International Federation of Pharmaceutical Manufacturers Associations (IFPMA)
13 September 2002

The CIPR Report: Possibly More Dangerous to Economic Development than the Alleged Costs of Patents and Copyrights

Today, the Commission on Intellectual Property Rights releases their new study "Integrating Intellectual Property Rights and Development Policy" in Geneva. "Although the Report recognizes certain positive aspects of intellectual property rights rules, it suggests directions that will neither aid development nor improve access to health care in developing countries," says Dr. Harvey Bale, Director General of IFPMA.

The Report correctly states that some IP protection is likely to be appropriate for developing countries and that it can make an important contribution to research and innovation in developed countries. (CIPR Report, p.6) Second, the Report recognizes that, despite its restricted mandate to review only the impact of IP policies on development, intellectual property issues are only one element to promote development and better access to medicines (CIPR Report Executive Summary, pp. 5-6). Third, it correctly underlines the need for countries to adopt a range of policies to improve access to medicines including additional resources to infrastructure (CIPR Report, p. 39). Finally, it gives a fairly balanced view of the role of existing intellectual property rules in protecting and developing uses of traditional knowledge, and thus expanding the stakeholder participation in the global regime of intellectual property rights.

However, the reports overall tone reflects a bias in the Commission to overestimate the "costs" of IP rights, and to favor exceptions to TRIPS rules and compulsory licensing. The CIPR Chairman was quoted in the media as saying that patent rules "have gone too far."

"The Report exaggerates the negative aspects of intellectual property for developing countries. Despite concerns expressed in the Report, more and more developing countries recognize the benefits of patents for pharmaceuticals and recognize that the significant issues of access to medicines lie elsewhere - in partnerships, financing, political and social commitment and infrastructure," says Dr. Bale.

Nearly all major developing countries and countries in transition from socialist economies have already adopted TRIPS level protection (or even higher standards) - including China, Brazil, Chile, Korea, Russia, Hungary, Taiwan, Mexico, Jordan, Cambodia, and Thailand. The two major exceptions - Argentina and India - had the only representatives from developing countries as members of the CIPR. Dr Bale of IFPMA notes that, "Developing countries have two models of IP protection to choose from - that of China, Brazil, Mexico where economic growth is strong, foreign investment is flowing in, there is no "brain drain" problem, and innovation is beginning to take place or that of Argentina and India, both beset by inadequate growth, a drain of skilled people to other countries, no opportunity for innovation and (as in the case of Argentina) financial chaos. I believe that the choice is clear."

As for compulsory licensing, the theoretical approach taken by the CIPR is that weakening patents through forcing the patent holder (e.g., for AIDS drugs) to license a product to a competitor will make medicines accessible to millions of people not now served. Unfortunately, the only significant beneficiary of compulsory licensing is the generic company recipient of such licenses. "Copycat companies in Argentina do not need licenses to get rights to manufacture drug innovations, and yet their prices are often as high or higher than those of the originator's prices or the prices of the same products in Brazil or Mexico, where patents exist. And in India, there are no pharmaceutical patents that could even theoretically block access to AIDS drugs there and Indian "generic" companies freely copy drugs patented elsewhere. Some companies promise to export AIDS drugs to other regions. Yet of more than 500,000 AIDS victims in India needing access to AIDS drugs, less than 3 percent actually receive drug treatments," maintains Dr. Bale.

Developing countries in practice do not see compulsory licensing as a solution. It is the combination of poverty, lack of access to sufficient international financial assistance, the absence of trained medical personnel in many regions of all developing countries, lack of diagnostic equipment, lack of effective political leadership to address health as a priority, and so forth. "These countries need assistance in building infrastructure to address the healthcare needs of their populations," emphasizes Dr. Bale.

The fact is that prices of drugs are independent of the issue of patents and are driven by markets, like the prices of other products. Research-based companies are offering AIDS and other drugs to developing countries that are sometimes lower than even generic versions. What is needed is not an "IP solution" but cooperation among stakeholders - governments, international financial institutions, NGO's and industry - to expand access to health care through improved infrastructure and finance - and innovation in ultimately finding a cure and vaccines for HIV/AIDS and other diseases. "This requires stronger IP rules not weaker ones, changing companies that have capacity to do R&D in India and Argentina from copycats to innovators," states Dr. Bale.

Finally, and perhaps most importantly, the CIPR, in its mandate to review IP rules failed completely in its Report to address how TRIPS relates to addressing a growing threat to developing country consumers and to consumers around the world - the deadly trade in counterfeit medicines. In Southeast Asia people are dying because many anti-malarial drugs are fakes. Fake meningitis vaccines have killed thousands in Africa. Dr. Bale notes that "The TRIPS Agreement has sound provisions that will help to stem the rise in the export of counterfeit drugs from one country to another. It is astonishing that despite growing media attention to the seriousness of counterfeit medicines trade, the Report ignores this danger completely, only referring to the existence of counterfeit computer software."

In its negative attitude toward the relationship between IP and the interests of developing countries, the Report overlooks one of the strongest mechanisms - the TRIPS provisions on counterfeiting - to improve public health worldwide," points out Dr. Bale. "In its misplaced emphasis on alleged problems of patents the CIPR missed an opportunity to help raise the issue of how the TRIPS Agreement can be of important help in overcoming this menace of counterfeit drugs," he adds.

In conclusion, although the reports findings address an important issue, it reveals very little new data. Most importantly, the report fails to underline the real needs of developing countries to have strong intellectual property protection in order to stimulate domestic Research and Development as well as foreign direct investment.

Strong intellectual property rights are essential as they provide incentives and protection for innovation including research into finding new drugs for diseases, which particularly affect developing countries. Examples of these on-going efforts include important innovations in HIV/AIDS and anti-malarial drugs. Further examples include public-private R&D partnerships such as the Medicines for Malaria Venture (MMV) as well as other productive partnerships to address diseases affecting the developing world.

(For further information on these partnerships, please visit the IFPMA web site: