Transcript New Intellectual Property Regimes and New Business Models for Funding R&D

New Intellectual Property Regimes and
New Business Models for Funding R&D
James Love
Consumer Project on Technology
20 March 2003
The Human Genome and Africa
Stellenbosch, South Africa
introduction
The development of new tools to diagnose and
treat health care problems will present enormous
ethical and practical dilemmas for society. We will
have to determine which public policy instruments
are adequate for financing the costs of the research
and development that is needed for progress, and
we will have to decide if these new technologies
will be accessible to the poor, or if they are
affordable to middle income persons.
How do we fund R&D?
• Public and Donor Funds
– Direct
– Indirect
• Research Mandates
• Intellectual Property Rights
– Patents
– other exclusive marketing rights
Intellectual property
Scope of patentability in WIPO Substantive
Patent Law Treaty (SPLT)
Article 12(4) [Industrial Applicability/Utility] A claimed invention shall be
industrially applicable (useful). It shall be considered industrially applicable
(useful) if it
[Alternative A]
can be made or used for exploitation in any field of [commercial] activity.
[Alternative B]
can be made or used in any kind of industry. "Industry" shall be understood in
its broadest sense, and shall not be limited to industry and commerce proper,
but include agricultural and extractive industries.
[Alternative C]
has a specific, substantial and credible utility.
Who obtains patent protection?
PCT Patent Filings, 2002
USA
Germany
Japan
UK
France
Netherlands
Sweden
Korea
Switzerland/Liechtenstein
Canada
All Developing countries
Number
44,609
15,269
13,531
6,274
4,877
4,019
2,988
2,552
2,469
2,210
5,359
% of
Total Cumm %
39.1%
39.1%
13.4%
52.5%
11.9%
64.4%
5.5%
69.9%
4.3%
74.1%
3.5%
77.7%
2.6%
80.3%
2.2%
82.5%
2.2%
84.7%
1.9%
86.6%
4.7%
4.7%
Rate of investment in R&D for new
products: pharmaceutical industry
1997
1998
1999
8.0 percent
7.9 percent
8.8 percent
Source: James Love, What do US IRS tax returns tell us about R&D
investments? Van ontwikkelen tot slikken, Pharma Selecta congres, January
16, 2003
The pharmaceutical market was estimated at $406 billion in
2002. North America, Europe, Japan and Latin America
accounted for 85% of the worldwide pharmaceutical market.
• IMS estimates
Africa will account
for only $5.3
billion in sales, 1.3
percent of the
global market
Strong IPR regimes are
controversial because they lead to
disparities in access
Cost
Tim Hubbard’s demand curve
problem
+ Marketing
+ R&D
Cost + Profit
Free
People treated
Changes in Prices for Fluconazole in Thailand,
following the introduction of competition in 1998
•
•
Fluconazole was sold as monopoly
by Pfizer for 200 baht per pill, and
was too expensive to treat
cyptococcal meningitis
The introduction of competition
was a major victory for Asian
AIDS activists
200
180
160
140
Thai 120
100
Baht 80
60
40
20
0
200
6.5
price
before
price after
Generic competition and social activism has driven
down the price of AIDS drugs in Africa
Nevirapine+3TC+d4T HAART Regime
annual cost
$12,000
$10,000
$9,825
$8,000
$6,000
$4,000
$3,087
$2,000
$0
$737
$180
BI/GSK/BMS RSA retail may BI/GKS/BMS Lowest generic
USA
2001
"donation"
February 2003 demonstrations in Korea over pricing
of Glivec, a Norvartis drug to treat leukemia
Doha Declaration On The Trips Agreement And
Public Health
5(a) Each Member has the right to grant
compulsory licences and the freedom to
determine the grounds upon which such
licences are granted.
Paragraph 4: Doha Declaration on TRIPS
We agree that the TRIPS Agreement does not and
should not prevent Members from taking measures to
protect public health. Accordingly, while reiterating
our commitment to the TRIPS Agreement, we affirm
that the Agreement can and should be interpreted and
implemented in a manner supportive of WTO
Members' right to protect public health and, in
particular, to promote access to medicines for all.
In this connection, we reaffirm the right of WTO
Members to use, to the full, the provisions in the
TRIPS Agreement, which provide flexibility for this
purpose.
How does one promote access to
medicines for all?
• Is marginal
cost pricing
best for the
poor?
• Is the right to
health equal to
the right to
copy?
Are Access and R&D competing
policy objectives?
