Global Patent System for Pharmaceuticals

The American Enterprise Institute, The Brookings Institute, and the Center for Global Development held a briefing on Capitol Hill this morning titled “The Global Patent System for Pharmaceuticals: Avenues for Moving Forward.” The panel of academics commented on the three “avenues,” or ways to deliver prescription medicines to developing countries, but did not conclude that any one method would be superior. Jenny Lanjouw of the Center for Global Development gave an overview of each “avenue.”

1. System of voluntary licensing

Under this “avenue,” pharmaceutical and biotechnology companies would get together to decide on an industry code of patent licensing that would apply to drugs, vaccines, and medical devices. Firms would voluntarily license patents to a range of competing generic manufacturers in developing countries, in exchange for receiving a specific royalty rate based on the income of the developing country. The generic companies would bear the cost of production.

The code would not stipulate that licenses must be given to manufacturers in wealthier countries to produce the drugs there for sale in poorer, developing countries. Iain Cockburn of Boston University said the poorest countries would not have access to pharmaceuticals under a voluntary code because most do not have the capability to manufacture even copied drugs themselves.

2. Semi-voluntary patent waiver

Under this system developed by Jenny Lanjouw herself, patent protection in poor countries would differ across diseases depending on the importance of those countries’ markets as a potential source of research incentives. Protection broadens to cover more diseases as countries grow richer and their market becomes more significant. The plan is premised on the fact that patents stimulate research investment. Stronger patent protections would exist for non-global diseases such as malaria so as to give the strongest support to research, while global diseases such as cancer would have less patent protection.

Keith Maskus of the University of Colorado said he was doubtful that additional research and development incentives would be created under this plan. “It doesn’t do a lot to encourage research and development funding,” said Maskus.

3. Systems of compulsory licensing

Compulsory licensing would eliminate patent protection in developing countries. The panelists were asked to come up with a compulsory licensing system that would strike the proper balance between access to drugs in poor countries and maintaining incentives for research and development. Jenny Lanjouw, suggested that compulsory licensing be kept to only public health problems in developing countries. The countries would be required to pay a royalty rate based on their income and development.

F.M. Scherer, professor emeritus of Harvard Univesity, said a better alternative would involve a quid pro quo between pharmaceutical companies and representatives of developing countries, negotiated by United Nations Secretary-General Kofi Annan. Scherer’s ideal solution would involve the retention of patents for third-world diseases by pharmaceutical companies in exchange for 10% of pharmaceutical profits being used for the distribution of drugs to developing countries.

–Joe Moser
Galen Institute

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The American Enterprise Institute, The Brookings Institute, and the Center for Global Development held a briefing on Capitol Hill this morning titled “The Global Patent System for Pharmaceuticals: Avenues for Moving Forward.” The panel of academics commented on the three “avenues,” or ways to deliver prescription medicines to developing countries, but did not conclude that any one method would be superior. Jenny Lanjouw of the Center for Global Development gave an overview of each “avenue.”

1. System of voluntary licensing

Under this “avenue,” pharmaceutical and biotechnology companies would get together to decide on an industry code of patent licensing that would apply to drugs, vaccines, and medical devices. Firms would voluntarily license patents to a range of competing generic manufacturers in developing countries, in exchange for receiving a specific royalty rate based on the income of the developing country. The generic companies would bear the cost of production.

The code would not stipulate that licenses must be given to manufacturers in wealthier countries to produce the drugs there for sale in poorer, developing countries. Iain Cockburn of Boston University said the poorest countries would not have access to pharmaceuticals under a voluntary code because most do not have the capability to manufacture even copied drugs themselves.

2. Semi-voluntary patent waiver

Under this system developed by Jenny Lanjouw herself, patent protection in poor countries would differ across diseases depending on the importance of those countries’ markets as a potential source of research incentives. Protection broadens to cover more diseases as countries grow richer and their market becomes more significant. The plan is premised on the fact that patents stimulate research investment. Stronger patent protections would exist for non-global diseases such as malaria so as to give the strongest support to research, while global diseases such as cancer would have less patent protection.

Keith Maskus of the University of Colorado said he was doubtful that additional research and development incentives would be created under this plan. “It doesn’t do a lot to encourage research and development funding,” said Maskus.

3. Systems of compulsory licensing

Compulsory licensing would eliminate patent protection in developing countries. The panelists were asked to come up with a compulsory licensing system that would strike the proper balance between access to drugs in poor countries and maintaining incentives for research and development. Jenny Lanjouw, suggested that compulsory licensing be kept to only public health problems in developing countries. The countries would be required to pay a royalty rate based on their income and development.

F.M. Scherer, professor emeritus of Harvard Univesity, said a better alternative would involve a quid pro quo between pharmaceutical companies and representatives of developing countries, negotiated by United Nations Secretary-General Kofi Annan. Scherer’s ideal solution would involve the retention of patents for third-world diseases by pharmaceutical companies in exchange for 10% of pharmaceutical profits being used for the distribution of drugs to developing countries.

–Joe Moser
Galen Institute

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About the author