Patents, Biomedical Research, Canvassing Solutions and ... · Patents, Biomedical Research, and Treatments ... three types of patent: 1) utility patents for inventions or discoveries

T H E. . . . . . . . . . . . . . .

HASTINGS. . . . . . . . . . . . . . .

C E N T E R

Patents, Biomedical Research, and Treatments

JOSEPHINE JOHNSTON AND ANGELA A. WASUNNA

Examining Concerns, Canvassing Solutions

A H A S T I N G S C E N T E R S P E C I A L R E P O R T

S2 January-February 2007 / HASTINGS CENTER REPORT

Josephine Johnston and Angela A. Wasunna, “Patents, Biomedical Re-search, and Treatments: Examining Concerns, Canvassing Solutions,” Spe-cial Report, Hastings Center Report 37, no. 1 (2007), S1-S36.

Patents,Biomedical Research, and Treatments:

Examining Concerns, Canvassing Solutions

BY

JOSEPHINE JOHNSTON

AND ANGELA A. WASUNNA

On April 12, 1955, after eight years of researchand testing, Jonas Salk announced that his poliovaccine was safe, effective, and potent. The 1916

polio outbreak had left six thousand Americans dead andanother twenty-seven thousand paralyzed. In the twoyears following vaccine release, polio cases in the UnitedStates dropped by approximately 90 percent. By 1979 nocases of polio from the wild polio virus were reported na-tionwide.1 The immediate positive effect of Salk’s researchon the lives of thousands of Americans is uncontested. Yetdespite its enormous success, the vaccine was not patent-ed. When asked who owned the patent, Salk famously re-sponded: “Well, the people, I would say. There is nopatent. Could you patent the sun?”2

Salk’s explanation for not patenting the polio vaccinewould probably not convince a court of law—while he isright that no one can patent the sun, he may have beenable to obtain a patent on the vaccine (neither he, his em-ployer, nor the funder of the research ever applied forone). But it can still be assessed as an ethical argument—that no one should patent the vaccine because it shouldbelong to everyone, just as the sun does. His argumentmight have been based on a belief that a patent wouldhave had bad consequences—that it would have impededaccess to the vaccine, or that, as a moral principle, certainimportant, lifesaving discoveries should be placed in thepublic domain.

Although half a century old, Salk’s argument is stillvery much at play today. The consequences of patentinghealth-related discoveries for further research and for ac-cess to treatments are hotly debated, as is the morality ofasserting ownership over certain kinds of discoveries—forexample, those deemed lifesaving or essential for ongoingresearch or those deriving from the human body. The ra-tionale generally provided for the patent system is that itencourages innovation and early stage discoveries. Thatis, issuing patents eventually results in the availability ofknowledge and new products. But this rationale is also

S3SPECIAL REPORT / Patents, Biomedical Research, and Treatments: Examining Concerns, Canvassing Solutions

contested; some scholars, analysts, and practitioners be-lieve that in some contexts—including sometimes in bio-medicine and biomedical research—patents do little toencourage innovation and can even impede access toproducts and slow research.

One way of thinking about biomedical research andtreatment is as an ecology in which a variety of factors andplayers affect whether, how, and what biomedical researchis conducted and whether, how, and which treatments aredelivered and to whom. Different forces play niche rolesin this ecology, and patents are one such force. Yet the ac-tual and the ideal roles of patents in this ecology are con-tested. Some commentators argue that patents are inap-propriate, ineffective, or even harmful to innovation andaccess, while others argue that patents are vital to achiev-ing these goals.

In this report we consider these debates and how theyplay out in the patenting of inventions involving genesand stem cells and the patenting of drugs for HIV/AIDS.We have three purposes—to educate, to analyze, and tomake recommendations.

Having explained and assessed these debates, we con-sider laws, policies, and practices—proposed or put inplace at international, national, institutional, and individ-ual levels—that aim to preserve or create incentives for in-novation in biomedicine and to improve inputs for furtherresearch and access to drugs. Some of these laws, policies,and practices use patents, while others employ quite dif-

ferent mechanisms. What we consider amounts not to anoverhaul of the biomedical research and treatment sys-tems, but to “tinkering” with the ecology by affectingwhen patents are (and are not) used to improve biomed-ical research and treatment, focusing in particular onstimulating innovation and improving access both totreatments and to knowledge and resources useful for fur-ther research. Recognizing that, as in all ecologies, tinker-ing with one part can have an effect on another, we at-tempt to offer both an analysis and an ethical justificationfor laws, policies, and practices within and outside thepatent system. We conclude that any one law, policy, orpractice would be unlikely to both encourage innovationand maximize access in all situations.

A commitment to both innovation and access in bio-medicine and biomedical research can be onerous. It can,for instance, require that governments provide additionalincentives to innovate in particular areas or that patentholders enter into creative access arrangements underwhich they forgo some profits or commercial opportuni-ties because their patent happens to cover an “essential”drug or an invention that is necessary for further research.Yet access to new knowledge upon which further biomed-ical research can be based and to treatments for life-threat-ening diseases is of such fundamental importance—to in-dividuals, nations, and the global community—that itmust be one of the guiding goals for all involved.

I. Patents, Biomedical Innovation, and Access

Despite its enormous success, the vaccine for polio was not patented. When asked who owned the patent, Salk famously responded: “Well, the people, I would say. There is no patent. Could you patent the sun?”

In some senses, Salk’s story is unusual. His vaccine wasdeveloped in his university laboratory, using fundsfrom the March of Dimes Birth Defects Foundation

(then called the National Foundation for Infantile Paraly-sis).3 Whether driven by academic curiosity, the search forfame and glory, the desire to make a difference in theworld, or a combination of all three, one thing is clear:neither Salk nor his university needed a patent as an in-centive to innovate.

Once discovered, more money was needed to test thevaccine and then to manufacture and distribute it nation-wide. Often, funds for this extremely expensive stage ofdevelopment are invested by commercial entities on thebasis of expected future profits, should the tested productreach the market. This investment may be partially se-

cured by patents, which help assure investors that no oneelse is developing the same product. In Salk’s case, howev-er, the March of Dimes did not expect to recoup its in-vestment, and so a patent was not required to bring thevaccine to market. A similar story lies behind the almostsimultaneous development of another polio vaccine by Al-bert Bruce Sabin, which was also never patented.4

Yet despite the decades-long existence of an easy-to-ad-minister, inexpensive, and unpatented vaccine, polio haspersisted in many nations. In 1988, the wild polioviruswas still endemic in more than one hundred twenty-fivecountries on five continents, paralyzing more than onethousand children every day. It was not until early thiscentury that polio cases were reduced to an estimatedeight hundred children per year worldwide.5 The low cost


Patents are a kind of intellectual property, which is abroad term used to refer to creations of the mind, in-

cluding inventions, literary and artistic works, symbols,names, images, designs, and trade secrets.1 Intellectualproperty shares many of the legal characteristics associat-ed with real and personal property: it can be bought,sold, licensed, exchanged, or given away.

A patent is issued only when an inventor applies forone from a patent office. The application must include adescription of a discovery or invention so that the patentoffice can assess whether the invention meets that na-tion’s patentability criteria. If the patent is approved, theinventor receives a legal right to prevent others frommaking, using, or selling the invention in that jurisdic-tion without getting a license to do so from the inventor(in many nations the inventor is under no obligation toissue such licenses).2 The right to control makes it possi-ble for inventors to benefit from the result of their ownwork; otherwise, once the nature and purpose of thework was disclosed, others could easily appropriate it.3Patents are granted for a limited time, usually twentyyears from the time of filing, depending on national law.When the patent expires—when the invention goes “off-patent”—anyone may make, use, or sell the invention,within the constraints of other legal restrictions (lawsand regulations covering the manufacture and sale ofdrugs will apply to both patented and off-patent drugs).

Modern-day patents have their origins in medievalEurope, where rulers would issue letters granting mo-nopolies over activities, such as the production of soapor paper. The earliest known patent in England wasgranted by King Henry VI in 1449 to a Flemish man fora twenty-year monopoly over a method of makingstained glass.4 In 1474, Venice became the first nation tocodify its royal monopolies when it issued a statutegranting ten-year monopolies for useful inventions thatwere new to Venice. In 1610, following allegations thatroyal monopolies in England were being abused, James Irevoked all patents, declaring that “monopolies arethings contrary to our laws.” He made an exception,however, for new inventions.5 The English Statute ofMonopolies, passed fourteen years later, rendered illegalall monopolies except those for “new manufactures” thatwere not “contrary to the law nor mischievous to theState by raising prices of commodities at home or hurtof trade.”6

As England and other European nations expandedtheir empires, the patent system spread around theworld. In the United States, the Constitution of 1787explicitly authorized the granting of patents when it pro-vided Congress with the power “[t]o promote the

Progress of Science and useful Arts, by securing for lim-ited Times to Authors and Inventors the exclusive Rightto their respective Writings and Discoveries.”7 Japanpassed its first patent act in 1871, and Germany passeda national patent act in 1877.

