Carlos M. Correa

Trade, TRIPS, and pharmaceuticals

The World Trade Organizations Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) set global minimum standards for the protection of intellectual property, substantially increasing and expanding intellectual-property rights, and generated clear gains for the pharmaceutical industry and the developed world. The question of whether TRIPS generates gains for developing countries, in the form of increased exports, is addressed in this paper through consideration of the importance of pharmaceuticals in health-care trade, outlining the essential requirements, implications, and issues related to TRIPS, and TRIPS-plus, in which increased restrictions are imposed as part of bilateral free-trade agreements. TRIPS has not generated substantial gains for developing countries, but has further increased pharmaceutical trade in developed countries. The unequal trade between developed and developing countries (ie, exporting and importing high-value patented drugs, respectively) raises the issue of access to medicines, which is exacerbated by TRIPS-plus provisions, although many countries have not even enacted provision for TRIPS flexibilities. Therefore this paper focuses on options that are available to the health community for negotiation to their advantage under TRIPS, and within the presence of TRIPS-plus.

Strategies for software exports from developing countries

Abstract The paper discusses the economics of software development and the factors that influence the viability of an export-oriented software industry in developing countries. The experiences of a number of Latin American and Asian countries in the production and export of software are analyzed. The case of India, the main software exporter in the developing world, is considered in some detail. The paper finally presents different software export strategies and their relative advantages for developing countries.

Ownership of knowledge: the role of patents in pharmaceutical R&D

Both the public and the private sectors contribute to research and development (R&D) in pharmaceuticals. The public sector originates many of the discoveries of new drugs. The private sector, which focuses on development, is heavily reliant on patents. Though patents are presumed to reward genuine inventions, lax rules on patentability and shortcomings in procedures permit protection to be obtained on a myriad of minor developments. These patents, though weak and possibly invalid in many cases, are used to restrain competition and delay the entry of generic competition. Developing countries should design and implement their patent laws so as to prevent strategic patenting and promote competition and access to medicines.

The Trips Agreement and Developing Countries

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) brought about a very important change in international standards relating to intellectual property rights.1 Because of its far-reaching implications, particularly with respect to developing countries, the agreement has been one of the most controversial components of the WTO system. Strong disagreements on the scope and content of the Agreement emerged during the Uruguay Round negotiations, both between developed and developing countries and among developed countries themselves. Implementation of the Agreement and its review under the “built-in agenda” have also been contentious with regard to many aspects.

Do national access regimes promote the use of genetic resources and benefit sharing

This paper examines the implementation of national regimes on access to genetic resources in a number developing countries, particularly in the members of the Andean Community. It discusses the principles of the Convention on Biological Diversity that inspired such regimes, the main aspects of the adopted legislation, the expectations that countries had while introducing it and the problems faced by regulatory authorities in dealing with access applications. The paper also analyses the implications of such regimes on research and the extent to which the objectives with regard to benefit sharing have been reached. The problems created by the application of uniform rules to all kinds of genetic resources is also addressed, in connection with the treatment of plant genetic resources for food and agriculture (PGRFA). The paper suggests the need to review the access regimes in order to consider the special case of PGRFA, and to solve the difficulties found in their application.

The TRIPS Agreement: How much room for maneuver?

The access to and use of information and technology for development is subject to intellectual property rights. During the past decade, particularly with the adoption of the TRIPS Agreement, the rights of intellectual property right (IPR) holders have been expanded and strengthened. This is likely to affect the scope and modalities of access to information and technologies needed for development. This paper examines, in Section 1, the main characteristics of the TRIPS Agreement. Section 2 presents the ways in which World Trade Organizations (WTO) member countries have used the flexibility left by the Agreement at the national level in order to promote a competitive access to goods and technologies. It examines, in particular, the use of parallel imports, exceptions to exclusive rights and compulsory licenses for that purpose. Section 3 briefly analyses the criteria of interpretation applied under the WTO dispute settlement system in TRIPS-related cases, while Section 4 discusses the normative implications of the Agreement in countries in different levels of development and in selected sectors.

The Impact of the Economic Partnership Agreements on WTO Law

Economic partnership agreements (EPAs) contain obligations relating to the availability and enforcement of intellectual property rights that go beyond what is required under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). This paper examines, first, the extent to which those TRIPS-plus requirements may influence the law of the World Trade Organization (WTO), particularly through interpretations under the dispute settlement mechanism. Second, it elaborates on the possible inconsistency of such requirements with the provisions of the TRIPS Agreement. The paper concludes that, although the EPAs’ jurisprudence might influence interpretations to be made in the context of the WTO, this is unlikely to occur. It also concludes that, under some circumstances, WTO bodies may find that EPA provisions contravene those in the TRIPS Agreement that cover the same subject matter.

Towards a new model for pharmaceutical research.

