Drug Patents and Developing Countries: New Proposal.

A creative new idea on using existing patent laws and procedures to deal with the conflict between intellectual property and access to medication in developing countries was posted on the World Bank's Annual Bank Conference on Development Economics ("A Patent Proposal for Global Diseases," by Jean O. Lanjouw, Yale University, the Brookings Institution and NBER, April 2001, http://econ.worldbank.org/files/l733_lanjouw.pdf).

We cannot judge the technical merits, but certainly new ideas on this issue need attention -- especially at this time when access to treatment will be considered at the United Nations General Assembly Special Session on HIV/AIDS, June 25-27, 2001.

The current problem is that the existing TRIPS (intellectual property) provisions of the World Trade Organization treaty require every country to have U.S./European style patent laws in force by 2006. This provision, adopted with no thought for its effect on access to health care, could be a disaster for poor countries, because pharmaceutical companies price their drugs for rich-country markets, and have incentives to write off the poor who do not count financially, instead of having greatly varying prices which might lead to public-relations problems in rich countries. But at the same time, some intellectual-property advocates hope that the new patentability of drugs for developing-country diseases might lead to medical research and drug development on diseases which are largely limited to poor countries, diseases largely neglected until now. [Medicines could be sold profitably in poor countries, but they would have to be developed and marketed differently than in rich counries.]

The proposal is to use a procedural change in the patent offices of rich countries, to make pharmaceutical companies choose whether to protect their new drug patents in rich countries or in poor countries -- but not in both. Then for diseases like cancer, which affect both rich and poor countries, companies would choose to protect their patents in rich countries -- allowing low-cost generic copies to be sold in poor countries, which are a negligible market in comparison. But for diseases like malaria, which affect poor countries almost entirely, companies would choose patent protection in poor countries. In theory prices would not be prohibitive, as the medications would have to be priced for poor countries in order to sell at all.

This policy could be implemented entirely by one or a few developed countries, without requiring any change in international treaties.

Abstract of "A Patent Proposal for Global Diseases":

There are two identifiable types of diseases in developing countries. Some, such as malaria, are specific to poor countries, but many others, such as cancer, have a high incidence in all countries. These differences give rise to quite distinct drug markets. In particular, for global diseases, pharmaceutical industry profits derived from having a monopoly over sales in poor countries make only a marginal contribution to total world-wide profit and therefore the incentives to invest in research. At the same time, even a small price increase due to such a monopoly in a poor country can greatly reduce the number of people able to purchase patented drugs and the welfare of those who do. This paper describes a policy that could improve on the current patent regime by acknowledging these differences in markets and what they imply for optimal patent protection. It allows protection to strengthen for diseases specific to developing countries where a clear argument can be made that some form of new incentives are warra nted. At the same time, it effectively keeps protection at its current level in situations where increased profits are less likely to generate new innovation.

The paper is available at: http://econ.worldbank.org/fi1es/1733_lanjouw.pdf

Comment

Clearly the preferred solution would be to change the WTO TRIPS so that it does not block most of the world's population from access to new medicines. But we do not know if such a change is possible. In case it is not, devices like the one proposed by Lanjouw need to be considered.