PHM-Exch> Intellectual Property Raises Costs of Living

[Claudio Schuftan]

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From: Jomo <jomoks at yahoo.com>

*Intellectual Property Raises Costs of Living*

*Jomo Kwame Sundaram, Claire Lim*

KUALA LUMPUR, Malaysia, Feb 11 (IPS)  - Many medicines and medical tests
are unaffordable to most of humanity owing to the ability of typically
transnational pharmaceutical giants to abuse their monopoly powers,
enforced by intellectual property laws, to set prices to maximize profits
over the long-term.

Most basic research is funded by government grants, and in recent years, by
philanthropic initiatives. When a profitable opportunity presents itself,
venture capitalists fund ‘last leg' efforts to patent an innovation and
‘take it to market', as the patent holder ‘takes all'.

    Patents, a form of intellectual property rights (IPRs), are believed by
many to be necessary to incentivise innovation, and to recover research and
development costs, by creating a temporary legal monopoly.

IPRs are monopoly rights
After securing patents, patent holders typically take additional measures
to deter and undermine potential competitors, and to consolidate and extend
their monopoly position for as long as possible by any means available.
Private companies have then used their monopolies to charge exorbitant
prices.

In 2015, Turing Pharmaceuticals bought the rights to Daraprim—a drug used
by cancer and HIV patients to fight deadly parasitic infections—raising its
price 50-fold from USD13.50 to USD750! The ‘price gouging' company was
controlled by Martin Shkreli, dubbed ‘Pharma Bro' by the US media and once
deemed ‘America's most hated man'.

Private companies eager to extend their monopolies try to ‘evergreen' them,
by registering ‘follow-on' patents involving minor variations closely
linked to the original invention. By ‘evergreening', the patents system has
been used by companies to create long term monopolies.

Others engage in ‘patent trolling', obtaining many patents to profit from
litigation or licensing, without inventing anything or making products of
their own. Trolling enables patent owners to blackmail those in need to
their patents, sometimes by creating ‘patent thickets'—webs of overlapping
IPRs—and related bottlenecks, limiting utilization of patented knowledge
and effectively hindering further innovation.

Before the US withdrew from the Trans-Pacific Partnership (TPP) in January
2017, TPP provisions would have extended IP protections to cover
‘biologics', i.e., naturally occurring substances, such as insulin for
diabetes patients.

These onerous TPP provisions have been suspended in the successor
Comprehensive and Progressive TPP (CPTPP) following US withdrawal, but can
easily be reinstated, e.g., to induce the US to rejoin the TPP.

Tripping up public health
Through various means, US-style IPR regimes have spread worldwide since
adoption of the World Trade Organization's (WTO) agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS).

Under TRIPS, all WTO members have to provide a minimum level of IPR
protection which includes, among other things, patent protection for a
minimum of 20 years, including for imported IPRs registered in other
countries.

TRIPS also stipulates conditions for using the ‘compulsory licence'
concession allowing governments to license the use of a patented invention
to a third party or government agency without the consent of the
patent-holder.

There is moot evidence that TRIPS benefits developing countries by
attracting foreign investment, promoting technological transfer and
increasing innovation. Instead, TRIPS has imposed substantial, avoidable
costs on developing countries.

Where developing countries have made use of TRIPS concessions, they have
faced international pressure from pharmaceutical giants and their
governments to limit, if not eliminate the scope of these exceptions

Malaysia is the first country to use ‘compulsory licencing' under TRIPS to
produce sofosbuvir for Hepatitis C treatment. The drug, from patent owner
Gilead, costs almost RM300,000 (USD68,000) for the full course, while
generic substitutes cost just over RM1000. US ‘big pharma' has applied
pressure on Malaysia to stop using its ‘compulsory licence'.

IP for intellectual piracy
Developing countries are generally unable to check the monopolistic
practices of transnational pharmaceutical conglomerates due to
underdeveloped antitrust regimes, weak law enforcement capacities and their
influential partners.

Such companies may ‘re-package' medicinal products and processes from
developing countries' ‘traditional knowledge systems' to secure patents on
them, including naturally occurring substances known as ‘biologics'.

Turmeric is widely used in India for medicine, food and dye among other
things. In 1995, the US granted the University of Mississippi Medical
Center a patent for the use and administration of turmeric powder to heal
wounds, granting it an exclusive right to sell and distribute turmeric.

The Indian Council for Scientific and Industrial Research (CSIR) objected,
arguing that turmeric had been so used in India for centuries, providing
historical references in Sanskrit, Urdu, Hindi and other languages. The US
patent was eventually revoked because it lacked the ‘novelty' element, but
it required herculean efforts.

Alternatives
Developing countries are now no longer able to require technology transfer,
further limiting their ability to develop their own technological
capacities and capabilities. Hence, many developing country governments are
told they have no other way to industrialize except by generously inducing
transnational companies to locate parts of their ‘value-adding' activities
in their economies.

Innovation, Intellectual Property and Development, by Joseph Stiglitz, Dean
Baker and Arjun Jayadev, suggests alternatives to incentivise innovation,
especially relevant for developed economies. These include: centralized
direct R&D financing; decentralized funding through tax breaks for research
spending; using prizes to recognize and reward innovative research; and
establishing open source platforms to promote free knowledge flows.

Without the strong private monopolies enabled by current IP rules, the
currently unaffordable prices of medicines and other products can be
significantly reduced while developing countries will have much better
prospects for developing internationally competitive industrial capacities
and technological capabilities.

Claire Lim is a lawyer who used to practice in England. Jomo Kwame Sundaram
was a university professor and senior UN official. Both work with the
Khazanah Research Institute, whose views are not expressed here.


Visit this story at
http://ipsnews.net/2020/02/intellectual-property-raises-costs-living
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