NCPA - National Center for Policy Analysis


May 7, 2007

Patents are only worth the paper they're printed on unless governments protect them, and with recent developments, there has been reason for alarm, says the Wall Street Journal.


  • Thailand recently browbeat Abbott Laboratories into dropping its prices for an HIV/AIDS drug last month by threatening to break its patent.
  • Still more recently, Brazil declared it would seize the patent for Merck's HIV/AIDS drug, efavirenz.
  • It's the first time Brazil has seized a patent, and it's a slap in the face of the World Trade Organization and the market system for drug innovation.

Did Brazil's HIV/AIDS problem suddenly turn into an epidemic overnight, or did Lula just not like Merck's terms -- a 30 percent discount off the market price? Perhaps he was thinking, instead, of Brazil's huge generic drug industry, which could commercially benefit from a free invention and a big domestic market for selling it.

This is a dangerous game, says the Journal. Pharmaceutical companies can't afford to develop new drugs if they can't charge market prices for their existing products. Drug innovation is a risky business, and companies won't be willing to sink hundreds of millions of dollars into research and development, especially on diseases that affect the poor and sick in developing countries, if they fear their intellectual property will be stolen.

Source: Editorial, "Thai Flu Moves South," Wall Street Journal, May 7, 2007.

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