TITLE: Independent Commission Finds Intellectual Property Rights Impose Costs on Most Developing Countries and Do Not Help to Reduce Poverty AUTHOR: Commission on Intellectual Property Rights PUBLICATION: Press release DATE: 12 September 2002 URL: http://www.iprcommission.org NOTE: The full report of the Commission, as well as an executive summary, will available online in Word and PDF at the above website. Hard copies can be requested by email: ipr(at)dfid.gov.uk. INDEPENDENT COMMISSION FINDS INTELLECTUAL PROPERTY RIGHTS IMPOSE COSTS ON MOST DEVELOPING COUNTRIES AND DO NOT HELP TO REDUCE POVERTY Calls on Developed Nations, WTO and WIPO to Improve "IP" Policies and Practices Affecting the Lives of the Poor and Developing Countries Urges Strategies for Developing Countries to Minimise Their Costs LONDON (12 September 2002) -- In presenting its final report today to the British government, the Commission on Intellectual Property Rights declared the internationally-mandated expansion of intellectual property (IP) rights unlikely to generate significant benefits for most developing countries and likely to impose costs, such as higher priced medicines or seeds. This makes poverty reduction more difficult. The Commission also called on developed nations, the World Trade Organisation (WTO) and the World Intellectual Property Organisation (WIPO) to take the circumstances of poor countries and their development needs properly into account when seeking to develop international IP systems. The intensively researched, 180-page report is entitled Integrating Intellectual Property Rights and Development Policy. It is the culmination of much study and follows on more than a dozen meetings and workshops, 17 working papers, an exhaustive literature review of the field, visits to several developed and developing nations and a major conference. The report makes some 50 recommendations aimed at aligning IP protection with the goal of reducing poverty in developing nations. Topics include IP and health; agriculture; traditional knowledge; copyrights, software and the Internet; and the role of WTO and WIPO in advancing developing country interests. The Commission is an independent international body made up of Commissioners from both developed and developing countries with expertise in science, law, ethics and economics. The Commissioners come from industry, government and academia (see list of Commissioners below). "Developed countries often proceed on the assumption that what is good for them is likely to be good for developing countries," said Professor John Barton, Commission Chair and George E. Osborne Professor of Law, Stanford University. "But, in the case of developing countries, more and stronger protection is not necessarily better. Developing countries should not be encouraged or coerced into adopting stronger IP rights without regard to the impact this has on their development and poor people. They should be allowed to adopt appropriate rights regimes, not necessarily the most protective ones." The Commission concludes that the intellectual property rights system, as a whole is less advantageous for developing than for developed countries in many areas of importance to development, such as health, agriculture, education and information technologies. The system increases the costs of access to many products and technologies that developing countries need. The Commission report concludes that the extension of IP rights globally will diminish the degree of competition worldwide for many products and services. For example, the degree of competition in developing country markets for patented pharmaceutical products will diminish in 2005 when major suppliers of generic versions of such medicines will have to apply patent protection under TRIPS (WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights). "This is particularly important for those countries where competition is already weak," said Barton. "Developing countries participate in global intellectual property systems as 'second comers' in a world that has been shaped by 'first comers,'" said Barton. "They are now being urged to adopt a complex set of rules more suited to advanced economies. When their economies were at comparable stages of maturity, most developed countries did not follow the stringent intellectual property standards they now advocate for developing countries." The Commission calls on developed nations to take the economic needs of developing countries fully into account when seeking to craft international intellectual property rights systems. Developed countries should pay more attention to reconciling their commercial self interest with the need to reduce poverty in developing countries, which is in everyone's interest, says the report. Higher IP standards should not be pressed on developing countries without a serious and objective assessment of their impact. The impact of IP rights on poor people will vary according to socio-economic circumstances. IP systems should be tailored to a country's state of development and its particular circumstances, according to the report. WTO, WIPO The Commission also called on the international institutions principally responsible for the development of global IP policy, WTO and WIPO, to take into account the needs and interests of those adversely affected by IP rights, not just the interests of potential beneficiaries of those rights. According to the report, "The voice of developing countries and, in particular, consumers needs to be better heard and the decisions taken better informed by evidence of the impact of IP rights in those countries?WIPO must give explicit recognition to both the benefits and the costs of IP protection for developing nations." "Equally, this applies to the evolution of policy with respect to the digital media and the Internet," said Barton. "The temptation to impose very strict protection because of the ease with which software and other digital media can be copied may diminish the very real benefits they could bring to developing countries, particularly in accessing educational and scientific documents at low cost." ACCESS TO MEDICINES The Commission concludes that without the incentive of patents, it is doubtful the private sector would have invested so much in the discovery and development of medicines, many of which benefit both developed and developing countries. However, the report finds that the IP system "hardly plays any role in stimulating research on diseases particularly prevalent in developing countries" unless there is also a substantial market in the developed world. In fact, as IP rights are strengthened globally, the overall cost of medicines in developing countries is likely to increase unless steps are taken to counteract this trend, according to the report. The report suggests that developed and developing countries adopt a range of policies to improve access to medicines. One means of obtaining medicines at lower prices, amongst others discussed in the