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Chapter 6 Patents and Medicines

Chapter 6 Patents and Medicines

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Chapter 6 of the LOCOST book "(The Revised) A Lay Person's Guide to Medicines,", LOCOST, Baroda, India, 2006.
Chapter 6 of the LOCOST book "(The Revised) A Lay Person's Guide to Medicines,", LOCOST, Baroda, India, 2006.

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Published by: S.Srinivasan ('Chinu'); Renu Khanna on May 20, 2010
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05/15/2011

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… under conditions of globalization Western knowledge systems have sought, largely with success, togain complete dominance across the globe in nearly all spheres of life. The economists' conceptions of growth, poverty, scarcity, and development, marketed by all the social sciences, have come to predominateeverywhere, and the sum total of Western social science has not only been to mire the so-calleddeveloping world in ever more acute levels of poverty, but to forestall the possibility of worldviews andlifestyles that do not synchronize with the conception of the "good life" that prevails in the "developed" West. The entire theory of development…is predicated on a time-lag: countries that are under-developedor part of the developing world seek to emulate the developed countries, but by the time they haveseemingly caught up, the developed countries have gone well beyond to another plane of development. The natives, to speak in a different tongue, always arrive late at the destination; indeed, the theory of development condemns the underdeveloped to live not their own lives, but rather to fulfill someone else'sconception of life. Development doesn't merely demand that the past of the native be entirely jettisoned,it also hijacks the native's future.
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-
Vinay Lal,
"Home Truths and McData"He, who receives an idea from me, receives instruction himself without lessening mine; as he who lightshis taper at mine, receives light without darkening me.
-Thomas Jefferson 
Consistent with human rights norms requiring access to essential medicines and in response to Thaiactivist demands, Thailand has initiated a program of universal access to government-subsidizedantiretroviral drugs that now reaches 70,000 of 170,000 Thai people living with HIV/AIDS. However,the future costs of expanded treatment with newer patented medicines will be prohibitive if the US.succeeds in its objectives to ratchet-up intellectual property protections. Therefore, we join our Thaicolleagues at Chiang Mai and throughout Thailand demanding that the US suspend negotiations onintellectual property rights and that it drop all intellectual property provisions affecting access topharmaceutical products, specifically all TRIPS-plus terms, in the Thai FTA and in other FTAs as well.In addition, we demand that the U.S. publish its proposed text for the entire FTA and that the Thai peoplehave had a chance to hold public consultations on the proposed agreement.
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- International NGO Solidarity Statement 
If I have seen further it is by standing on the shoulders of giants.-
Isaac Newton 
, Letter to Robert Hooke, February 5, 1675
Patents, Trade andAvailability of Medicines
247
Chapter 6
Patents,Trade
 
Freedom of "Free" Trade
It is clear we need trade -- unless we believe and live in some kind of self-sufficient and self-reliant villagerepublic. Among the great debates of our times - on which the jury is still out - is the question of how freeshould be trade in the light of globalization. Does free trade necessarily mean free capital flows? Why does itnot imply free migration of labor for instance or free exchange if information? Is trade, and free trade at that,always fair to the poor?Let us set aside for the time being troubling issues like the "inevitability" of globalization, the pattern of development -- and with it questions like development for what -- that free trade may bring; and let us alsoassume for the purposes of this chapter that trade and free trade are indeed benign instruments -- as many 
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distinguished economists assure us -- for alleviation of poverty and more positively for bringing prosperity to the whole world.Much of the discussion below is onhow India's new patents amendments would affect availability of affordable drugs, both generics and new ones, nationally and globally.Free trade the way it is conducted today is seldom fair to the poor. Free trade itself is selectively implementedby the developed countries. As of today free trade does not imply free migration of labor, for instance, orfree exchange of information. They want you to buy their goods and buy your services but do not want your
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poor. As the December 2005 Hongkong round of WTO negotiations showed, governments of developedcountries would want the developing countries to remove subsidies and tariffs with alacrity but would notrespond in equal measure. We suggest that under such a framework of free trade, the idea of patents and intellectual property rights isan anomaly and acts actually as a barrier to trade. The idea of intellectual property rights that imply not only the right to own and sell ideas, but also the rightto regulate their subsequent use is itself a major cause of market failure.
ALayPerson'sGuide
248
1. Free Trade, WTO/TRIPS and the Pharma Industry
th
 Almost all justification for the positive benefits of international trade traces its roots to the British 19
 
