Trade Agreements, Intellectual Property, and the Role of the World Bank in Improving Access to Medicines in Developing Countries

Abstract

The price of medicines is one of the main barriers to treatment access for many poor people in developing countries due to their low purchasing power and the limited availability of public or private insurance in poor countries. It has been estimated that between fifty percent and ninety percent of pharmaceutical expenditures in developing countries are paid for out-of-pocket. In developed countries, on the other hand, over seventy percent of such expenditures are funded through insurance or other reimbursement schemes. Patents and other mechanisms of market exclusivity facilitate the acutely problematic pricing of new drugs: Intellectual property rights (IPR) and regulatory protections grant a temporary monopoly to a rightholder, thereby allowing prices to be set well above marginal and direct manufacturing costs. Although the majority of essential drugs - as defined by the World Health Organization's essential drug list - are off-patent, there are some important and even life-saving drugs (such as those for HIV/AIDS and cancer) and vaccines that are patent-protected. In recent years, research intensive industries and the developed countries in which they are located have made a strong push for international IPR harmonization. Harmonization of IPR amounts to pressures for developing countries to raise their IPR protection to developed-country levels. This trend has taken place in the last decade in the multilateral context of the World Trade Organization's (WTO) Trade- Related Aspects of Intellectual Property Rights (TRIPS) Agreement. In recent years, developed countries have also pushed to increase patent protection beyond the levels required by TRIPS - known as "TRIPS-plus" provisions - when negotiating bilateral free trade agreements (FTAs).