[A2k] NYT: Lifting the Patent Barrier to New Drugs and Energy Sources

Thiru Balasubramaniam thiru at keionline.org
Tue Apr 12 20:09:05 PDT 2016


http://www.nytimes.com/2016/04/13/business/economy/lifting-thepatent-barrier-tonew-drugs-and-energy-sources.html


<SNIP>

The question does not apply only to how we develop lifesaving drugs. It has
acquired new urgency as the world rushes to discover and spread new
technologies to replace fossil fuels as sources of energy and stave off
impendingclimate change.

The debate was center stage in the negotiations that led to the
Trans-Pacific Partnership trade agreement. The Obama administration,
spurred by the drug industry, insisted that patent protections should be
tightened further around the world. But several other countries argued that
they raisedexcessive barriers for poor countries, costing lives.


The argument is now being echoed in the climate debate.

“This was a very contentious issue in the international climate
negotiations leading up to the summit in Paris in December,” said Robert N.
Stavins from the Kennedy School of Government at Harvard. He was a
coordinating lead author of the chapter about international cooperation in
the latest assessment report by the Intergovernmental Panel on Climate
Change.

A group of countries led by India argued for transferring intellectual
property rights for clean energy technologies to developing nations to
accelerate their diffusion. Professor Stavins offers a counterargument: “In
the long term, if there are no property rights, it will destroy the
incentive to develop the next generation of technologies.”

The battle against climate change is young. There is little empirical
evidence of the effects of patents on clean energy technology. But the
evidence from other industries in which intellectual property protections
have been ratcheted up in the name of innovation offers a decidedly mixed
picture.



--

ECONOMY

Lifting the Patent Barrier to New Drugs and Energy Sources

Eduardo Porter

ECONOMIC SCENE APRIL 12, 2016

Malaria has preyed on humans for centuries. Hundreds of thousands of
children die each year from the disease. Considering the market’s size, why
haven’t pharmaceutical companies rushed to develop a vaccine against the
deadly parasite that causes it?

The answer is easy: There is no money to be made from a vaccine for poor
children who could not possibly pay for inoculation.

Last year, GlaxoSmithKline finally introduced the world’s first malaria
vaccine for large pilot tests among African children. The move, however, is
not an endorsement of the profit motive as a spur for innovation. The Bill
and Melinda Gates Foundation picked up much of the tab. And Glaxo does not
expect to make money on its investment.

The lack of interest of the pharmaceutical industry, which generates huge
profits protected by a web of patents enforced around the world, raises an
important question.

Do we need a different way to spur innovation and disseminate new
technologies quickly around the world? Are patents, which reward inventors
by providing them with a government-guaranteed monopoly over their
inventions for many years, the best way to encourage new inventions?

The question does not apply only to how we develop lifesaving drugs. It has
acquired new urgency as the world rushes to discover and spread new
technologies to replace fossil fuels as sources of energy and stave off
impendingclimate change.

The debate was center stage in the negotiations that led to the
Trans-Pacific Partnership trade agreement. The Obama administration,
spurred by the drug industry, insisted that patent protections should be
tightened further around the world. But several other countries argued that
they raised excessive barriers for poor countries, costing lives.


The argument is now being echoed in the climate debate.

“This was a very contentious issue in the international climate
negotiations leading up to the summit in Paris in December,” said Robert N.
Stavins from the Kennedy School of Government at Harvard. He was a
coordinating lead author of the chapter about international cooperation in
the latest assessment report by the Intergovernmental Panel on Climate
Change.

A group of countries led by India argued for transferring intellectual
property rights for clean energy technologies to developing nations to
accelerate their diffusion. Professor Stavins offers a counterargument: “In
the long term, if there are no property rights, it will destroy the
incentive to develop the next generation of technologies.”

The battle against climate change is young. There is little empirical
evidence of the effects of patents on clean energy technology. But the
evidence from other industries in which intellectual property protections
have been ratcheted up in the name of innovation offers a decidedly mixed
picture.

