Sunday, December 19, 2004

Drug patents, innovation and productivity

I got my legal research essay back this week, which was based on the problems in achieving the right balance between TRIPs obligations and human rights, in particular the right of access to essential medicines.

TRIPs obligations in terms of drug patents are fairly simple to understand. WTO Members must provide a legal system which protects drug company intellectual property for 20 years, once the drug company can prove originality. There is a nice discussion by Becker and Posner on the pro-intellectual property side on their new blog, here and here.

I always thought I was pro-IP, in terms of allowing some economic reward for innovation. My research essay didn't change me from that view in most cases, such as where patents are filed for an industrial use. In excluding competitors from making, say, a wheel of the same shape, IP serves its function, in rewarding that innovator and encouraging others to also innovate and make a better wheel.

However, where life-saving medicines are concerned, I am no longer so sure. What I want to know is this: has anybody thought of the economic consequences of allowing monopoly rights in drugs? What I mean is, we reward innovation because it increases production. What happens if that 'reward' actually decreases production because of the large number of people who cannot access these drugs and therefore cannot be productive in their normal employment?

Surely by allowing monopolies in patented pharmaceuticals, we are actually going backwards. Rather than allowing people access to medicines that will save their lives and therefore increase their productive capacity, we are in fact allowing pharmaceutical companies profits at the expense of all other sectors of the economy. Often this occurs in developing countries and therefore where production is most required.

Go IP, but not in pharmaceuticals. The only justification I can see (even though I do not agree with it) for allowing patents and restricting access to drugs is for innovation, so that we get better drugs. What if that justification is not even enough anymore? Aren't we just allowing drug companies unjustified monopoly rights?

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