intellectual property rights?
- Are patents necessary to ensure drug development?
- What are patent pools?
- How much cheaper are generic drugs?
- TRIPS flexibilities
- Why do governments find it hard to use the TRIPS flexibilities?
- How have drug companies reacted?
- Where have indigenous communities’ medicines and knowledge been subject to patents?
What is ‘intellectual property’?
Intellectual property is defined as knowledge which people, companies or organisations can hold rights to. The rules allow the owner to possess their invention or design in the same way that a person can own physical property. In exchange for sharing their knowledge, the owner is granted a monopoly on the income generated by it. Trade rules on intellectual property are a powerful tool at the disposal of pharmaceutical companies.
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Who benefits from intellectual property rights?
Intellectual property rights, or patents, are mostly held by companies or individuals in wealthier developed countries. So it is no surprise that it these companies and individuals who have lobbied hardest for tough rules to protect their businesses.
Trade rules governing intellectual property enable pharmaceutical companies to enjoy a monopoly on the medicines they sell. This makes drugs more expensive because the manufacturing company is free to set the highest possible price in the market in which the drug is sold. This can increase company profits, but put desperately needed medicines beyond the reach of the poorest people.
Are patents necessary to ensure drug development?
Companies say their patent monopoly is an important incentive for research, given lengthy studies and investment are often required before a drug is deemed effective and safe for distribution. Drugs can take between 12 and 15 years to develop at the cost of hundreds of millions of dollars. Only one in three drugs actually recoups its development costs.
But patent protection has increased over the past few decades from just a few years to the 20-year monopoly of today. Big pharmaceutical companies devote millions of dollars to marketing and lobbying, and records show over 1,000 pharmaceutical lobbyists are registered each year in Washington alone.
It is in everyone’s interest that pharmaceuticals can make a fair return on their investment, to encourage research and development of new drugs. But the current system allows pharmaceutical companies to put excessive profit margins above the health emergencies of developing countries – costing millions of lives.
What are patent pools?
Patent pools are a proposal where patent owners voluntarily give their patents to a central ‘pooling’ organisation that then licenses them to other companies and researchers. Companies that make generic drugs, and researchers that want to use the patents to develop new drugs, can pay a fair royalty to the patent owners for access. The pool acts as a ‘one-stop- shop’ for managing negotiations and receiving and paying royalties.
UNITAID, which was set up by France, Brazil, Chile, Norway and the UK in 2006 to increase access to quality drugs for HIV, TB and malaria, is currently trying to set up a patent pool for HIV treatments.
How much cheaper are generic drugs?
The first generation of HIV drugs, for example, cost around $10,000 per patient per year under patent. Now the patents have run out, several different companies have made unbranded versions. Through this competition, the cost has come down to as little as $87 per patient per year. This huge cost reduction is one of the main reasons why access to HIV treatment has grown rapidly in developing countries, to reach three million people to date.
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TRIPS flexibilities
The TRIPS Agreement include flexbilities that enable developing countries to protect public health. In theory the flexibilities allow them to override patents. For example governments can shop around for cheaper sources of a patented drug on sale abroad, known as ‘parallel imports’. Compulsory licensing, another TRIPS flexibility, allows a government to grant permission for someone else to produce the patented product or process without the consent of the patent owner.
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Why do governments find it hard to use the TRIPS flexibilities?
TRIPS flexibilities can only be utilised if they are incorporated into a country’s domestic legislation. One major reason many developing countries have not incorporated TRIPS flexibilities into their national laws is a lack of technical expertise. Many developing country governments have also been reluctant to put these flexibilities into practice because they are wary of trade sanctions and other reprisals that wealthy countries may apply if they try to use the measures to produce or import generic drugs. The majority of developing countries also lacks the capacity or expertise to manufacture patented drugs, even if they wished to do so under a compulsory license.
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How have drug companies reacted?
In recent years powerful drug companies have pursued court cases against producers and governments in an effort to protect their profits. The pharmaceutical company Pfizer has been challenging the Filipino government’s right to use TRIPS safeguards and Swiss company Novartis tried (and failed) to win a court case against the Indian government over patent rights for a cancer drug.
Thailand has issued a number of compulsory licences for HIV antiretroviral drugs including pharmaceutical giant Abbott’s Kaletra®. Abbott was angered that Thailand had ignored the patent system and retaliated by announcing that it would not sell seven of its newest products in Thailand. One of these products was a new once-a-day heat resistant form of Kaletra® which would have been extremely useful in the hot Thai climate. Thailand was also placed on a US watch list of countries committing intellectual property piracy.
Where have indigenous communities’ medicines and knowledge been subject to patents?
One example is the San people who live in the Kalahari desert in South Africa, Botswana, Namibia and Angola. The San chew the hoodia, or ‘xhoba’ plant, on hunting expeditions because they have learned that it can help suppress their appetite..A South African research institute and a UK-based company patented the plant’s key constituents and then sold the rights to develop and market the resulting drug for millions of dollars to Pfizer, a powerful pharmaceutical company. The San people were not consulted during this process.
Only after an international campaign did the San win the rights to share in the profits made from their traditional knowledge. But the percentage they will receive is only a tiny proportion of net sales.
Last modified: 13/01/2011