Despite considerable investments in research and development (R&D) and the availability of powerful scientific and technological tools, innovation in the pharmaceutical industry has declined drastically in the last decade. In addition, most of the new molecules introduced into the market do not entail genuine therapeutic innovations or target the diseases that prevail in developing countries. Most importantly, the prices charged for new pharmaceutical products are unaffordable to the poor and, increasingly, to patients and social security systems, even in developed countries. The lack of appropriate treatments for many of the diseases afflicting developing countries leads to millions of deaths per year.1 Governments have the responsibility to provide effective solutions to this problem.2 They have an ethical imperative to do so, but also the duty to see that the right to health, recognized under international law and many national constitutions, is guaranteed. On 26 May 2012, the World Health Assembly adopted a resolution that could mark the beginning of a needed change in the current model of pharmaceutical R&D. The resolution calls for an inter-governmental meeting (scheduled for November 2012) to examine in depth the proposals made in April in the report of the Consultative Expert Working Group on Research and Development: Financing and Coordination (CEWG),3 established by the World Health Assembly in 2010 under Resolution WHA63.23. Such proposals included open approaches to R&D, pooled funds, direct grants to companies in developing countries, prizes for milestones and end products, and patent pools. The main recommendation of the CEWG was, however, more far-reaching: to start multilateral negotiations for the possible adoption of a binding convention on health R&D.3 This is quite momentous, since the only binding convention adopted so far by the World Health Organization (WHO) has been the Framework Convention on Tobacco Control.2 The concept of a new convention rests on four main premises. First, the current RD a better, more sustainable and predictable financing model is needed. The following are some of the possible objectives of a binding convention as spelled out by the CEWG report: Improving the coordination of public and private RD enhancing innovative capacity in developing countries and technology transfer to these countries; generating RD improving priority-setting based on the public health needs of developing countries and making decisions through governance structures that are transparent and give developing countries a strong voice. However, the objectives, elements and mechanisms of a possible instrument will be defined at the discretion of the governments that eventually participate in a negotiating process. For instance, the CEWG report recommended that all countries dedicate at least 0.01% of their gross domestic product (GDP) to RD however, it will be the governments’ decision, if negotiations on a convention take place, to determine the level and kind of contributions they should make. There is a wide range of options, such as spending on domestic R&D programmes or contributing to an internationally agreed financing mechanism. Hence, the percentages recommended by the CEWG should not be considered as a “take it or leave it” option, nor should they be a reason for countries with a large GDP to fear that the proposed convention would entail extraordinarily large financial contributions. The basic objective of the convention proposal is to put in place a new model of R&D that would lead to a reduction of R&D costs and increase innovation through a more focused, health-driven research agenda and through improved monitoring, cooperation and sharing of research results. This would lead, in turn, to much more affordable, accessible treatments. Although this model will probably generate, in particular, new products targeting the neglected health needs of developing countries, it may help to mitigate the impact of high pharmaceutical prices on stretched public health budgets in developed countries as well. The elaboration and adoption of an international mechanism capable of delivering new and affordable treatments is a milestone event. Through such a mechanism, WHO’s Member States have an unprecedented opportunity to contribute to “the attainment by all peoples of the highest possible level of health”.4

The Use of Compulsory Licences in Latin America

Compulsory licences and government use are provided for in Latin American patent legislation, but so far only two countries (Brazil and Ecuador) have made effective use of this flexibility, in both cases in order to improve access to patented medicines. While the consistency with the provisions of TRIPS on compulsory licensing was questioned in two cases under the WTO dispute settlement mechanism, such challenge did not lead to changes in legislation. Notably, one of such cases seems to confirm the compatibility with that Agreement of compulsory licences based on the lack of effective working of a patent in the country of grant.

Emerging Markets and the World Patent Order: The Forces of Change

The implementation of patent law in the emerging market countries is having an impact on the international patent system. First, it is apparent that the principal emerging market economies are not strictly adhering to the patent regimen of the USA, Europe and Japan, but are instead adapting patent law to their own unique environments. This is more a story of adaptive management of existing standards than it is an innovation of new standards and models. Much of this adaptation of patent standards has been concentrated in the public health sector. Second, to the extent that these emerging economies want to maintain the operating space within which to chart their own paths, they are unlikely to sign on to a strong global patent harmonization exercise. Third, the emerging economies have placed some priority on addressing social welfare within the context of the patent regime, such as by using compulsory licensing to provide access to medicines.Perhaps the most interesting trend among the emerging markets is the building up of local technology-dependent industries through use of preferential procurement policies and other industrial policy mechanisms. While the domestic and international patent system may play a role in the shape of industrial development, it seems that the emerging markets have concluded that a patent system “does not a high-growth economy make”. This does not truly represent a break from the industrial policy implemented by the USA, EU and Japan. The governments of each of these countries have used their vast resources to incentivize local R&D and production. For the USA, much of this has been done in the context of expenditures by the Department of Defense, and more recently by the Department of Energy. For Europe, Airbus Consortium R&D and local production was heavily supported by government subsidy. The Japanese government has invested heavily in its computer industries.For countries that are pursuing an integrated industrial policy that focuses on the result, rather than the particular means used to accomplish the objective, patents are likely to remain a part of the industrial policy mix. This chapter does not suggest that emerging markets have discovered an alternative to patents. Rather, and not surprisingly, they appear to have concluded, despite simplistic arguments about patents and innovation, that they cannot simply rely on the patent system to build up a sound technological base and a competitive economy. Patents are a tool to be modified and used as the specific task requires. As the task changes, so may the terms of patenting.