Today, the U.S. Patent and Trademark Office issuesthree types of patent: 1) utility patents for inventions ordiscoveries of new and useful processes, machines, arti-cles of manufacture, or compositions of matter, or anynew and useful improvements; 2) design patents for de-signs for an article of manufacture; and 3) plant patentsfor distinct and new varieties of plant.8 Most of thepatents relevant to this discussion are utility patents on,for example, new chemical entities, new devices, new or-ganisms, or new processes.

To obtain a patent in the United States, or in any ofthe world’s major intellectual property regimes, the in-ventor must show that the invention is useful (or has in-dustrial applicability), nonobvious (that is, it cannot bean obvious improvement on a preexisting invention),and novel. Exact formulations of these criteria varyslightly between jurisdictions.9

Patents are not international. Inventors who wish tocontrol the use of their inventions internationally needto apply for patents in many different countries, whichcan be time-consuming and expensive. In some cases,patents issued in one jurisdiction will not be issued inanother either because that jurisdiction does not (yet)have a patent system (Swaziland lacks one, for example),because patentability criteria or the interpretation ofthese criteria vary from one jurisdiction to another (itwas for such reasons that Canada refused to issue apatent on a mouse, already patented in the UnitedStates, that was engineered to be susceptible to cancer10),or because nations have laws preventing the patenting ofsome inventions (in the European system, for example, apatent application may be rejected for “moral reasons,”as described in this report).11 Concerns about the impactof national variation on trade have led to treaties andguidelines seeking some level of international uniformi-ty in patent law application. For our purposes, the mostimportant of these is the Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS), whichcame into effect in 1995.

The overall objective of the TRIPS agreement is that:“The protection and enforcement of intellectual proper-ty rights should contribute to the promotion of techno-logical innovation, and to the transfer and disseminationof technology, to the mutual advantage of producers andusers of technological knowledge and in a manner con-

A History of Patents


ducive to social and economic welfare, and to a balanceof rights and obligations.”

Prior to the TRIPS agreement, over forty countries,including middle income countries such as Brazil andIndia, provided no product patent protections for phar-maceutical products.12 This exclusion allowed some de-veloping countries with pharmaceutical industries tomanufacture exact copies of drugs covered by patents inother countries but not eligible for patents in the manu-facturing country and to sell these drugs (known as“generics”) at a lower cost. Developing countries withoutpharmaceutical industries also benefited because theycould legally import generics at competitive prices.13

Under the TRIPS agreement, all member countries ofthe World Trade Organization must, within establishedtransition periods, ensure that their intellectual propertylaws provide for patents “for any inventions, whetherproducts or process in all fields of technology.” Thisclause effectively closed the loophole that Brazil andIndia had exploited to manufacture generic drugs, andtherefore threatened to make affordable generic drugsunavailable in poor nations.14 The Indian and Braziliandrug industries had made an enormous impact on inter-national public health, with India alone producing ap-proximately 67 percent of pharmaceutical products soldin the developing world.

Countries are also obliged under the TRIPS agree-ment to ensure that their laws grant patents for at leasttwenty years, limit the scope of exceptions to patentrights, grant compulsory licenses only under certain con-ditions, and effectively enforce patent rights. All devel-oped members had one year (1996, if membershipbegan in 1995) to amend their patent legislation, where-as developing members had five years (until 2000) andcountries like Brazil and India, which did not previouslyrecognize pharmaceutical product patents at all, had tenyears (until 2005) to implement a TRIPS-compliantpatent system.

The TRIPS agreement itself does not establish a uni-form international patent law. While obliged to amendtheir laws to comply with the minimum standards in theagreement, WTO member countries also have consider-

able flexibility to develop patent and other intellectualproperty laws that complement their own legal systemsand development needs.15 However, exercising this flexi-bility has proven difficult, as section III of this reportmakes clear.

1. World Intellectual Property Organization, About IntellectualProperty; http://www.wipo.org/about-ip/en/ (accessed June 7,2006).

2. T.G. Field, Jr., “What is Intellectual Property?” January2006; http://usinfo.state.gov/products/pubs/intelprp/ (accessedJune 7, 2006).

3. Commission on Intellectual Property Rights, “IntegratingIntellectual Property Rights and Development Policy,” 2002http://www.iprcommission.org/graphic/documents/final_report.htm (accessed June 7, 2006).

4. The U.K. Patent Office, “Origins,” Patents, http://www.patent.gov.uk/patent/whatis/fivehundred/origins.htm (accessedJune 7, 2006).

5. Ibid.6. Statute of Monopolies 1624 (England), Section 6.7. Constitution of the United States, Article 1, Section 8.8. 35 United States Code 101.9. L.B. Andrews, “Genes and Patent Policy: Rethinking Intel-

lectual Property Rights,” Nature Reviews Genetics 3, no. 10 (2002):803-808.

10. Harvard College v. Canada (Commissioner of Patents) [2002]4 S.C.R. 45, 2002 SCC 76.

11. E.R. Gold, “Biotechnology Patents: Strategies for MeetingEconomic and Ethical Concerns,” Nature Genetics 30 (2002):359.

12. Haochen Sun, “The Road to Doha and Beyond: Some Re-flections on the TRIPS Agreement and Public Health,” EuropeanJournal of International Law 15, no. 1 (2004): 123-50.

13. S. Kontic, “An Analysis of the Generic Pharmaceutical In-dustries in Brazil and China in the Context of TRIPS andHIV/AIDS,” http://www.law.utoronto.ca/documents/ihrp/HIV_kontic.doc.

14. J. Barton, “TRIPS and the Global Pharmaceutical Market,”Health Affairs 23, no. 3 (2004): 146-54.

15. C. Correa, “Integrating Public Health Concerns into PatentLegislation in Developing Countries,” (Geneva, Switzerland: TheSouth Center, 2000); J.H. Reichman, “Taking the Medicine withAngst: An Economist’s View of the TRIPS Agreement,” Journal ofInternational Economic Law 4, no. 4 (2001): 795-807.

of the unpatented vaccine was clearly not enough to en-sure universal access to it.

The story of the polio vaccine is not the story of allnew drugs and treatments, many of which use patents tosecure commercial investment to bring them “from benchto bedside.” But it is not an entirely unique or outdatedmodel, either. There is no one model for the funding andconduct of biomedical research or the development andprovision of medicines and treatments, and there is noone model for the role of patents in these processes.Patents provide an incentive for some biomedical re-search, but sometimes they play a much more limited

role. Similarly, they are important for securing the fundsto turn some early discoveries into products and to dis-tribute them to those in need, but they are not always nec-essary, and although they can ensure that knowledge isdisclosed to the public, they can also prevent individualsand institutions from using that knowledge. Discerningwhen patents are important, how they should be man-aged, and when they are unnecessary or even damaging isdifficult and debated. Getting clear on the uses and limitsof patent systems is, however, crucial for the developmentof effective and ethically defensible law, policy, and prac-tice.

S6January-February 2007 / HASTINGS CENTER REPORT

The Bigger Picture: Health, BiomedicalResearch, and Treatments

Despite great progress in identifying, treating, curing,and preventing disease and disability, millions world-

wide still suffer ill health. Safe and effective treatments donot exist for many conditions, and according to the WorldHealth Organization, one-third of the world’s populationlacks access to existing essential drugs—a figure that sur-passes 50 percent in some parts of Asia and Africa.6 Thistreatment access problem has at least three explanations inany particular case: (1) individuals or nations cannot af-ford existing treatments; (2) nations lack the infrastructureor political will to acquire and distribute the treatmentsthat they can afford; (3) the appropriate treatments do notexist. As we will see, patents may or may not contribute tothese problems.

(1) Individuals or nations cannot afford existing treat-ments. The gap in wealth between rich and poor coun-tries can be illustrated most dramatically by examiningdisparities in global health indicators. Maternal mortalityin the world’s least-developed countries is fifteen times therate of that in industrialized countries. Average life ex-pectancy in the developed world is seventy years, in manydeveloping countries less than fifty years,7 and in someAfrican countries, particularly those ravaged byHIV/AIDS, less than forty years. Three diseases—HIV/AIDS, tuberculosis, and malaria—together kill ap-proximately six million people per year in developingcountries, accounting for more than a third of the annualdeath toll in these regions. In 2004, average per capitahealth expenditures in the developing world as a wholewere the equivalent of $98, compared to an average ofmore than $3,800 in industrialized countries. An estimat-ed 1.5 billion people are not expected to survive to the ageof sixty, and more than 880 million people lack access tohealth services.8

Cost is one of the many reasons individuals around theworld—in both developed and developing countries—lack access to treatments. The price of a treatment, partic-ularly a drug, is influenced by many factors, includingwhere, when, and how it was discovered, developed, man-ufactured, and distributed, as well as whether and where itis patented. Some treatments cost a lot to discover and de-velop, and they may be priced to recover that cost. Somedrugs, regardless of their initial discovery and develop-ment costs, are simply more expensive to make and dis-tribute than others. The price of a treatment in a particu-lar country is also affected by how much people are will-ing and able to pay for it.

