Patent Solutions

It might seem overly dramatic to say that life and death hang in the balance in an upcoming summit on intellectual property rights, but in fact, it’s true. Today, U.S. Trade Representative Robert Zoellick will be attending a summit on the World Trade Organization’s Trade-Related Intellectual Property Rights (TRIPS) Agreement, and many activist groups, including Oxfam, Student Global Aids Campaign and the Harvard Aids Coalition, are concerned he will push for patent protections. This move would prevent the manufacture of the generic medications that millions of people in the developing world, where patented medicines are prohibitively expensive, depend on in order to survive.

Zoellick is wrong to call for more stringent patent protections, but simply loosening or removing patent restrictions is at best a short-term solution. Solving the health crisis in developing countries in the long run will require a radical shift in the role of government in medical research.

Supporters of the patent system argue that rival companies should not be allowed to copy and produce medicinal drugs developed by other firms, insisting that without well-defended intellectual property rights, medications would not be developed at all. It is true that, if medical research were left to the free market without a patent system, companies would have no incentive to invest in researching and developing new drugs. After all, if they did develop the drugs and pay the high costs involved, other companies, which had not shouldered those research costs, could simply copy the new medicines and sell them at a fraction of the original price. To remedy this incentive problem, governments issue patents to the developers of new drugs. However, this solution only creates a new problem because patents give companies a state-protected monopoly over a drug. Since only one firm can produce a specific drug, it can charge exorbitant prices—or rather “uncompetitive prices” as economists would say—and leave citizens of developing countries priced out of drugs that could save their lives.

There is, fortunately, a way out of this dilemma. If national governments discarded the patent system in the medication market and instead assumed responsibility for researching and developing new medicines, the incentive problem could be avoided without creating state-protected monopolies. Instead, every company would be allowed to copy and manufacture the drugs developed by the government. The new competition between many firms would drive down prices and, in turn, make them affordable by those who so urgently need them.

Of course, the contribution of governments need not stop at the research and development of new drugs, but could also include providing financial support as well. While patents create a monopoly, which artificially raises the price of medications, another reason that drugs are kept out of the hands of the poor is simply that they are poor. Even at competitive prices, life-saving medicines may be unaffordable to many of the most desperately impoverished. In this respect, the most powerful tool that nations like the U.S. have to save lives is a simple one: generosity. Medical research will benefit rich and poor nations alike, but responsibility for the funding lies with the developed countries, because only they can afford it. Considering that the U.S.’s current foreign aid contribution, at less than one percent of the federal budget, is shamefully low, America should pay for subsidized or free medications in developing countries. This would certainly be a valuable investment in our security: decreasing human suffering will improve the prospects for stability and political moderation, and such generosity on our part will blunt the efforts of anti-U.S. demagogues. But, more importantly, it would save lives, and when you’re in a position to do so, that’s the right thing to do.