TRIPS and the Balance between Private Rights and Public Well-being
| Author | Deeparghya Mukherjee |
| DOI | 10.1177/0015732515598590 |
| Published date | 01 November 2015 |
| Date | 01 November 2015 |
| Subject Matter | Commentary |
TRIPS and the Balance
Foreign Trade Review
50(4) 284–297
between Private Rights
©2015 Indian Institute of
Foreign Trade
and Public Well-being:
SAGE Publications
sagepub.in/home.nav
The Case of the
DOI: 10.1177/0015732515598590
http://ftr.sagepub.com
Pharmaceutical Sector
Deeparghya Mukherjee1
Abstract
Adherence to the Trade-Related Aspects of Intel ectual Property Rights (TRIPS)
has had varied impacts across the world, and concerns of adverse effects on
public wel -being, especial y in the context of the pharmaceutical sector, are
largely debated. In this article, we analyze the effects of TRIPS on public well-
being in the context of the pharmaceutical sector. We look at the policies of
China, India and Brazil (three major players in the global pharmaceutical industry)
and their usage of the TRIPS flexibilities. China, which has not used the TRIPS
flexibilities, has benefited from technology transfer and foreign direct invest-
ment (FDI) in research & development (R&D). The need for FDI in R&D in India
and Brazil as potential destinations for research on neglected tropical diseases
(NTDs) is brought out. We conclude that the effects of TRIPS on public well-
being are critical for countries which do not have the ability to use the flexibilities.
At a time when trade and investment treaties are mostly aimed at stricter com-
mitments on intel ectual property rights (IPR) than TRIPS, such countries need
to negotiate appropriate investment and knowledge-sharing commitments from
their developed counterparts so as not to be adversely affected by agreeing to
demands on bending IPR laws.
JEL: O32, O34, F13, F21
Keywords
Intellectual property rights, pharmaceutical sector, emerging economies
1 Visiting Research Fellow, Institute of South Asian Studies, National University of Singapore,
Singapore.
Corresponding author:
Deeparghya Mukherjee, Visiting Research Fellow, Institute of South Asian Studies, National University
of Singapore, Singapore.
E-mail: isasdm@nus.edu.sg
Mukherjee
285
Introduction
Economic growth and development are at the centre of economic agendas for coun-
tries around the world.1 Over the last 50 years and more, multinational corporations
(MNCs) have provided major stimuli to economic growth and higher productivity
through research and innovation have come to be the primary source of their com-
parative advantage. Intellectual property, generated out of research, is guarded by
most legal systems across the world providing exclusive rights of production and
marketing of a particular product to the inventor through patents or otherwise.
The role of intellectual property in shaping the world economy today is increas-
ingly important, and more so, since it found its way into international trade and
investment agreements. Going back to the formation of the World Trade
Organization (WTO) in 1995; the TRIPS Agreement was introduced primarily
through lobbying by the US pharmaceutical industry to protect their interests
across all WTO member nations.
Intellectual property may be in various forms, and the WTO-TRIPS include the
following as intellectual property: copyright and related rights, trademarks includ-
ing service marks; geographical indications including appellations of origin;
industrial designs; patents including the protection of new varieties of plants; the
layout designs of integrated circuits; and undisclosed information including trade
secrets and test data.2 However, it was recognized that there were differences
amongst countries in terms of maturity and prevalence of the concept of intellec-
tual property. Thus, flexibilities were granted to countries depending on their
stages of development. To list a few important ones: First, countries were given
time (depending on the levels of economic development) to scale up their intel-
lectual property regimes, and developing economies had until 2005 to implement
the TRIPS while the least developed countries currently have an extension till
2021 with possibilities of further extensions, especially for patents in the pharma-
ceutical sector.3 Second, provisions for compulsory licences were made to grant
flexibility to national governments to allow generic production of a particular
product in exchange for a fee paid to the patentee. Third, patent laws were to be
framed by individual countries, and the conditions for incremental innovation
were left to individual countries. TRIPS only apply to new inventions and not for
incremental innovation. Fourth, TRIPS does not delve into the area of parallel
importation. Countries are free to import a patented drug from a third country if
the price is less than what the patentee charges in the importing country (Mani &
Nelson, 2013). Most flexibilities were granted with an eye on the pharmaceutical
sector as TRIPS would affect the ability of most developing countries to provide
medicines with direct impact on domestic well-being.
TRIPS and Public Well-being
Bhagwati (2002) had initially argued that IPRs are not a trade issue at all and
hence, should not be a part of the WTO agenda. It is contended that the implica-
tions of the TRIPS were unknown to most of the developing world when they
286
Foreign Trade Review 50(4)
signed on to it (Yu, 2005). Stiglitz (2006) notes that the major problem with TRIPS
remains that the agreement seeks to restrict the use of knowledge.
Most countries adopted the TRIPS as a move towards incentivizing research
and development and investment in research activities. However, in the aftermath
of TRIPS, the world has experienced its adverse effects on well-being. In Africa,
crucial acquired immuno deficiency syndrome (AIDS) drugs were patented and
thereby, priced higher than the affordability of most citizens. In the late 1990s,
amidst the outbreak of AIDS, the US pharmaceutical giants were reluctant to
bring down the price and increase the supply so as to save human lives. The AIDS
endemic in Africa claimed at least 10 million lives, a significant portion of the
deaths could have been stopped if the pharmaceutical companies had agreed to
reduce the price and increase supply.4 Subsequently, in the Doha round, the provi-
sions of compulsory licensing were further strengthened to emphasize the right of
developing country governments to determine where and when the need for a
compulsory licence existed.5 Although Article 31 of the TRIPS agreement does
not specifically outline the grounds on which a licence may be issued, some
examples of worthy scenarios as obtained from legislations of developing coun-
try governments are (i) failed negotiations to obtain a licence on reasonable
terms, (ii) public interest, (iii) national emergencies, (iv) failure to exploit or
insufficiency of working of a patent, (v) counter anti-competitive practices,
(vi) establish pharmaceutical industrial base or in line with trade/industrial pol-
icy objectives and (vii) dependent patents (where a patent cannot be exploited
without using another patent) (Correa, 2013).
On TRIPS and its effects on public well-being, Rangnekar (2004) establishes
that TRIPS may hurt prospects of innovation which is the primary motive for
arguing in favour of a TRIPS arrangement. Today, TRIPS form the base of
intellectual property agreements that countries reach in their bilateral free trade
agreements (FTAs). The US and some European Union countries have been
promoting increased commitments with partner...
To continue reading
Request your trial