Latin America has made great strides in protecting pharmaceutical patents still held by the intellectual property holders. Through free trade agreements such as NAFTA as well as some decisions made by South American governments, particularly Brazil, pharmaceutical patent protection is increasing and the pharmaceutical industry is growing and innovating. These steps by Latin American governments highlight a larger piece of the pharmaceutical patents debate which is ensuring an economic incentive for development of new intellectual property. Modern drugs are getting more expensive to produce and pharmaceutical patents still need to be honored and protected.

Pharmaceutical Patents Gaining Respect in Latin America

When Mexico and the United States signed NAFTA, the groundwork was laid for the now booming Mexican pharmaceutical market. Mexico is the largest market in the South America and the increased protection of pharmaceutical patents has lead to research companies such as Schering-Plough to increase their involvement in the Mexican pharmaceutical industry. Furthermore, direct investment has increased overall into the Mexican pharmaceutical space.

Increased foreign direct investment and balanced, fair Free Trade Agreements are two key aspects of healthy pharmaceutical patent protection. However, they do not answer the question “Why are pharmaceutical patents important?” The answer to that question is that pharmaceutical patents protect pharmaceutical innovation.

Pharmaceutical Patents Still In Effect Foster Development of New, More Effective Pharmaceuticals

The economic incentives found in drug patent protection can ensure that more money is funneled into research and development to make new, more effective medications. This idea isn’t held just by pharmaceutical companies. In just about every industry the amount of money funneled into R & D is dependent on the expected success of the new intellectual property. Without pharmaceutical patents still in place, drugs do not have the protection they need to succeed in the market. If the drugs cannot succeed, then new ones cannot be developed. According to a study by the NCPA, a ten percent decrease in market value directly lead to a 2.25% decrease in spending for research and development.

The NCPA also presents the compelling argument that pharmaceutical patents are also directly responsible for an increase in affordable generic medications. Innovation and R & D is fueled by success in the market. If imitators (generic drug manufacturers) ignore patent protection, then they decrease the drugs chances on the market. If pharmaceutical patent holders cannot be reimbursed for their costs of development, then they are not going to develop new drugs. Without new drugs, the generic manufacturers will not have new products to create once the pharmaceutical patents expire.

 

 



By: James Njoroge

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Protecting drug patents is an important effort in the global fight against disease. By protecting drug patents, the creators of these drugs can obtain a window to recoup the massive financial investment of creating a new medication. Without that opportunity to make a profit, the drug companies simply cannot afford to develop new medications. According to the following statement made in The Financial Times, Miles White, CEO of Abbot Laboratories:

“Today, creating a single new medication costs, on average, about $1bn. That massive funding comes from one source alone: private investors. Without a promise of return on that investment – ‘the fuel of interest’ – that funding will go elsewhere, to opportunities that are less vital and less risky. And that is a risk our world cannot live with and cannot allow.”

According to the FDA, the prices of generics here in the United States are actually cheaper than their generic or rebranded Canadian counterparts. The argument that strong drug patent protection makes it more costly for other countries to develop medicines does not always hold water.

Furthermore, some diseases, like AIDS, continue to develop and evolve over time. The medications that are designed to treat these diseases must be able to be adapted over time as well. If it costs up to a billion dollars in R&D to develop a single medication, then there is also a substantial cost to updating that medication. When drug patents are left unprotected we run the risk of the pharmaceutical researchers not having the resources to keep up with the changing disease.

One recent example of the damaging misuse of pharmaceutical patents were the moves of the Thailand government abusing the TRIPS arrangement by the WTO to create their own version of the aids drug Kaltera in early 2007. In extreme circumstances, compulsory licenses are granted to countries that have a state of emergency. However, it should be used as a last resort. In this particular instance, the Thai government refused an offer from The Global Fund for a free supply of a generic version of Efavirenz. After refusing the offer, the Thai government had the state sponsored pharmaceutical company Government Pharmaceutical Organization (GPO) create their own version of the drug. One can easily see that the Thailand government had more interest in helping out one of its subsidiaries rather than its people.

 



By: James Njoroge

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