[MUSIC] Hello everyone. My name is Jayashree and I'm going to talk to you about trade, intellectual property rights and public health. So let's begin with the topics I'm going to cover. First, the interaction between these three subjects, then a little bit about what intellectual property rights are and why we have them. What is their economic rationale? How do they impact innovation and access to medical technologies? And last but not least, the special case of neglected tropical diseases. This is a graph which I've taken from the report done by the World Health Organization, the World Intellectual Property Organization, and the World Trade Organization. This is available on the web, and I will leave you to study at your leisure. All I want to point out to you is that there are three intersecting circles in the middle. The smaller circles on the side describe the policies. The ones in blue talk about public health policies. In red, intellectual property policies and green, the trade policies. So let me just mention two trade policies which could be relevant for access and innovation. Access in particular could be affected by tariff barriers and even other non-tariff barriers. So tariff barriers, what are they? They are customs duties which are levied for instance on medicines which make the prices of medicines higher. Non-tariff, what could these be? These could be health regulations, regulations on certain products which then could lead to the blockage of imports of certain products and there are rules. The rule basically says that it has to be necessary. Necessary to take this measure which affects trade. And it's not that, WTO member countries are not allowed to take measures to regulate health. It's just that when it has an adverse effect on trade, it has to be adequately justified in terms of it being necessary. Let me now turn to what intellectual property rights are, because this is something that most people may not have heard of. So, intellectual property refers to creations of the human mind or the intellect. And there are three characteristics of intellectual property rights in general. One, they are exclusive, meaning that the right holder can prevent others, who do not have his or her authorization to use the proprietary product or invention or creation. The second important characteristic of intellectual property rights is that they're usually temporary. I say usually because there are some exceptions like trade secrets, for instance, which remain valid for a long period of time. Which remain valid until somebody else discovers them through honest means for instance. The third characteristic that we need to refer to is that intellectual property rights are applicable territory by territory. Meaning there is no such thing as a global intellectual property right. So you have to apply for it and get it granted in each territory. For example, for a patent or for a copyright, it is automatically available provided that the countries follow certain international norms. But in general, a patent valid in the United States is not valid in Switzerland automatically, that's the third criteria that one needs to remember. Why don't we have intellectual property rights? This is an important question. There are two categories in general that economists would say in terms of the economic function of rights. One is those intellectual property rights that aim to incentivize innovation or creation, example patents and copyrights. And this is the category that we need to deal with here. This is more relevant for us in this presentation. These rights serve a purpose. They serve to correct the market failure that there would not be innovation if there was a perfectly competitive market situation. So in perfect competition, where markets are completely competitive that, the originator puts out an innovative product. Others come in and copy those products, and within a short period of time, the profits of the originator who puts in the innovative product are competed away. This would then mean that there would be no incentive for innovators to put new products onto the market because the cost they incurred in doing so are not rewarded by the market. There's a second category which is less important, and yet you should know that there is a second category which is intellectual property rights that aim to correct information asymmetries. And what does this mean? This means that the buyers and sellers do not have the same information about a product ex-ante. And to correct this there are certain distinctive signs which are used, such as trademarks or geographical indications, which improve the efficiency of market transactions. It improves the information so that it's more equal that the buyers and sellers have the same kind of information. What does all this mean for medical innovation, for innovation related to health products? One thing, do we need innovation? Yes we do, particularly in this field. We know that we do not yet have a cure for cancer. That's important. There are several companies, pharmaceutical companies, working on this. This is like the Holy Grail of R&D in the pharmaceutical sector, and yet we still don't have it. We need such innovation to improve global health outcomes. The pharmaceutical sector, in particular, is especially dependent on patents, and this has been brought out by a large number of studies done by economists. Not now, but for several decades earlier, which shows that this sector in particular stands out on its dependence on patents. There are other intellectual property rights, which are important trade secrets, test data protection, which are also covered in the TRIPS Agreement which we'll come to a little later. What has been the major problem in medical innovation in the last