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Does TRIPS Raise Problems for Innovation in Developing Countries?

This study examines the impact of TRIPS and other IPR reforms on innovation in developing countries, highlighting potential problems and assessing the evidence for their effectiveness. It also explores the implications for medicine prices and the ongoing debate surrounding TRIPS.

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Does TRIPS Raise Problems for Innovation in Developing Countries?

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  1. Does TRIPS Raise Problems for Innovation in Developing Countries? Keith Maskus University of Colorado, Boulder Oxford Conference: Bridging the Gap in Global Health Innovation 9-13 September 2007

  2. TRIPS is Supposed to Improve Innovation and Tech Transfer • TRIPS (and other global IPR reforms) are sold with this theory. • TRIPS suggests such improvements: • Article 7: IPR should contribute to the promotion of innovation and transfer of technology. • Article 8.2: freedom to prevent IPR abuses that interfere with ITT. • Article 66.2: positive obligation of developed countries to provide incentives for enterprises to promote ITT to LDCs.

  3. But IPR Reforms Could Raise Problems • Limit policy space in patent eligibility, compulsory licensing, etc. • Support market power in presence of weak competition. • Block follow-on innovation and restrict imitative competition. • Raise costs of inputs, medicines, agricultural technologies. • Restrict fair-use access to educational, scientific, and cultural materials. • Quasi-permanent shift in terms of trade.

  4. What Systematic Evidence? • No studies of TRIPS per se; • Evidence is scarce in developing countries: -Studies tend to use aggregate data (need more micro surveys). - Most IPR reforms are recent or ongoing (including TRIPS). - IPR are only one factor in technical change and competition processes. - Significant causality problems.

  5. Patent Reforms and Innovation • Weak prospects for promoting local invention from stronger patents: • Lerner’s historical study; • Branstetter’s work on Japan; • Yi Qian’s study of 26 countries and pharmaceutical patent laws, 1978-2002; • Rise in Korea’s patenting after lag. • Inward technology transactions seem to be improved: • Sensitivity of FDI in patent-sensitive industries; • Licensing and markets for technology services. • But there is no evidence for poorest countries.

  6. Patents and Medicine Prices • Best econometric evidence predicts substantial price increases: Counterfactual Estimates of Drug Price Changes (%) after Indian Patents Introduced, 1999-2000 Base (Chaudhuri, Goldberg, Jia, AER 2006)

  7. Must Patents Raise Medicine Prices? • Depends on structure of competition, insurance markets, etc. • Studies fail to account for patent standards that may limit market power. • Price studies are static and only speculate about induced R&D or technology transfer.

  8. Has TRIPS Failed to Achieve More Innovation and ITT? • Hard to tell as an economic matter based on evidence and it is still early. • Arguably IPR reforms have improved prospects for collaborative IP management and contracts. • Progress on price differentiation in commercial markets has been slow.

  9. A TRIPS Backlash? • WIPO Development Agenda ; • Compulsory licensing cases in Thailand and Brazil; • A “kinder and gentler” USTR may be coming. • Concerns limited to industrial policy in middle-income economies; • Focus shifted to enforcement and technology transfer.

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