The presence of a patent (or patents) on a treatment oron the products or processes involved in that treatmentcan also affect its price. If a product or process is patentedin a jurisdiction, the patent holder or any licensees cancontrol who sells that treatment in the jurisdiction. Fewer

licensees means greater power to price the treatment with-out reference to competitors (although in some markets,price controls or negotiations with large purchasers, in-cluding governments, may constrain prices). Drugs, vac-cines, and other treatments that are covered by patents arealmost always more expensive than their off-patent coun-terparts.

Yet even in the absence of patents, treatments are sel-dom free. Drugs and devices must be manufactured (someare expensive to make) and distributed and sometimes re-quire specialist knowledge to be administered, all of whichcontributes to their price. And usually, at least some prof-it must be possible if manufacturers and distributors are toenter the market at all. In rare instances, all these costs arecovered by a national government or a national or inter-national aid organization (such as WHO or The Bill andMelinda Gates Foundation), and treatments are thengreatly subsidized, even free. At other times, even whentreatments are sold at or only slightly above manufactur-ing cost, they may still be too expensive for millions of thepoorest individuals and countries worldwide.

(2) Nations lack the infrastructure to adequately dis-tribute the treatments that they can afford. Unfortunate-ly, access problems may persist despite the availability ofappropriate treatments that are inexpensive or free. For ex-ample, a recent study examining fifty-three African coun-tries found that patents were not the primary reason thatpeople lacked access to antiretroviral drugs.9 The study’sauthors, Amir Attaran and Lee Gillespie-White, arguedthat poverty, the high cost of the drugs, national regulato-ry requirements for medicines, tariffs and sales taxes, andabove all a lack of sufficient international financial aid tofund the treatment posed greater barriers to access thanpatents per se.10 The study’s methodology was criticized,but it nonetheless made an incontrovertible point: pa-tients in poor countries often do not receive adequate ac-cess even to those drugs that are no longer patented.11 Infact, the majority of products on WHO’s list of essentialmedicines—which includes many drugs used to treat var-ious aspects and side effects of HIV/AIDS—are now offpatent, yet they remain unavailable or unaffordable tomost of those suffering from the virus.12

Differences in health status between poor and richcountries are caused not just by the diseases that areprominent, but also by the quality of the health system.13

Health systems must, in addition to providing basic treat-ments, attend to public health, vaccinations, sanitation,water safety and quality, nutrition, and reproductivehealth. They must also operate efficiently, effectively, andfairly. Otherwise, the safe delivery and administration oftreatments (even if provided freely) will be difficult or im-possible. As one commentator recently observed, “Even ifwe had free and unlimited supplies of ARVs and other es-sential HIV/AIDS commodities, they still would not be

available to the majority of people who need them be-cause of poor infrastructure.”14

Health systems must also seek to ensure that availabletreatments meet quality standards. Surveys from severaldeveloping countries show that 10 to 20 percent of sam-pled drugs fail quality control tests.15 Fewer than one inthree developing countries are estimated to have fullyfunctioning drug regulatory authorities, which is part ofthe reason that growing numbers of fake drugs are enter-ing these countries. Between 25 and 50 percent of medi-cines sold in the developing world are estimated by WHOto be counterfeit.16 Further, a World Bank study foundthat “inefficiencies in the procurement, storage, prescrib-ing, and use of drugs are so extensive . . . that consumersin some countries get the benefits of only $12 worth ofdrugs for each $100 spent on drugs by the public.”17

Unfortunately, political will is often in short supply.18

For example, despite the huge numbers of deaths frompreventable diseases in African countries each year,African governments spend an average of only 3 percentof their gross national product on health care (while theUnited States spends approximately 14 percent).19 Thesecountries spend more on their military than on healthcare.20

None of these infrastructure problems are the fault ofthe patent system, and going some way toward addressingthem is necessary to make even cheap or free treatmentsreliably available to those who need them.

(3) The appropriate treatments do not exist. Ofcourse, the access problem may not just be affordability;people all over the world suffer and die from conditionsfor which efficacious treatments do not even exist. In par-ticular, there is an acknowledged lack of new treatmentsand vaccines for diseases that primarily affect people livingin poor countries. An estimated 90 percent of the $56 bil-lion spent annually on health research by the public andprivate sectors goes toward diseases that afflict just 10 per-

cent of the world’s population.21 In the last twenty-fiveyears, almost fourteen hundred new medicines were de-veloped, but only 1 percent of them were for tropical dis-eases that kill millions each year.22 The research and devel-opment pipelines for new drugs for diseases like tubercu-losis, African sleeping sickness, and leishmaniasis are vir-tually empty. Where drugs exist to treat these illnesses,they are often old, ineffective (including against new,drug-resistant strains), and sometimes difficult to admin-ister in resource-constrained environments. Some vaccinesrequire refrigerated storage, for example, yet there are nosuch facilities in many rural parts of the developing world.

Sometimes the absence of effective treatments is notfor lack of trying, but for many conditions—particularlythose that affect very few people or mainly poor people—the absence is likely explained by market forces. The bot-tom line is that poor countries are seldom profitable mar-kets; they are simply unable to pay for, or properly dis-tribute and monitor, many treatments. Developing drugsand other treatments for conditions that are prevalent pri-marily in these countries can be a financial loser. Thesame is sometimes true for treatments for unusual diseasesand conditions, for which the market, even in the devel-oped world, can be too small to attract investors.23 Again,the patent system is not to blame. Providing additional in-centives (other than potential patents and profits fromsales) for biomedical research that targets neglected dis-eases, or that seeks better ways to deliver existing treat-ments, may be the only way to stimulate innovation inthese areas.24

In sum, to significantly improve the health status oftheir citizens, countries need strong and well-run healthsystems and disease prevention programs; well-function-ing drug approval, procurement, and distribution pro-grams; sufficient numbers of well-trained health person-nel; and the political will to address health problems.They also need affordable access to new and existing treat-ments.


Health infrastructure problems are not the fault of the patent system, but going some way toward addressing them is necessary to make even cheap or free treatments reliably available to those who need them.


Biomedical research and the development of treat-ments both involve many stages, any of which canyield patentable inventions and discoveries. Some

of these inventions and discoveries are useful in further re-search, such as newly identified genes that generate a par-ticular protein; while others will likely be used in treat-ments following additional development, such as newchemical entities that could eventually be marketed asdrugs. Some inventions are useful both as they stand andfollowing further development; for example, geneticmarkers for breast and ovarian cancer can be useful in on-going research and for screening potential sufferers.

The biomedical research generating these inventions isfunded in a variety of ways and conducted by a variety ofindividuals and institutions. Some research is funded bycompanies, other research by governments, internationalcharitable organizations, private foundations, and otherorganizations. Funders may be motivated by a desire forspecific products, such as a malaria vaccine or a new treat-ment for diabetes, or by the quest for greater knowledge inbasic biomedical science, such as of cell differentiation orgene-environment interaction. Of the biomedical researchfunded by nonprofit entities, a significant portion is fund-ed by national governments and is conducted in academ-ic institutions. In 2002, the United States federal govern-ment provided $19 billion to academic institutions for re-search and development, of which two-thirds came fromthe U.S. National Institutes of Health.25

The importance that parties attach to obtainingpatents on inventions and discoveries also varies. Wherethe research is funded or conducted by a company, thecompany may seek patents to recoup the costs of their ini-tial research and eventually to generate a profit. Where theresearch is funded by a government or charitable organiza-tion or conducted in a nonprofit institution, such as a uni-versity or an independent research institute, recovering theoriginal research costs may not be necessary and a profitmay not be expected. Nevertheless, in the United Statesand increasingly in other countries, laws and policies en-courage the recipients of government and other fundingto patent the results of their research on the grounds thatpatented inventions are more likely to be picked up by in-dustry and further developed into new products.26

Some inventions and discoveries resulting from bio-medical research have always been patented—by both for-profit and not-for-profit researchers (many of whom arelegally obliged to immediately assign their patents to theiremployers). But in the past twenty-five years, the numberof biomedical patents has dramatically increased world-wide, including on biological materials and on inventionsor discoveries that are still at early stages of development.

The Increase in Biomedical Patenting

From 1990 to 2003, the number of U.S. patents grant-ed annually increased over 100 percent, from about

80,000 to 169,000 per year.27 During a comparable peri-od, patent applications to the European Patent Office andthe Japanese Patent Office also increased significantly.28

While this increase has covered many areas, it has beenparticularly significant in the biological sciences, andwithin that field, in genetics. A 2002 survey commis-sioned by the National Science Foundation reported thatthe total number of “international patent families” onhuman DNA sequences (defined as groups of patents as-sociated with a single invention) tripled from the early tolate 1980s and nearly tripled again during the early andlate 1990s. Although the increase occurred worldwide, thesurvey found that “[t]hroughout this 20-year period, theUnited States led all other nations and the 15-nation Eu-ropean Union (EU) with 72 percent of total internationalpatent families formed.”29

A recent survey by Kyle Jensen and Fiona Murray fo-cusing on the United States reports that 20 percent of theover twenty-three thousand known human genes listed inthe National Center for Biotechnology Information’sdatabase are the subject of 4,270 U.S. patents (in overthree thousand patent families).30 These patents areowned by over eleven hundred different institutions, indi-viduals, or companies, based both in and outside theUnited States. Although these numbers indicate that alarge portion of the human genome is unpatented, someimportant genes are heavily patented, including genes as-sociated with increases in breast cancer, diabetes, and obe-sity31—three diseases that exert a heavy toll in the devel-oped world (and therefore represent potentially profitablemarkets for new treatments).

