The TRIPS Agreement and Access to Medicine

The Trade Related Aspects of Intellectual Property (TRIPS) agreement is an undertaking by members of the World Trade Organisation (WTO) to respect each others’ property rights.  At its inception, its main purpose was to protect the intellectual property rights (IPRs) of Northern firms, who have historically tended to be the main innovators, in Southern markets where imitation was prevalent.  It was granted as a quid pro quo for easier entry of Southern products into Northern markets.  Two main issues have arisen as a result of the introduction of TRIPS.  One concerns the effect on Southern industrial development, and whether this is made more difficult in the face of more stringent intellectual property protection.  The other is the effect on Southern consumers, particularly with regard to their access to medicine.  In both cases, the policy interactions can be quite intricate.  For example, even with the TRIPS agreement in place, Northern governments still have control over whether exhaustion of IPR protection is national or international, essentially governing whether Northern retailers can sell goods on in other markets that they have bought at home.  Under an amendment to the TRIPS agreement, Southern governments can license products to local producers on a compulsory basis.  And firms can decide which markets they serve.  The interaction of these policies and entry decisions has a critical bearing on the welfare implications.

Bond R. and K. Saggi, (2012); “Compulsory licensing, price controls, and access to patented foreign products.” Vanderbilt University typescript.

Branstetter L., R. Fisman and F. Foley, (2006); “Do stronger intellectual property rights increase international technology transfer? Empirical evidence from U.S. firm-level data.” Quarterly Journal of Economics, 121(1): 321–349. [Earlier version]

Branstetter L., R. Fisman, F. Foley and K. Saggi, (2011); “Does intellectual property rights reform spur industrial development?” Journal of International Economics, 83(1): 27–36. [Earlier version]

Chaudhuri, S., P .Goldberg and P. Jia, (2006); “Estimating the effects of global patent protection in pharmaceuticals: a case study of quinolones in India.” American Economic Review, 96(5): 1477–514. [Earlier version]

Goldberg P.K., (2010); “Intellectual property rights protection in developing countries: the case of pharmaceuticals.” Journal of the European Economic Association, 8(2-3): 326-353. [Earlier version]

Grossman G.M. and E. Lai, (2008); “Parallel imports and price controls.” Rand Journal of Economics, 39(2): 378–402. [Earlier version]

Ivus, O., (2010); “Do stronger patent rights raise high-tech exports to the developing world? ” Journal of International Economics, 81(1): 38–47. [Earlier version]

Javorcik B., (2004); The composition of foreign direct investment and protection of intellectual property rights in transition economiesEuropean Economic Review, 48(1):39–62. [Earlier version]

Richardson M., (2002); “An elementary proposition concerning parallel imports.” Journal of International Economics, 56(1): 233–245.

Saggi, K., (2013); “Market power in the global economy: The exhaustion and protection of intellectual property.” The Economic Journal, 123 (567): 131–161. [Earlier version]

Valletti T.M., (2006); “Differential pricing, parallel trade, and the incentive to invest.” Journal of International Economics, 70(1): 314–24.

Valletti T.M. and S. Szymanski, (2006); “Parallel trade, international exhaustion and intellectual property rights: a welfare analysis.” Journal of Industrial Economics, 54(4): 499–526. [Earlier version]