Global Health Implications of Intellectual Property and TRIPS

FACT SHEET Global Health Implications of Intellectual Property and TRIPS Intellectual property is an integral component of regulating the international dissemination of information and products both within and outside the medical market-place. Patents, copyrights, and trademarks on pharmaceuticals and other medical technologies help maintain the highest quality, effectiveness, and safety; however, prolonged periods of market exclusivity have allowed certain pharmaceutical companies to maintain market dominance over specific drugs, keeping prices too high to reach some of the poorer nations in the world.1 In order to establish a minimum standard for intellectual property across the globe, the World Trade Organization (WTO) agreement on TradeRelated Aspects of Intellectual Property Rights (TRIPS) was ratified in 1995. TRIPS seeks to: ! ! ! ! !

Standardize international intellectual property regulations; Properly settle certain disputes between WTO members; Ensure that adequate standards exist in all member nations; Combat the leaking of undisclosed information, such as test data and new drug compounds; Protect the global market from counterfeit and substandard pharmaceuticals.2

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Current Debates A significant TRIPS debate has focused on whether the agreement has given the developed world a significant advantage relative to the developing world by granting large scale pharmaceutical companies’ long-term market exclusivity and preventing the entrance of generics. Rigid intellectual property provisions have allowed the ten largest pharmaceutical manufacturers to control about 46 percent of all the world’s drug sales. In response to this debate, many pharmaceutical companies point out that in order to encourage investment in the development of high-cost drugs that take a long time to create and test, companies need assurance that a patent will protect their intellectual property investment long enough to recover investment costs and make a profit. Otherwise, there is a disincentive for companies to develop the drugs in the first place.

Despite this market dominance, the high prices of brand name drugs forces the least developed countries (LDCs) to rely almost exclusively on generic alternatives. For example, in countries such as Tanzania, Zimbabwe, and El Salvador, more than 70 percent of drugs prescribed by physicians are generics. Because of this, TRIPS introduced certain safeguards, including compulsory licensing, parallel importation, and Bolar provisions, in order to ensure the production and distribution of generics in developing nations.

Market Share of Ten Leading Pharmaceutical Companies in 20052

Safeguard Measures Compulsory licensing A compulsory license is used to issue a license for the production of a patented product without the consent of the patent holder. It is issued by a national government to a third party producer or a government agency for production. However, if a compulsory license is issued, the product being produced may only be used for domestic consumption in the nation where the license was issued, and may not be exported.4 While TRIPS identifies national emergencies and periods of extreme urgency as times when compulsory licenses should be issued, it does not limit the reasons for issuing these licenses.5 Parallel importing Parallel importation refers to a country’s ability to import a patented drug without the consent of the patent holder. For example, if a pharmaceutical company sells a drug for $1 in the United States, and the same company sells the same drug in Ghana for $10, someone in Ghana may import the drug from the United States and sell it for $3.2 Bolar provisions The Bolar provision allows a generic producer to have testing and regulatory approval of a generic version of a drug prior to the brand name patent expiration. This is done to ensure generic producers are ready for the production and sale of a generic when the patent expires. Without the Bolar provision, generic manufactures generally do not release versions of the drug until two to three years after the patent expiratory date.2 The Doha Declaration and TRIPS During the Doha Conference in 2001, the WTO adopted a special Ministerial Declaration to clarify ambiguities in the TRIPS agreement.6 The declaration was meant to: ! ! !

Recognize the adverse effect that intellectual property can have on the prices of pharmaceuticals in the developing world; Reinforce the safeguard measures established by TRIPS and encourage developing nations to take advantage of these measures to ensure the public’s health; Define what constitutes a national emergency in granting compulsory licenses.

Further Reading Lancet Series on Trade and Health: http://www.thelancet.com/series/trade-and-health WHO Reports on Trade: http://www.who.int/trade/en/ Declaration on the TRIPS agreement and Public Health: http://www.wto.org/

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References 1. WHO 2006. TRIPS, Intellectual Property Rights and Access to Medicines. Available from: http://www.who.int 2. Smith R, Correa C, Oh C. 2009. Trade TRIPS and Pharmaceuticals. The Lancet. 373(9664): 684-691.

3. WHO 2004. The World Medicine Situation. Available from: http://www.who.int 4. WHO 2008. The DOHA Declaration on the TRIPS agreement and Public Health. Available from: www.who.int 5. WTO 2006. Compulsory Licensing of Pharmaceuticals and TRIPS. Available from: http://www.wto.org 6. Correa C, WHO 2002. Implications of the Doha Declaration on TRIPS and Public Health, Health Economics and Drugs EDM Series No. 12 June 2002.

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