These increases in “gene patenting” have many causes,including increased investment in genetics by the interna-tional biotechnology industry and by governments, yield-ing correspondingly more inventions and discoveries.Some of the government-funded research has been underthe recently completed international Human GenomeProject and on an ongoing basis from the U.S. NationalHuman Genome Research Institute at the National Insti-tutes of Health and from the U.K.’s Wellcome Trust. Ad-vances in technology and an increased propensity amongthose conducting the research to file for patents on thiskind of invention and discovery have also contributed tothe increase.

Around the world, new laws and changes in academicculture and practice have led to more patenting in allkinds of research, including biomedical research.32 Per-haps because it was the first nation to alter its domesticlaw on the issue, the United States leads the world in aca-demic patenting.33 The United States’ 1980 Bayh-Dole

II. The Biomedical Research Context: Genes and Stem Cells


Act states that institutions receiving federal funds mayelect to retain title to any inventions resulting from a fed-eral grant, contract, or cooperative agreement, subject tocertain restrictions, including that the government retainsa nonexclusive license to any inventions and that institu-tions share royalties with individual inventors (usuallyuniversity faculty).34 That same year, the U.S. Congressgave government agencies the power to patent the resultsof their in-house research.35 In the ten years since 1995,the NIH alone has been awarded an average of one hun-dred twenty-two U.S. patents per year.36 Patents awardedto U.S. academic institutions quadrupled between 1988and 2003, rising from approximately eight hundred tomore than thirty-two hundred patents issued per year (forbiomedical and other inventions).37

These “academic” patents are said to be necessary, notto recover the costs of the initial research, but to encour-age industry—often through exclusive licensing of thepatented invention—to pick up the results of the researchand translate them into new products.38 Without a patentand the ensuing exclusive license, some have argued, com-panies, particularly pharmaceutical companies, will not beinterested in investing the resources to develop inventionsor discoveries generated with public or other monies.These patents also allow the institution and the individualinventor to generate additional income. But some criticsargue that patenting and licensing by nonprofit institu-tions have had a negative impact on access, both to endproducts such as drugs and diagnostic tests and to infor-mation and materials useful in further research, such asgenes or methods of deriving stem cells. Thus patentingand licensing fees have sometimes hindered innovation.39

As more biomedical patent applications have beenfiled, more of these applications have been granted, inpart due to the evolution of patent law. Most nations havestrengthened their patent regimes over the past decade,sometimes in order to comply with the Agreement onTrade-Related Aspects of Intellectual Property Rights(TRIPS), but also in hopes that stronger patent laws en-courage innovation.40 Changes in the world’s three majorpatent systems—those of the United States, Europe, andJapan—have expanded the coverage of patent protection,led to broad patents in new areas, restricted the use of re-search exemptions, and encouraged courts to enforce therights of patent holders.41

The U.S. patent system is known for its openness togranting patents. There are a number of reasons for thisflexibility, including case law and policy and practice atthe U.S. Patent and Trademark Office (USPTO). In theUnited States, patents have been issued on naturally oc-curring substances since the 1912 decision that adrenalincould be patented provided it was isolated from its natur-al source.42 In 1980, the U.S. Supreme Court in Diamondv. Chakrabarty expanded patentability criteria to includesome living organisms. The case involved a claimedpatent on a genetically engineered bacterium that was ca-pable of breaking down crude oil. In a five to four ruling,the Court held that patents could be awarded on livingorganisms provided that the organisms had been suffi-ciently manipulated by the inventor:

The patentee has produced a new bacterium withmarkedly different characteristics from any found in na-ture and one having the potential for significant utility.His discovery is not nature’s handiwork, but his own;accordingly, it is patentable subject matter.43

Since then, higher life forms have also been the subject ofpatent applications. In 1988 and 1992, Harvard Univer-sity obtained patents in the United States and EuropeanUnion respectively on the “oncomouse”—a mouse genet-ically engineered to be susceptible to cancer. Not all juris-dictions have accepted this patent, however; the SupremeCourt of Canada denied it on the ground that the mousewas a higher life form and not a “composition of matter,”as required under Canada’s Patent Act.44

While not all jurisdictions will issue the same patents,the overall number of biomedical patents issued world-wide is on the rise. This increase, and the emergence ofpatents in areas like genetics and stem cell research, hasled to calls for changes in the laws, policies, and practicesthat bear on patent systems.

Current Concerns: Patentability, Morality, andAccess

The increase in biomedical patents has fueled a num-ber of concerns, which broadly fall into two cate-

gories: concerns about the legality and morality of patent-ing certain kinds of inventions, and concerns about theconsequences for the biomedical research and therapeuticcontexts.

The overall number of biomedical patents issued worldwide is on the rise. This increase, and the emergence of patents in areas like genetics and stem cell research, has led to calls for changes in the laws, policies, and practices that bear on patent systems.


Where patents have claimed isolated biological sub-stances, including genes or cell lines, critics have claimedthat these naturally occurring substances, even when iso-lated, do not meet the legal requirements of novelty or, insome cases, nonobviousness. In the case of patents on iso-lated genes, for instance, it has been argued that the use-ful properties of the substance are not invented by the sci-entist but are “natural, inherent qualities of genes them-selves.”45 This argument has also been applied to cell lines.In addition, now that DNA sequencing has become rela-tively quick and easy to do, some have argued that isolat-ing a portion of DNA no longer meets the patentabilitycriteria of nonobviousness because isolating the genewould have been obvious to a skilled person working inthe field.46 When it comes to interpreting the patentabili-ty criteria, the U.S. courts and USPTO have taken a par-ticularly expansive view.

Questions have also been raised about the applicationof patent law. An analysis by Jordan Paradise, Lori An-drews, and Timothy Holbrook of seventy-four U.S.patents containing over one thousand claims related tohuman genes determined that 38 percent of the claimsdid not meet the legal criteria for patentability. Accordingto the authors’ interpretation of the law, the most frequentproblem was that the patents “claimed far more than theinventor actually discovered.” Other problems includedclaims of unproven utility, or claims of a correlation be-tween two things, such as a mutation in a gene and a dis-order, without showing that the mutation caused the dis-order.

Some errors are to be expected in the granting ofpatent applications, but based on their results, Paradise,Andrews, and Holbrook suggested that the USPTO insti-tute specialist training for patent examiners in DNA-based technologies, introduce additional safeguards to en-sure that patent applications are sufficiently examined,and possibly alter its financial incentives. “Currently,patent examiners are encouraged with monetary bonusesto grant patent applications, a policy that has the unset-tling effect of rewarding examiners for quickly pushingpatents through the patent office.”47 Although other juris-dictions organize their patent offices differently, similarproblems may nonetheless plague gene patents and otherbiomedical patents issued outside the United States. TheParadise study’s concerns and recommended responsessuggest that all patent regimes should consider specialisttraining for examiners working in genetics and othernovel, specialized areas, and that periodic review of theapplication of patentability criteria is necessary to ensurethat they are being correctly applied.

Critics have also argued that, regardless of the legalpatentability criteria, certain inventions should not bepatented. Where patents involve human biological sub-stances, some have asserted that these substances shouldnot be patentable under law (or that, regardless of the law,inventors should not apply for patents on them) because

they already belong to “humanity”—they are “our com-mon heritage”—and patenting them inappropriatelycommodifies the human body.48 A counter to such argu-ments is that they rely on moral positions not necessarilyshared by most members of society (a claim that ought tobe open to empirical analysis within jurisdictions).

One way to recognize this argument is to legally ex-clude from patentability those inventions that threaten“ordre public” or common morality. The TRIPS agree-ment permits this move. Although U.S. law does not cur-rently accommodate objections based on such concerns,49

the European Patent Convention contains this exclusion50

and the European Biotechnology Directive on the legalprotection of biotechnological inventions prohibitspatents on processes for cloning humans, the modifica-tion of the human germ line, and the use of embryos forindustrial or commercial purposes (a provision that hasprevented patents on human embryonic stem cells).51

Not surprisingly, interpreting this morality exclusioncould be difficult. In its report on the ethics of patentingDNA, the U.K.’s Nuffield Council on Bioethics notedthat evaluating patent applications by weighing their im-pact on “ordre public” and “morality” will require expertisethat is generally not represented in patent offices.52 De-spite these difficulties, this kind of objection has been suc-cessfully raised in Europe, which suggests that the exper-tise to address it in particular cases can be developed. Cer-tainly, if feelings about the morality of patenting certainkinds of invention run high, a morality-based legal exclu-sion will be the most effective way to prevent such patent-ing. Whether the exemption is desirable will very muchdepend on what is valued in a given jurisdiction: the ex-emption might slow a line of innovation by removing theincentive of obtaining a patent, but this result could beconsidered an acceptable price to pay in a society com-mitted to keeping human bodily materials out of thecommercial realm. Even where the law does not providethis exclusion, morality-based objections might neverthe-less persuade some inventors not to seek patent protectionor, if a patent is issued, to make the invention widelyavailable. Morality arguments may affect practice even ifthey cannot alter the law.

