Volume 14, Number 2 Article by T N Srinivasan September, 2002
TRIPS and IPR: The Heart of the Matter :
T N Srinivasan, currently Samuel C Park Jr Professor of Economics, Yale University and special advisor to the World Bank, raised the three issues which he feels are at the heart of the debate over TRIPS and IPR — Are patents necessary for innovation? What is the best way to provide life saving drugs to the poor at a price they can afford? What is the best way to minimise the cost of production of these drugs?
There is the fundamental assumption in the utilitarian view that most IPR regimes subscribe to, that by granting a patent you are going to encourage innovation. Quoting papers published in the RAND Journal of Economics, he finds little evidence of patent protection having increased innovative or R&D activity significantly. A patent could in fact be more a comparative bargaining chip than a means by which you appropriate the returns on investment in innovation.
Drug pricing becomes an issue only when markets are not functioning competitively. Whether the non-competitive nature of the drug market arises from the monopoly created by patents, raises the issues of parallel imports and exhaustion of property rights. The TRIPS agreement leaves it to each country to determine if they want to have a national or a global exhaustion set-up – and there are arguments for both sides.
Prior to the Uruguay round of multilateral trade negotiations, intellectual property was under the jurisdiction of the World Intellectual Property Organisation (WIPO). Why was TRIPS put in the negotiating agenda, Srinivasan asks, when there were other means or protecting IP? The whole issue centres on the dispute settlement mechanism. Under GATT, this was a political process that encouraged the defendant and plaintiff eventually to compromise. Under the WTO, the process is an adversarial legal process where poor countries are at a disadvantage because they cannot afford to hire expensive legal consultants. If the developing countries have the clout, Srinivasan contends, they should vote to take TRIPS out of WTO altogether and leave IPO under a strengthened WIPO.
Jousting with T N Srinivasan in the post-presentation discussion were Jayashree Watal, Consultant to the WTO Secretariat and others.
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