report, is for countries to use a mechanism called "compulsory licensing." Compulsory licensing allows a country to contract a third party to manufacture a patented product if there are good reasons to do so (for instance if the government considers the price of a medicine unjustifiably high). In fact, the United States government envisaged its use when negotiating the price of Cipro following the anthrax attacks last year. The report also recommends use of differential pricing, which would allow prices for drugs to be lower in developing countries, while higher prices are maintained in developed countries. If this is to work, according to the report, "then it is necessary to stop low priced drugs leaking back to developed countries." Developing countries should also aim to facilitate in their legal systems the ability to import patented medicines if they can get them cheaper elsewhere in the world. Developing countries should also make provisions in their law that will facilitate entry of generic competitors as soon as the patent has expired on a particular drug, says the report. "In developed countries, generic competition causes prices to fall quite sharply," said Barton. "In the absence of patents in developing countries, more people would be able to afford treatments they need." The Commission recognises that the IP system is one factor among several that affects poor people's access to healthcare. Other important constraints to access to medicines in developing countries are the lack of resources and the absence of a suitable health infrastructure (including hospitals, clinics, health workers, equipment and an adequate supply of drugs) to administer medicines safely and efficaciously. PATENTS ON PLANTS AND TRADITIONAL KNOWLEDGE The report discourages developing countries from providing patent protection for plants and animals, as is allowed under TRIPS, because of the restrictions patents may place on use of seeds by farmers and researchers. It recommends developed countries respond constructively to the concerns of developing countries about the patenting of their genetic resources and associated traditional knowledge. Patent applicants should be required to disclose the geographic source of the genetic material from which their "invention" is derived, the report says. In this way, developing countries can be informed of proposed patents that incorporate their resources and take action if their rights have been overlooked. The report urges other reforms as well to make it harder for commercial interests to claim rights on what is already known in developing countries (such as knowledge of the medicinal value of a native plant). According to patent law, IP rights cannot be claimed on "prior art" -- knowledge already in the public domain. But some countries, the U.S. for instance, do not recognise such knowledge when it comes from outside their own borders. Therefore, the report recommends a broader definition of prior art. It endorses the cataloging of traditional knowledge -- with the appropriate consent of the holders of the knowledge. Examiners who weigh the validity of patent applications could then check claims of "invention" against existing traditional knowledge. "India has been working with other countries to catalogue traditional knowledge, particularly following our experience with invalid patent claims on turmeric and basmati," said Ramesh Mashelkar, a Commissioner, and Director General of the Indian Council of Scientific and Industrial Research and Secretary to the Department of Scientific and Industrial Research in Delhi, India. TRIPS The Commission recommends that developing countries take advantage of the flexibilities built into the international TRIPS treaty. It also recommends that least developed countries be allowed a longer period of time to phase in TRIPS provisions -- until at least 2016. "TRIPS allows compulsory licensing and other means of promoting lower-priced generic drugs and increased competition-these are valuable tools for developing countries," Barton said. "But countries should have to apply TRIPS based on their own development milestones, not based on an arbitrary date." Developing countries need to shape their IP laws to promote development generally and keep in mind some of the negative impacts of overly generous IP protection, according to the report. For instance, as some developed countries have found, the patenting of technologies needed to conduct research can provide an incentive for research, but it can also inhibit research, which needs to make use of those protected technologies. The report considers how, for example, the search for an effective malaria vaccine may be complicated by the large number of patents on the genetic material required in the research. Developing countries should also restrict the patenting of minor advances, which can create a legal maze of patent claims, according to the report. "But overall, IP rights are only one factor among many in the development process," said Gill Samuels, a Commissioner and Senior Director of Science Policy and Scientific Affairs (Europe) at Pfizer Ltd, Sandwich, UK. "Their importance should be recognised, but not overstated. Even the complete absence of IP rights would not solve the lack of sufficient resources for adequate health facilities, health workers and medicines for all in developing nations." In particular, countries need other measures to stimulate development in the interests of poorer people, including increased public funding for health and agricultural research, Barton said. "The IP system is not well suited to encouraging this." Neither is the international IP system particularly effective at promoting the transfer of technology or foreign investment, despite this being an objective of TRIPS, the report found. To accomplish these goals, countries need a combination of increased international funding; specific initiatives to support research into areas that lack a lucrative market (for instance, many drug companies hesitate to develop malaria drugs or vaccines because most countries that need them cannot afford them); and support for increased education and training within developing countries. Further information on the Commission is available at http://www.iprcommission.org. THE COMMISSIONERS Professor John Barton (Commission Chair) George E. Osborne Professor of Law, Stanford University, California, USA Mr. Daniel Alexander Barrister specialising in Intellectual Property Law, London, UK Professor Carlos Correa Director, Masters Programme on Science and Technology Policy and Management, University of Buenos Aires, Argentina Dr. Ramesh Mashelkar, FRS Director General, Indian Council of Scientific and Industrial Research and Secretary to the Department of Scientific and Industrial Research, Delhi, India Dr. Gill Samuels, CBE Senior Director of Science Policy and Scientific Affairs (Europe) at Pfizer Ltd, Sandwich, UK Dr. Sandy Thomas Director of Nuffield Council on Bioethics, London, UK