Trade Win No. 6
IPRs help rather than hinder pharmaceutical access
Development and distribution of vaccines during the COVID-19 global pandemic four years ago demonstrated what many studies have shown—patents and other intellectual property rights (IPRs) make it easier for companies to share the technologies behind much needed pharmaceuticals. This in turn helps provide access to medicines that might otherwise be out of reach for many around the world.
Prior to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994 , countries such as India and China expressly prohibited patents on pharmaceutical products. The TRIPS Agreement requires all signatory countries to provide minimum intellectual property protection for all technologies, including pharmaceutical products, without discrimination. Despite criticisms that they increase drug prices, these provisions actually foster pharmaceutical investment, innovation, and, importantly, widespread dissemination of medicines in several ways.
First, the pharmaceutical industry relies heavily on IPRs to protect their investments in research and development. Companies typically invest billions of dollars and decades of effort in not only inventing new drugs but also in the testing necessary to obtain regulatory approval for those drugs. Patents are of particular value, especially now that regulatory laws in the U.S. and many other countries allow generic manufacturers to enter the market by relying on the originators’ clinical trials data. Although patents are only twenty years in duration, early studies suggest that without patents, the pharmaceutical industry would introduce approximately 60 percent fewer new drugs per year. Thus, without the incentives to develop them in the first place, no one ever would receive the benefit of new drugs.
For example, a study on biomedical innovation in Brazil found that allowing patents on pharmaceutical products incentivized the testing and commercialization of biodiversity-based pharmaceuticals. Patents also facilitated public-private partnerships between university inventors and the biomedical industry.
Second, pharmaceutical companies introduce new drug products earlier in countries with strong intellectual property rights. A study of 647 new drug products first marketed between 1983 and 2002 showed that, controlling for market size and GDP, countries with pharmaceutical patent protections experienced a 55 percent earlier product introduction. Launching a new drug entails significant costs in obtaining regulatory approval in each country and educating health care professionals on administering the new drug safely and effectively.
Third, a recent study of COVID-19 vaccine manufacturing and distribution shows that reliable IPRs promoted broad collaborative efforts to ramp up supply and increase access. Licensing patents and vital trade secrets to partners in India and Brazil helped expand manufacturing capacity. Development of some vaccines such as Pfizer’s mRNA vaccine also resulted from such collaborative efforts. Enforceable IPRs allowed companies to share pivotal technologies, and sell vaccines at cost to less wealthy nations without fear of losing valuable business assets.
Attempts to waive or compulsorily license pharmaceutical IPRs would have derailed COVID-19 vaccine deployment. A robust IPR regime facilitates both development and international distribution of new drugs— undoubtedly a proven win in international trade and health.