Access for Further Research and Innovation

These concerns—that patents involving genes andother biomedical inventions might improperly

stretch (and sometimes might not meet) the legal criteriafor patentability, and that such patents are immoral—have been joined by concerns about the consequences ofthese patents for further research and treatment. Specifi-cally, the concern is that because patent-holders have thepower to prevent others from making or using their in-ventions, they effectively have the power to inhibit or pre-vent research and therefore slow or prevent innovation.


In theory, patenting and licensing biomedical inven-tions that might be useful in further research could facili-tate innovation. The possibility of obtaining a patent en-courages investment in research in new areas, and once is-sued, the patent provides the basis for seeking the invest-ment for further research and development. Patents in-volving isolated genes and methods of deriving cell lines,for example, are the “products” of numerous biotechnolo-gy companies, which license these inventions to generatethe funds to conduct further research.

But patenting and licensing could also impede furtherresearch if it creates a “tollbooth” through which re-searchers must pass.53 Some inventions, such as those in-volving genes or broadly described methods of derivingembryonic stem cells, are essential for further research.But if these licenses are expensive, the research may be toocostly to pursue, and if a great many licenses are required,negotiating all the licenses might be prohibitively difficultand time consuming as well as expensive.

But how valid are these concerns? The U.S. debateabout them is not finished. During the 1990s, there werereports that academic researchers were having troublegaining access to materials or were being preventing fromusing processes generated by other laboratories.54 Theseaccess problems were thought to have arisen when patentholders refused to share their patented materials andprocesses or required costly and time consuming negotia-tion of licenses necessary for research to go forward. In1998, Michael Heller and Rebecca Eisenberg describedthis access problem as “the tragedy of the anticommons,”whereby “[a] proliferation of intellectual property rightsupstream may be stifling life-saving innovations furtherdownstream in the course of research and product devel-opment.”55 As Heller and Eisenberg described it, when aresearcher needs access to multiple patented inputs to cre-ate a single useful product, “[e]ach upstream patent allowsits owner to set up another tollbooth on the road to prod-uct development, adding to the cost and slowing the paceof downstream biomedical innovation.” This concern wasalso echoed in 2002 by the U.K.’s Commission on Intel-lectual Property Rights.56

In the late 1990s, the U.S. National Institutes ofHealth was so concerned about the possibility that patentswere stalling research that it established a working groupto focus on what it called “research tools,” defined as “thefull range of resources that scientists use in the laborato-

ry.” In its 1998 report, the group noted that “[a]lthoughcompetitive pressures have always given scientists an in-centive to withhold new research tools from their rivals,past practices allowed for relatively free exchange, typical-ly without formal agreements and without explicit con-sideration of commercial rights or potential financial ben-efits.” It concluded that “many scientists and institutionsinvolved in biomedical research are frustrated by growingdifficulties and delays in negotiating the terms of access toresearch tools,” and it urged the NIH to promote free dis-semination whenever possible.57

In response, the NIH issued guidelines stating that re-cipients of NIH funds are expected to ensure that uniqueresearch resources are made available to the scientific re-search community. In particular, the guidelines stated thatresearch tools need not always be patented, and that ifthey are patented, they should seldom be licensed exclu-sively to one individual or organization. When an exclu-sive license is considered necessary to ensure further de-

velopment, the guidelines recommended that it be limit-ed to a particular commercial field, allowing the patentholder to use and distribute the tool for other research.58

The NIH followed these guidelines in 2004 with its “BestPractices for the Licensing of Genomic Inventions,” inwhich it makes similar recommendations to its fundingrecipients about patenting and licensing of a wide array ofgenetic materials and technologies, including sections ofDNA, methods for the sequencing of genomes, and thedetection of genetic mutations and genetic modifica-tions.59

The NIH’s guidelines and best practices are not lawsand are directed only at institutions receiving NIH funds,the vast majority of which are universities, colleges, andnonprofit research institutions. Nevertheless, if adoptedby these institutions—and particularly if applied to all re-search findings rather than only to research tools and ge-nomic inventions generated using government funds—they could have a major impact on access.

In 2006, the Organisation for Economic Co-Opera-tion and Development, in guidelines it issued for the li-censing of genetic inventions, made recommendationsvery similar to those of two NIH guideline documents.The OECD guidelines attempt to shape the practice of allpatent holders, however, not only of those whose inven-tions were generated using public monies.60 The rationalefor restricting guidelines to genetic inventions (although

Some critics assert that human biological substances should not be patentable because they already belong to “humanity”—they are “our common heritage”—and patenting them inappropriately commodifies the human body.


Against the background of a decade of controversyover patents involving human genes came the 1998

derivation of pluripotent stem cell lines from humanembryos by James A. Thomson and colleagues.1 Theirresearch generated both great scientific interest and, be-cause it involved the destruction of early human em-bryos, much public controversy. In the United States, italso led to two important patents on a purified prepara-tion of primate embryonic stem cells, a purified prepara-tion of human embryonic stem cells, and a method forisolating each.2 The patents were issued to Thomson asinventor and assigned immediately by him to the Wis-consin Alumni Research Foundation, which handles in-tellectual property generated at Thomson’s workplace,the University of Wisconsin-Madison.

Concerns about the morality of the patents. The criti-cism of these patents—and subsequent patents involvinghuman embryonic stem cells—is much like that direct-ed at patents involving human genes. Three claims areparamount: that the declared inventions do not all meetthe patentability criteria, that the patents will impede ac-cess for research and future treatment, and that patentsshould not be issued on this subject matter for moralreasons. Because they include rights to cells taken fromhuman embryos that are destroyed in the process of re-moving the cells, one U.S. senator views such patents as“akin to slavery”3 (although the patents do not actuallycover human embryos themselves). The necessary con-nection between some of the inventions claimed in thesepatents and human embryos has resulted in similarpatents being challenged or not issued at all in other ju-risdictions.

When the European Patent Office granted a patentto the University of Edinburgh in 1999 on a method ofusing genetic engineering to isolate animal stem cells, aprotest erupted and a challenge to the patent waslodged.4 The challenge was successful on severalgrounds, including that it was contrary to the EuropeanPatent Convention, which excludes from patentabilityuses of human embryos for industrial or commercialpurposes and inventions contrary to “ordre public.”5

The University of Edinburgh initially amended itspatent application to exclude human embryonic stemcells, but it later reversed its position and launched anappeal, which has not yet been decided. In the mean-time, at least two other patent applications involvinghuman embryonic stem cells have been rejected by theEuropean Patent Office on the basis of its Edinburgh de-cisions.6

Concerns about access and control. Embryonic stemcell patents also raise concerns about access to the mate-rials and processes needed for further research and treat-

ment. In the United States, the Thomson patents havebeen described as effectively covering “all [embryonicstem] cells and downstream products, regardless of howthe cells are derived.”7 Broad patents are not unusual innew areas of science and technology, and they are ar-guably an appropriate reward (and incentive) for enter-ing into uncharted territory. Nevertheless, the Thomsonpatents have been criticized for their breadth and for thepower they give the patent holder, who effectively con-trols all subsequent human embryonic stem cell researchand any treatments that might result before the patentexpires.

The extent of this power became evident in 2001when the U.S. National Institutes of Health began to setup a registry listing all embryonic stem cell lines thatmeet President Bush’s federal funding policy. To facilitatethe use of these lines, the NIH negotiated with The Wi-Cell Research Institute (to which the Wisconsin AlumniResearch Foundation had assigned the patent rights) toensure that researchers who signed a standardized agree-ment could use the registry’s lines without breaching theThomson patent. Under the agreements, Wi-Cell makesthe patented lines and derivation method available tononcommercial, federally funded researchers royalty free(Wi-Cell seeks a nominal charge when asked to supplyactual materials). But if researchers wish to commercial-ize their work, they must negotiate new licenses, as mustall researchers—commercial and noncommercial—whowish to study embryonic stem cells using nonfederalfunds. Without these licenses, researchers risk a patentinfringement suit, although such a suit might not becompletely successful if, as some legal scholars believe,aspects of the Thomson patents are open to challenge8

(in fact, these patents are being legally challenged as wego to press).

