The Handbook of Global Science, Technology, and Innovation

Chapter 21Patents, Monopoly Power, and the Pricing of Pharmaceuticals in Low-Income Nations

F.M. Scherer

Introduction¹

Invention patents are accorded particular importance in the pharmaceutical industry – a role both complicated and enhanced by the adoption of the TRIPS (Trade-Related Intellectual Property Rights) agreement under the Treaty of Marrakesh in 1995. Before TRIPS was adopted, many nations did not grant patents on pharmaceuticals, and especially on pharmaceutical products. TRIPS established deadlines for the universal granting of pharmaceutical product patents. Among 32 mostly high- and medium-income nations surveyed by Edson Kondo (1994: 62), 13 – Argentina, Brazil, Chile, Colombia, Ecuador, Greece, India, Mexico, Peru, Portugal, Spain, Thailand, and Venezuela – did not grant pharmaceutical product patents as of 1990. By 1996, the most highly developed World Trade Organization (WTO) members were expected to begin granting such patents, and the least developed nations were required to comply by 2006 (later extended to 2016). (International agency terminology favors using “least developed” to characterize “low-income” nations. In the context used here, “low-income” is more descriptive, even if not always politically correct.)

Patents are significant in pharmaceutical research and development for two main reasons.² First, focusing usually on a precisely defined chemical or biological molecule and its uses, they provide particularly clear and unambiguous property rights, ...