century thinker David Ricardo and his theory of comparative advantage. In a by now oft-quoted illustration,Ricardo explained how it was advantageous for England to produce cloth and Portugal to produce wine, aslong as both countries traded freely with each other, even though Portugal might have produced both wineand cloth at a lower cost than England did. Few have dared to question the context of Ricardo or the wisdomthat trade and free trade at that is always advantageous to all parties concerned. Economist Utsa Patnaik 
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however has this to say:
…Comparative advantage is the reason given, for example, by Professor K N Chaudhuri in the
Cambridge Economic History of India 
to explain why from being the world’s largest exporter of cottontextiles in the pre-colonial era, India turned into an importer of cotton manufactures from Britainand an exporter of agricultural products like raw cotton, jute, opium, indigo and so on…
1.1 Issues in Free Trade, IP and Innovation: Unsettled Still
 
No argument can be more fallacious than Ricardo's theory. Why it should have been necessary to usemilitary force to induce countries like Portugal, China or India to trade, if it was so beneficial forthem, is not explained. Even more important, the theory is internally logically fallacious. A fallacy in atheory can arise either because the premise is incorrect, or because the argument is incorrect. In thecase of the comparative advantage theory applied to Northern trade with warmer lands, the premiseitself is incorrect. The premise is that in the pre-trade situation (assuming the standard two-countrtwo-commodity model) both countries can produce both goods. Given this premise, then it can beshown that both the countries gain by specializing in that good which it can produce at relatively lower cost compared to the other country, and trading that good for the other good: for compared tothe pre-trade situation, for a given level of consumption of one good a higher level of consumptionof the other good results in each country. This mutual benefit arising from comparative advantage, isadduced as both the reason for and the actual outcome of specialization and trade……While Ricardo's explanation was superficially extremely clever, he did a signal disservice to thecause of objectivity and science, by pretending in effect that all trade including forced trade, wasfreely chosen trade determined by technologically determined, neutral cost factors. Trade patterns which had been in reality the outcome of trade wars, genocide and political subjugation, werediscussed in such a way as to ignore this historical reality of "capitalism's blustering violence" (to usea memorable phrase first employed by Rosa Luxemburg [5]); and by focusing only on value-neutralcost factors - necessarily in a fallacious manner - Ricardo provided an intellectual justification for,and hence an apologetic for forced trade. "Capitalism's blustering violence" was neatly sanitized intothe theory of relative costs. All subsequent mainstream trade theory has been similarly tautologicaland apologetic in character, and has talked of mutual gains from trade as the necessary cause andresult of all observed patterns of specialization- not simply that between countries of similareconomic strength. "Factor endowments" are talked of while completely ignoring the realdifferences in productive capacities in the same "factor", land, in different countries. Many generations of third world economists have been fooled into believing that somehow being involvedin a particular pattern of primary sector specialization, was unavoidable in terms of pure cost-of -
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production logic and was to the ultimate benefit of their countries...
Even many economists who have been involved, enthusiastically, in the genesis of WTO see TRIPS as anunnecessary intrusion in WTO. It was only the corporate lobbies supported by the US government thatsucceeded in "turning it away from its trade mission and rationale and transforming it into a royalty 
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collection agency." Secondly, it is not even clear - not even to many of the World Bank experts who
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advocate these policies - that openness in trade promotes growth! Just as it is not clear that lower taxespromote investment and growth.One of the reasons given for high prices of drugs by pharma majors is the cost of discovering a new drug.However it has been shown that many a drug including all the recent blockbusters was first discovered in
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public funded institutions. It is also not clear at all that there is sufficient evidence to say patent protection
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promotes innovation. In fact IP protection has been shown to discourage future innovations. At the best of times, a patent appears to be a means for creating a monopoly, and a kind of protectionism sought with rentcollection in the name of royalties and profits. Why then is the WTO refereeing free trade, not really fair trade, trade that is fair to the millions of poorprimary producers? Is free trade possible in health and pharmaceuticals given the WTO/TRIPSdispensation? Is free trade and free market possible even in principle given the nature of health care
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Patents,Trade

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