The Thomson patents highlight the control thatpatent holders (who may or may not be the inventor)can have over a field of research by means of licensingpractices. At first, WARF seemed to be fairly accommo-dating: although it retained a tight hold on future com-mercial rights, it issued nonexclusive licenses to many re-searchers. But recently some researchers have com-plained that access is not as easy and cheap as they wishit were.9 Critics also accused WARF of being unreason-able and aggressive when it asserted that if a U.S. statebenefited from its role in funding stem cell research, asCalifornia proposed to do, then it would consider thatresearch commercial and would require a more expen-sive commercial license. As stem cell research progressesand the distinction between commercial and noncom-mercial use blurs, the exercise of patents rights are, per-

The Example of Stem Cells


this term is given a wide definition in the document) isnot clear, and it may well be that many of the OECD’srecommended practices could, and in some cases should,

be applied to all biomedical inventions (this point is dis-cussed further in section V below).

Given the widespread patenting of biomedical inven-tions and the concern about the effects of those patents,

haps predictably, becoming an issue in the stem cell de-bate.

Attempts to force benefit sharing. Another twist onpatent issues in stem cell research occurred in 2004.When California voters agreed to use $3 billion worth ofstate bonds to fund stem cell research, they also agreedthat “[a]ll grants and loan awards be subject to intellec-tual property agreements that balance the opportunity ofthe State of California to benefit from the patents, royal-ties, and licenses that result from basic research, therapydevelopment, and clinical trials with the need to assurethat essential medical research is not unreasonably hin-dered by the intellectual property agreements.”10 Imple-menting this restriction is proving challenging, and crit-ics have charged that restrictions might discourage inno-vation and investment, and that the additional benefitsharing is unnecessary anyway because the state’s citizenswill benefit sufficiently from new and better treat-ments.11 While the restriction asserts that the funders ofthe research that led to the patent (the State of Califor-nia) should benefit from whatever income the patentproduces, it does not specify how that benefit-sharingshould occur.

Currently, the body entrusted with distributing thestate’s stem cell funding has proposed translating theoriginal benefit sharing language into a policy wherebyall nonprofit organizations would own any intellectualproperty arising from their research, but recognizing thatthis intellectual property would be “shared broadly andpromptly with the scientific community,” would be li-censed nonexclusively where possible, would be subjectto the march-in rights if underutilized, and would “bemade freely available for research purposes in Californiaresearch institutions” (an effective exemption frompatent infringement for academic research use within aspecific geographic territory).12 This proposal, whichwould function as a condition of receiving state funding,does not include a requirement to share royalties, but itdoes include many elements of the practice recommen-dations made by the NIH and the Organisation for Eco-nomic Cooperation and Development for genetic inven-tions and research tools. It has been criticized for notseeking to limit the costs of any stem cell treatments re-sulting from the state-funded research. The overall issueis still not resolved.13

Plainly, stem cell research shows how patents generateconcerns both about morality and about whether patentsmay limit access to the materials and processes neededfor further research and treatment. To date, the formerconcerns have led some jurisdictions to refuse patent ap-

plications involving embryonic stem cells, which someanalysts feel has had a chilling effect on research in thosejurisdictions (although it is difficult to tell which juris-diction-specific factors are responsible for research in-vestment). Access for further research and treatment hasthus far not been a significant problem, in large part be-cause of the practices of the patent holders or the absenceof patents, depending on the jurisdiction in question.However, if embryonic stem cell research leads to a prof-itable treatment before the broad Thomson patents ex-pire or are overturned, and if the Thomson patent hold-ers seek royalties that drive up the cost of such treat-ments, attention may return to the patents themselvesand the expectations and practices of those who controlthem.

1. J.A. Thomson et al., “Embryonic Stem Cell Lines Derivedfrom Human Blastocysts,” Science 282, no. 5391 (1998): 1145-47.

2. U.S. Patents 5,843,780 and 6,200,806.3. A. Pollack, “Debate on Human Cloning Turns to Patents,”

New York Times, May 17, 2002.4. M. Rimmer, “The Attack of the Clones: Patent Law and

Stem Cell Research,” Journal of Law and Medicine 10, no. 4(2003): 448-505.

5. Convention on the Grant of European Patents (EuropeanPatent Convention), Article 53(a).

6. P.M. Webber, “Patentability of Human Embryonic Cellsunder the EPC,” http://pharmalicensing.com/features/disp/1119630334_42bc33fe14906 (accessed September 14, 2005).

7. S. Rabin, “The Gatekeepers of hES Cell Products,” NatureBiotechnology 23, no. 7 (2005): 817-19, at 818.

8. Ibid.9. J.M Simpson, “WARF Should Stop Impeding Research,”

Wisconsin State Journal, June 26, 2006. G. Blumenstyk, “A TightGrip on Tech Transfer,” Chronicle of Higher Education, September15, 2006.

10. State of California. “Proposition 71: Text of Proposed Law,”http://www.ss.ca.gov/elections/bp_nov04/prop_71_text_of_pro-posed_law.pdf.

11. California Council on Science and Technology, “PolicyFramework for Intellectual Property Derived from State-FundedResearch: Final Report to the California Legislature, Governor ofthe State of California,” January 2006, http://www.ccst.us/ccst/pubs/ip/ipfinal.pdf.

12. California Institute of Regenerative Medicine, “Notice ofProposed Regulation Adoption, California Code of Regulations,Title 17.—Public Health, Division 4—California Institute ForRegenerative Medicine,” chapter 3, May 5, 2006, http://www.cirm.ca.gov/laws/pdf/ip_oal_nonprofit.pdf.

13. Center for Genetics and Society, “The California Stem CellResearch Program at One Year: A Progress Report,” January 18,2006, http://genetics-and-society.org/resources/cgs/20060118_cirm_press.html.


one might expect that many biomedical researchers aretoday prevented from pursuing research due to patentscontrolled by other researchers, academic institutions, orcompanies. Yet there is less evidence of patents slowingdown biomedical research than one might imagine. In2005, John P. Walsh and colleagues published a survey ofover four hundred biomedical researchers in U.S. universi-ties, government, and nonprofit research institutions.They sought information on researchers’ patenting activi-ties and experiences obtaining permission from others touse materials and processes in their research. The surveyrevealed that of those researchers who knew that their re-search involved another’s patent, none reported abandon-ing a line of research. In addition, very few reported mak-ing modifications to research design or sustaining delaysdue to another’s patents, and of those who sought a licensefor use of another’s technology, all but one reported ob-taining permission to use the technology for free. Walsh etal. concluded that, “for the time being, access to patentson knowledge inputs rarely imposes a significant burdenon academic biomedical research.”61

However, the Walsh study also reported that when itcame to using another’s research materials—substancesthat must be physically shared, such as cell lines or modelorganisms, not just intellectual property—access wassometimes delayed or denied altogether. “Over a 1-yearperiod, an average of one in six respondents reported thatdelays in receiving materials from other academics causedat least one project they were working on to suffer agreater than 1-month delay, a substantial delay in a fast-moving research field. Noncompliance by other academicswith research input requests resulted in about 1 in 14 sci-entists abandoning at least one of their projects each year.”Reasons given for refusals or delays were that compliancewas costly and time consuming for the holder of the ma-terials, but Walsh et al. also established a correlation be-tween refusals to supply materials and the presence ofcommercial interests in those materials (although notspecifically patents).62

Other reports have had other results, however. A surveyconducted by the American Association for the Advance-ment of Science of its own members found that 40 per-cent of respondents reported difficulties in obtaining ac-cess to patented technologies, and over half of these saidtheir work was delayed or needed to be changed.63 And al-though the Walsh findings somewhat assuage the concernthat patents are hindering research, the study also foundthat only 5 percent of researchers regularly checkedwhether there was a patent on the material or process theywere employing in their research, and only 5 percent re-ported that they or their institution had received a notifi-cation letter citing patent infringement.64

These findings about proceeding without checking forpatents and without obtaining licenses may evidence abroad commitment to the norm of communalism and thepractice of sharing knowledge.65 They also suggest thatU.S. academic biomedical researchers and patent holdersfrequently behave as though there were an exemption inpatent law for academic research, even though a recentU.S. court decision clarified that such an exemption doesnot exist.66 A research exemption does exist under statutein some countries, including Japan, Korea, Mexico,Turkey, and many EU countries.67 Where a research ex-emption is not available, proceeding as if one exists likelyfacilitates the progress of research, but it relies on the hopethat patent holders will not enforce their legal rights—arisky strategy.

Until better evidence of the actual impact of patents onresearch exists, and in light of the potential for patent in-fringement lawsuits, the risk that patents may slow or pre-vent research ought to be taken seriously. In countrieswithout a statutory research exemption, or where such anexemption is very narrow, the promotion of patenting andlicensing practices likely to promote widespread use of theinvention is recommended. Other industries have man-aged to bring to the market products incorporating largenumbers of patents, in part due to the willingness ofpatent holders to license their innovations under realisticterms.

