Affordable access to essential medicines that are under patent depends partly on the terms

of national patent laws, and on the actions of the patent holder. The TRIPS agreement
includes a number of flexibilities that can be used to reduce the prices of essential medicines
and to better meet the goal of universal access. TRIPS does not prevent national
governments from issuing compulsory licences in order to meet national health objectives,
from choosing an exhaustion regime that best suits national circumstances (allowing parallel
importing for example), or from defining patentability criteria in national patent legislation.
The patent system provides market-driven economic incentives for innovation which leads to
the R&D efforts to cater to the needs of those who have the power to pay for the new
products and completely ignoring the poor populations with virtually no purchasing power. As
a result, the unique medical needs of the poor largely go unaddressed by private
pharmaceuticals.
The simple explanation for excessive drug prices is monopoly pricing. But monopolies are a
recipe for excessive prices. A company will raise prices until its profits start to drop. Most
essential medicines are not under patent, and generic versions can be produced or imported
without infringing patent rights.