WTO/TRIPS is limited and problematic
framework for addressing global R&D
• TRIPS does not address the problem of free riding for the creation of
global public goods, such as research that enters the public domain.
• Small return for non-profit and educational institutions
• There are insufficient private incentives to invest in many important
R&D projects.
• Exclusive rights on R&D may not be the most efficient mechanism to
finance R&D.
– Patent can be barriers to conducting research
– Private benefits are not equal to social benefits
– Excessive investment in drugs with incremental benefits, insufficient
investments in many areas.
• Strong IPR protection can and does lead to access problems
– HIV, Glivec/Leukaemia, Singulair/Asthma
Global brainstorming on intellectual property
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•
•
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•
Open Source/GPL models for
software development
Peer to peer technologies and social
organization models
UK Commission on Intellectual
Property Rights
TACD IP agenda
Royal Society brainstorming on
IPR
OECD IPR studies
US National Academies of Science
US Federal Trade Commission /
Department of Justice hearings on
competition and intellectual
property.
MSF Working groups on IPR/DND
•
•
•
•
•
•
•
•
•
IETF working group on IPR
UNDP Human Development
Report 2001
Blur/Banff discussions on music
Rockefeller Bellagio meetings /
collective management of
intellectual property rights
World Business Council for
Sustainable Development Project
on Intellectual Property Rights
Aventis Radical IPR scenarios
Ransom / Matching Funds model
WIPO access to genetic resources /
traditional knowledge and folklore
WHO/Harare proposal
Do we need a new global framework
for funding R&D?
Models for R&D treaties
•
•
•
•
The Treaty of Europe: R&D as a development tool
Landmine treaty: Humanitarian de-mining technologies
Koyto Climate Treaty: Energy efficient technologies
G8: Negotiations over funding vaccines and drugs for
neglected diseases
• John Barton: Vaccines, public domain, technology transfer
• Discussions on access to scientific journals
• Human Genome Project: Clinton/Blair Agreement
Decentralized decision making
on R&D
• Treaty requires minimum national contribution to
R&D, and transparency of investment flows
• Countries free to fund R&D in a variety of ways.
• Range of options allowed
•
•
•
•
•
•
Strong IPR, high prices
Research mandates
Weak IPR regimes (non-exclusive rights liability models)
Public Funding
No IPR open source development regimes, marginal cost
pricing
Each country’s system is without prejudice to claiming IP in other countries
regimes, subject to non-discrimination
Possible approach
• Divide countries into group by income
• For each group, minimum support for R&D is
percentage of GDP
• Contributions can be funded in a variety of ways
– Purchases of patented products
– Direct or indirect public expenditures on research
– Research Mandates
Retail Pharmaceutical Sales
per capita
% GDP
France
Germany
Italy
Spain
UK
$243
$207
$178
$160
$177
1.1%
0.8%
0.9%
1.1%
0.7%
Canada
USA
$219
$544
1.0%
1.5%
NZ and Australia
Japan
$138
$368
0.8%
1.1%
Argentina
Brazil
Mexico
$34
$23
$59
0.5%
0.8%
1.1%
China
India
Malaysia
Philippines
S Korea
Thailand
$5
$3
$18
$12
$64
$13
0.6%
0.7%
0.5%
1.4%
0.7%
0.7%
Initial health care R&D target for
developed economies
.1 percent of GDP?
.15 percent of GDP?
Could be adjusted higher to increase rate of
innovation
One could have weighting of expenditures
when determining acceptable funding levels
• 10 percent of purchase of patented products
– Based upon evidence of industry (or firm) reinvestment
rates
• 100 percent of public expenditures on public
sector research
• Premium for open source research (125 percent?)
• 150 percent of public expenditures on
development of vaccines and drugs for neglected
diseases
WHO Harare Proposal for funding R&D
• Proposal from August 2001 WHO/Afro region meeting on
intellectual property rights, trade agreements and public
health, attended by health and trade officials from 16
African countries.
• Compulsory licenses for all essential health care products
• Royalties are paid into national R&D fund
– Patent owners are shareholders in R&D fund
– Fund invested in African country
– Patent owners benefit from global returns on commercial
discoveries
Advantages of the Harare Proposal
• Brings prices closer to marginal costs
– Increases access for the poor
• Keeps royalty income in the country
• Level of compensation to patent owners is transparent
• Builds research infrastructure
– Universities
– Domestic private sector
• Provides domestic employment in important technology
sector
For more information
Consumer Project on Technology
[email protected]
http://www.cptech.org
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