Take the World Trade Organization’s 22-year-old Agreement on Trade-Related
Aspects of Intellectual Property Rights, known as Trips, the world’s first
enforceable deal to protect patents globally. Developing countries were
told it would promote their access to innovation. Multinationals would be
more likely to sell or license new technologies if they knew their ideas
would not be pirated. The deal would encourage foreign investment in local
research and development.

Did it deliver? One study about the impact of Trips across 60 countries
concluded that the deal encouraged access to technology: New drugs were
unlikely to be introduced until they were covered by patents. Patented
drugs were still more expensive than generics, but they became cheaper in
poorer countries.

Another study of Trips, however, concluded that while patent protection did
increase research and development in high-income countries, it did nothing
to foster more investment for treatments that combat diseases like malaria
that affect the world’s poor but have no market in the rich world.

Tight intellectual property protection can backfire, stopping locals from
piggybacking on foreign inventions, discouraging indigenous innovation in
less-developed countries.

It is often abused. Numerous studies have documented how pharmaceutical
companies play the system. When the original patents on their drugs expire,
they discourage the entry of cheap generic rivals by obtaining “secondary”
patents covering slight variations that have little or no therapeutic value.

One study found hundreds of secondary patents layered onto two
antiretroviral drugs to combat H.I.V., which delayed the entry of generic
competition by 12 years.

If overly strict patents on drugs can be counterproductive,the case against
them in other industries is even stronger. In high technology, for example,
they often encourage troll-like behavior and discourage entrepreneurs from
building on the inventions of their predecessors.

“I do not think we need stronger patents than we have now,” said Bronwyn H.
Hall, an expert on intellectual property at the University of California,
Berkeley. “There is a large body of evidence that suggests patents are not
viewed by firms as key to securing returns to innovation, except in the
pharma sector and a subset of firms in other sectors.”

The answer to the conundrum about new innovation and diffusion of existing
technology might hinge on what is more important — spreading existing clean
energy systems in the developing world, where energy use is rising sharply,
or inventing new ones.

It depends, unsurprisingly, on where you sit. “You do want a pipeline of
new technologies,” said Ambuj D. Sagar, professor of policy studies at the
Indian Institute of Technology Delhi. “But diffusion is the more
substantial point, given the time scale in which we need to make
substantial progress.”

Adam Jaffe, a lead author on the third and fifth assessment reports of the
climate change panel who now directs the research foundation Motu Economic
and Public Policy Research in Wellington, New Zealand, disagrees.
Technology diffusion, he says, is not yet a problem: “Today the problem is
inventing the thing.”

To be sure, energy systems are not the same as drugs, which are hard to
invent but cheap to make. The most popular technologies being deployed
around the world — like solar panels made in China — are hardly cutting
edge. Finance and know-how are bigger obstacles to the spread of clean
energy systems in poor countries than intellectual property rights.

Still, patenting of clean energy technologies has been increasing by 20
percent a year over the last two decades or so, according to a study by the
United Nations Environment Program, the European Patent Office and the
International Center for Trade and Sustainable Development. “There is a
need for improving market conditions and encouraging licensing in the
context of efforts to enhance technology transfer to developing countries,”
the study concluded.

Critics — mostly on the left — have repeatedly recommended weakening or
even replacing the patent system which, they argue, imposes excessive costs
by raising the prices of drugs and curtailing their access. Proposals range
from having the government buy most drug patents and put them in the public
domain, to paying a drug’s maker based on a formula derived from how much
the drug improves quality of life.

In the case of clean energy technology, noted a study by Professor Hall of
Berkeley and Christian Helmers of the Center for Economic Performance in
London, “patent protection may not be the optimal instrument for
encouraging innovation.”

Nonetheless, patents are probably here to stay. Still, rich countries will
end up one way or another paying to spread clean energy technology among
the world’s poor. Why not create a government-supported global fund to buy
intellectual property on behalf of poorer nations? Another idea: Finance
prizes to encourage innovation to solve poor people’s problems.

Both inventing new clean energy technologies and spreading them around the
world are behind schedule. We don’t have as much time as it took to create
a vaccine against malaria.



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