Even more than in the research context, the impactof patents in the treatment context has generatedconsiderable concern. The presence of patents has

prevented the production of cheap drugs in some markets,and enabled high pricing, although it is also clear thatpatents and high prices are not the only—and often notthe most significant—barrier to accessing treatment.Patented drugs for treatment of HIV/AIDS make an illus-trative case, which brings into sharp focus the relationshipbetween global intellectual property law, the market sys-tem, human rights, and health equity.

The extent of the HIV/AIDS problem is staggering. Inthe last two decades, over 30 million people have died ofHIV/AIDS. According to a 2005 UNAIDS report, an es-timated 40.3 million people are now living with HIV,with close to five million people becoming infected withthe virus in 2005. Sub-Saharan Africa remains hardest-hit,and is now home to approximately 25.8 million peoplewith HIV, almost one million more than in 2003. In fact,two-thirds of all people with HIV live in sub-Saharan

Africa, where an estimated 2.4 million people died ofHIV-related illnesses in 2005. Outside Africa, theCaribbean (Haiti particularly), India, Russia, and Chinahave the highest infection rates, and the epidemic is grow-ing in Central Asia, East Asia, and Eastern Europe, wherethe number of people with HIV has increased by onequarter since 2003.68

In Africa, socioeconomic factors and cultural traditionscontribute to the spread and impact of AIDS, includingthe poor social status of women, widespread poverty, thecollapse of public health systems, unemployment, rapidurbanization, wars, and the displacement of populationsdue to war and famine. It is not easy to quantify the eco-nomic impact of HIV/AIDS in African countries becausethe disease affects all sectors of the economy.69 When theAIDS epidemic hit the worst-affected countries in theearly 1980s, they were already struggling with develop-ment challenges, including debt and declining trade. ButHIV/AIDS made a bad situation infinitely worse. In-creased mortality has reduced the labor supply, and longperiods of AIDS-related illness have reduced productivityin almost every sector.

Government income in affected countries has declinedbecause of negative economic growth. Available estimatessuggest that HIV/AIDS has reduced the rate of growth ofAfrica’s per capita income by 0.7 percentage points a yearand that, for those African countries affected by malaria,growth was further lowered by 0.3 percentage points peryear.70 HIV/AIDS is also reversing important develop-ment gains at the very moment that governments need toincrease their spending in the health care sector to dealwith the disease, creating a financial and development cri-sis in the most affected countries. And the costs are notonly financial in nature, but also social and psychological,with HIV/AIDS having a devastating effect on the socialfabric of the affected countries.71

With proper administration, drugs can greatly prolongthe lifespan of people with HIV/AIDS and reduce mor-bidity. The most beneficial drugs currently on the marketare antiretrovirals (ARVs), which limit the damage thatHIV does to the immune system and can prevent mother-to-child transmission.72 These are the most critical drugs

because they reduce the viral load in the bloodstream tonearly undetectable levels and reduce opportunistic infec-tions. In effect, they transform HIV/AIDS into a chronicinfection requiring mostly outpatient care.73 A combina-tion or “cocktail” of antiretroviral drugs has thus farproven most effective. Anti-infective agents to treat or pre-vent opportunistic infections and palliative drugs to re-lieve physical and mental discomfort are also important,and most of them are available as affordable, genericdrugs. All ARV medicines, on the other hand, are current-ly under patent in developed countries (although patentson three of the drugs will expire in 2006).74 Currently, lessthan 5 percent of people in developing countries whoneed ARVs have access to them—and in sub-SaharanAfrica, only about 1 percent have access. In North Ameri-ca and Western and Central Europe, a large majority ofpeople who need antiretroviral treatment have access to it.As a result, AIDS deaths have stayed low since plummet-ing in the mid-to-late 1990s.75 The role of patents in cre-ating these access problems is by no means uniform, but asthe following case shows, patent holders have legal rights


Until better evidence of the actual impact of patents onresearch exists, and in light of the potential for patent infringement lawsuits, the risk that patents may slow or prevent research ought to be taken seriously.

III. Patents in the Treatment Context: Access to HIV/AIDS Drugs


that they can use to prevent the production of cheapdrugs.

Patents, Profits, and Patients: The Case ofSouth Africa

In 1998, in what can only be called a disastrous publicrelations move, the pharmaceutical industry sought to

prevent the government of South Africa from invoking alaw intended to make essential medicines more affordable.Of particular concern were medicines for HIV/AIDS. Atthe time, over 4.5 million people in South Africa were in-fected with HIV/AIDS—the highest rate of HIV preva-lence in the world—and thousands were dying each year.

The law sought, among other things, to allow genericsubstitution of patented brand-name drugs, promotecompetition in public drug procurement, improve drugquality, and make use of medicines more rational.76 In itspleadings, the Pharmaceutical Manufacturers Association,representing thirty-nine pharmaceutical companies, ar-gued that the law violated its members’ property rights asguaranteed in the South African Constitution. The PMAalso challenged the legality of the law’s provisions regard-ing parallel importing and the discretion granted to theMinister of Health to grant compulsory licenses.

Internationally, supporters of the pharmaceutical in-dustry argued that the actions of the South African gov-ernment threatened the international patent regime en-shrined in the multinational TRIPS agreement, and theysought to turn South Africa into a pariah state.77 Initiallythis lobbying had some success, particularly in the UnitedStates, which placed South Africa on a U.S. Trade Repre-sentative watch list. A year later, however, South Africawas removed from the list as a result of pressure from anorganized and global human rights campaign. Activistsaround the world pressured PMA to withdraw its claim byholding demonstrations and circulating petitions, includ-ing one signed by three hundred thousand individuals andone hundred forty groups from one hundred thirty na-tions.78 By crafting their campaign as one of “patents andprofits over poor African patients,” international humanrights activists were extremely successful in garnering sup-port from the public and bringing the world’s attention tothe plight of impoverished Africans living withHIV/AIDS. In the midst of these global protests, majordrug companies such as Merck cut drug prices in an effortto recoup some public support, blunt the offers frommanufacturers of generic drugs, and stave off growingpublic discontent about patents on medicines.

Eventually PMA’s case against the South African gov-ernment became a major embarrassment for the pharma-ceutical industry. In April 2001, three years after the casewas filed, the drug companies withdrew it. The SouthAfrican Minister of Health expressed his country’s posi-tion this way: “We regard today’s settlement as a victory inthe sense that it restores to us the power to pursue policies

that we believe are critical to securing medicines at afford-able rates and exercising wise control over them.”79 Thegovernment was thereafter free to implement its law andto import cheaper anti-AIDS drugs than those made andsold by international drug companies operating withinSouth Africa.

The South African case brought increased internation-al scrutiny to drug pricing practices in poor countries.Even though many drug companies initially argued thathigh prices for HIV/AIDS drugs were financially neces-sary, a good number begun to lower their prices signifi-cantly in the face of fierce criticism from people livingwith HIV/AIDS, civil society organizations, and interna-tional human rights organizations. Since then, prices forAIDS drugs have dropped drastically in African coun-tries—from approximately ten thousand dollars to lessthan two hundred dollars per patient per year. Offers bygeneric drug producers to provide cheap AIDS drugs havealso pressured drug companies to reduce their prices.

Beyond these actions taken by pharmaceutical compa-nies and generic drug producers to lower drug prices, theTRIPS agreement provided flexibilities for poor countriesto increase access to essential drugs, including ARVs. Acloser look at the specific TRIPS provisions is essential tounderstanding how these flexibilities play out in reality.80

Clarifying the TRIPS Agreement: The DohaDeclaration

There have been several difficulties in implementingthe TRIPS agreement in the treatment context. Part

of the problem lies in the interpretation of specific provi-sions intended to enable access to essential drugs, leadingto further World Trade Organization council and ministe-rial meetings to clarify the language and the intention ofthe provisions. There have also been practical challenges,particularly for developing countries trying to utilize theagreement’s flexibilities.

At the request of an alliance of African countries, theTRIPS council held two meetings in 2001 in Doha,Qatar, to discuss patents and access to essential drugs. De-liberations at these meetings centered on the objectivesand principles of the TRIPS agreement (articles 7 & 8),the permissibility of parallel imports (article 6), and theuse of compulsory licenses (article 31). A declaration wasadopted that explicitly laid out the relationship betweenthe TRIPS agreement and public health; it recognized the“gravity of the public health problems affecting many de-veloping and least-developed countries, especially those re-sulting from HIV/AIDS, tuberculosis, malaria and otherepidemics,” and acknowledged that intellectual propertyprotection can affect drug pricing. Perhaps most impor-tantly, the Doha declaration confirmed that “the TRIPSAgreement does not, and should not prevent membersfrom taking measures to protect public health.”81


Ordre public and commercial exploitation: Exceptionsin patent law are permissible to prevent abusive commer-cial exploitation and to protect ordre public, morality, andhuman life or health. There is no universally accepted de-finition of ordre public; member countries have flexibilityto interpret the exception in line with their social and cul-tural values. Arguably, however, ordre public is not limitedto national security but extends to the protection ofhuman, animal, or plant life or health and may be appliedto inventions that may lead to serious prejudice to the en-vironment.82

Compulsory licensing: Compulsory licenses can be is-sued by governments for patented inventions if a proposeduser has not succeeded, within a reasonable period oftime, in negotiating a license directly with the patentholder.83 Under the TRIPS agreement, the following con-ditions, among others, must be fulfilled before a compul-sory license can be issued:84

• The grantee must first have made efforts, for a reason-able time, to negotiate authorization from the rightholder “on reasonable commercial terms and condi-tions.” Governments may dispense with this require-ment in a “national emergency or other circumstances ofextreme urgency or in the cases of public non-commer-cial use.”