few decades? The major problem of this model of market based R&D is that there is low productivity, in terms of we're spending a lot of money, companies are spending about $120 billion they say per annum. And yet there are few breakthrough products. There are a lot of improved products but very few breakthrough. Innovation is getting harder, regulation is getting stricter, there's less tolerance for side effects. And health budgets are getting tighter where governments want innovation for lower prices. But somebody has to pay for this innovation. How does this all relate to access? Innovation and access are two sides of the same coin. There's no point in having innovation without access, and similarly, watch the point of access when you're not incentivizing the new product. The issue of access is usually related to intellectual property but I would say that the key message to remember is that it's more than intellectual property, it's multi-dimensional. Think of tariffs and taxes, think of finance, what's the point if there is no money to procure these medicines? And what about good procurement practices? There are several issues, infrastructure is yet another issue. This is not to say that intellectual property rights are not important, are not relevant for access, certainly they are. And while most people associate intellectual property with the aspect of affordability, I would say that there is yet another aspect, which is availability. So, without intellectual property, if there are no new medicines, you are not making these new treatments available to those who need them, that's one. If you suppress the prices, bring prices very low, then the originator companies may not be interested in introducing these products into that particular market. Do corporations only have the responsiblity? Is it only the corporations? What is the responsibility of governments? Should they not spend more money on health care and access to innovative products? This is a question especially in low and middle income countries where this is not happening as much. The criticality of management of intellectual property is very very important with respect to access. I would say intellectual property is neither inherently good or bad for access, what is important is how it is exercised. Take the example of HIV/AIDS. At the beginning of this pandemic which spread to Sub-Saharan Africa, the poorest of the parts of the world, the treatment cost $10 to 15,000 per patient per year in terms of dollars. Now, with huge scaling up of the finances and the genetic drug production, and distribution, it has now come to about $100 per patient per year for first line treatment. And originator prices have also come down because of the competition, because of low entry prices, and because of policies undertaken by them, such as differential pricing. But not least because there's been a lot of money put in by donor governments. Let me say a few words about the WTO TRIPS Agreement. While everyone says that it's because of the TRIPS Agreement, and the obligation to introduce patents in all fields of technology, that prices of medicines have gone up. I would say yes it is true that there is an obligation not to exclude pharmaceuticals or any other medical technologies from availability of patent grant. At the same time there are policy options. The two key policy options are compulsory licensing and parallel imports. These have been clarified in the Doha Declaration of TRIPS and Public Health. And an additional flexibility has been given, which is special compulsory licenses for export to meet the requirements of countries which cannot produce their own medicines. And there are other options which we already talked about which are voluntary and which are compatible with the TRIPS Agreement of differential pricing, licensing and governments can introduce price control measures. Business models are rapidly changing in this area. They are moving from an area where there was a single-supplier model following an earlier model of wide licensing. And now we are moving to multi-partner collaborations, of necessity card creations are moving to multi-partner collaborations. But what about neglected diseases? Markets don't work in this area. This is the famous 10/90 gap. What does this mean? It means that only 10% or less of total global R&D is being used to address the global burden of disease which affects about 90%. The 90% burden is not being addressed by R&D. A total of only $3 billion or so is being spent on neglected diseases, of which 70%, almost three fourths is going to the big three, HIV/AIDS, tuberculosis, and malaria. Much of this funding is, of course, coming from the public sector, or the philanthropic sector. And both push and pull mechanisms are being used. Push is about research grants and pull is about advanced market commitments or advanced purchase commitments, prizes. These are all mechanisms which are being used and which are extremely useful. The WHO is doing much more work on this and very recently has been tasked to put in some demonstration projects and this is available for you to look at on the WHO website. Let me conclude. I want to give you three key messages. You should go away with these three points. One is IP protection is important to generate innovation in the medical field. Particularly, you want improved medical products. On access, IP is an issue, but what is important is the management of IP. It's how IP is used that's critical for access, and the TRIPS Agreement does provide policy options. In the end, what we need to find, we in the international community, what we need to find are sustainable win-win solutions that promote both innovation and access to needed medical products. Thank you for your attention. [MUSIC]