• The use authorized by the compulsory license must be“predominantly for the supply of the domestic market.”

• Adequate remuneration must be paid to the patentholder.

The Doha declaration, while including a number ofprocedural conditions for granting compulsory licenses,made it clear that the TRIPS agreement does not limit thegrounds on which compulsory licenses can be granted,and members have the right to stipulate such grounds intheir own domestic laws.85 It further reiterated the right ofstates “to determine what constitutes a national emergencyor other circumstances of extreme urgency, it being un-derstood that public health crises, including those relatingto HIV/AIDS, tuberculosis, malaria and other epidemics,can represent a national emergency or other circumstancesof extreme urgency.”86

Despite this positive development, the spirit of theDoha declaration in affirming the right to grant compul-sory licenses is tempered by the reality that, as prices areforced down by compulsory licenses in developing coun-tries, drug companies’ incentives to develop products forthose markets are further weakened. This may occur in aresearch and development environment that already doeslittle to establish products exclusively for developing worldmarkets.87

Parallel importing and other TRIPS issues: The Dohadeclaration reaffirms that member states may adopt legis-lation to allow parallel imports without the consent of thepatent holder. It also exempts “least-developed countries”(as defined by the WTO) from providing patent protec-tion to pharmaceutical products until January 1, 2016.Before this deadline, least-developed countries are free toincrease their own capacity to manufacture generic drugsand to import cheap drugs from other member states.88

Brazil and China both implemented laws recognizingproduct patents earlier than India, which meant that Indiawas one of only a few countries that could legally producegeneric versions of drugs patented after 1995. Neverthe-less, India eventually had to become TRIPS compliant,and it created a system to accept patent applications forpharmaceutical products between 1995 and 2005.89 For-tunately, all of the first-line ARVs were patented prior to1995, and therefore the TRIPS agreement will not affectthe generic production of these drugs in India; they can beused domestically and exported.90 However, new drugscan be patented.

Finally, the Doha declaration urged developed nationsto implement their TRIPS obligation to facilitate thetransfer of technology to least-developed countries by pro-viding incentives to local enterprises and institutes to pro-mote such transfer.91

Manufacturing ability: The TRIPS agreement autho-rizes compulsory licenses predominantly for supply of do-mestic markets. Unfortunately, very few developing coun-tries have well-established generic drug manufacturing in-dustries, with the notable exceptions of India, which pro-vides roughly 67 percent of pharmaceuticals for develop-ing countries, and Brazil. The lack of manufacturing abil-ity within developing countries was the unresolved issue at

In what can only be called a disastrous public relations move, the pharmaceutical industry sought to prevent the government of South Africa from invoking a law intendedto make essential medicines more affordable. Of particular concern were medicines for HIV/AIDS.


the Doha conference, although it was clear that “memberswith insufficient or no manufacturing capacities in thepharmaceutical sector could face difficulties in making ef-fective use of compulsory licensing under the TRIPSAgreement.”92 The ministers consequently requested thatthe TRIPS council find an “expeditious solution” to theproblem.

Part of the problem was that developing countrieswanted to import generic drugs produced in a third-partycountry under a compulsory license, but the third-partycountry’s ability to export those generic drugs was limitedby article 31(f ), which requires that production undercompulsory licenses be “predominantly for the supply ofthe domestic market.” The term “predominantly” was notexplicitly defined in the TRIPS agreement, but has gener-ally been taken to mean that more than 50 percent ofdrugs produced under compulsory licenses should be in-tended for domestic consumption.93

In August 2003, this problem was resolved—albeitcontroversially and only after long rounds of negotiationsand compromise—by a decision adopted by the WTO’sgeneral council. The decision is laden with administrativedetails and procedural requirements, but the core effect isto provide a waiver to the “predominantly for the domes-tic market” limitation. Any country with manufacturingcapacity can now issue a compulsory license to producegeneric drugs for export to countries that have insufficientor no manufacturing capacity, at least if various conditionsare met.94

Under the 2003 decision, importing countries can beleast-developed countries, which are eligible to importwithout formal notification to the WTO, or any countrythat has committed to using these compulsory licensesonly in situations of national emergency or extreme ur-gency (such countries have agreed not to use the system tolower the general cost of purchasing medicine for publichealth care).95 All importing countries are required to take“reasonable measures within their means, proportionate totheir administrative capacities and to the risk of trade di-version,” to prevent the reexport of the products they im-port,96 a limitation that attempts to curb pharmaceuticalarbitrage. Where a compulsory license is issued to serve anexport market (as opposed to serving the domestic mar-ket), the exporting country, not the importing country,must pay compensation to the patent holder.

The decision also allows a recognized Regional TradeArea to be categorized as a single market under the TRIPSagreement provided 50 percent of its members are least-developed countries. An RTA is required to institute mea-sures to safeguard against the risk of reexporting medicinesdestined for circulation in the RTA to prevent medicinesdestined for poor countries from being exported to devel-oped countries. The advantage of an RTA is that it is alarger market than a single country and can therefore se-cure lower prices by purchasing in bulk.97

There is little consensus on the practical effectiveness ofthe 2003 decision. Some believe that it shows that theWTO can handle humanitarian concerns alongside globaltrade issues, while others, mainly nongovernmental orga-nizations, argue that the decision is so complex and rid-dled with restrictions, safeguards, practical hurdles, andred tape that it is unworkable.98 How the decision will af-fect developing countries that rely on cheap Indian gener-

ic drugs is not clear. Efforts by poor countries to importgeneric drugs from India under the TRIPS provisions willdepend almost entirely on the willingness of the Indiangovernment to grant compulsory licenses and of Indianpharmaceutical companies to produce them.99 Also, afterIndia becomes TRIPS compliant, Indian pharmaceuticalcompanies will have to license patented pharmaceuticalproducts, and this may result in higher drug prices and in-ternal competition among Indian drug companies; per-haps more importantly, the larger Indian companies willhave to become innovator companies, developing theirown research and development expertise in order to com-pete globally.

Political and Administrative Obstacles toImplementing the TRIPS Agreement

One of the issues that became clear during the lawsuitagainst South Africa was that many developing

countries lack the technical skills to implement the provi-sions in the TRIPS agreement. The agreement and its ac-companying declarations and decisions are exceedinglydense, and the interpretation requires considerable legalsophistication. Although there have been some efforts atbuilding expertise and technical capacity among senior of-ficials in the relevant ministries of developing countries,much more needs to be done for countries to gain the ob-

Many developing countries lack the technical skills to implement the provisions in the TRIPS agreement. The agreement and itsaccompanying declarations and decisions are exceedingly dense, and the interpretation requires considerablelegal sophistication.


jective technical expertise to take advantage of TRIPS’sflexibilities.

Also, developing countries themselves have to actstrategically in order to make greater use of the TRIPSflexibilities. Policies to optimize TRIPS require an invest-ment in human capital, an ability to attract capital, appro-priate technology infrastructure, public support for tech-nical progress and advanced scientific education programs,strong regulatory policies, and streamlined procurementpolicies.100 Because TRIPS affects health, trade, law, andother administrative sectors, countries need to set up in-tergovernmental coordinating structures. At a minimum,working with TRIPS requires a certain amount of synergyand understanding among different sectors to devise effi-cient strategies for increasing access to essential drugs. De-veloping countries also need to show more of a politicalcommitment by removing high-import tariffs for ARVsand essential medicine, particularly for donated drugs.101

Technical expertise is necessary but not sufficient. Asobserved in countries like South Africa and Brazil, at-tempts to exercise TRIPS flexibilities have met with pres-sure from pharmaceutical companies and the threat ofeconomic sanctions from powerful WTO member coun-tries.102 The United States, for instance, has alreadybrought India and Brazil before the WTO in its efforts toseek stronger national patent laws and compliance withTRIPS. In another example, Thailand amended its PatentAct of 1979 to allow compulsory licensing and parallel im-porting in 1992. When Thailand began to produce ageneric version of the HIV drug didanosine, an action thatconflicted with U.S. interests, the United States—Thai-land’s biggest export market—threatened trade sanctionsagainst Thailand. Under heavy pressure, Thailand stoppedproducing the drug and amended its laws to remove theclauses allowing for parallel importing and to limit com-pulsory licensing.103 These threats have frustrated the ef-forts of developing countries to adopt national legislationthat provides for compulsory licensing, parallel importingclauses, and other options in a manner most conducive forthe health, economic, and development needs of theirpeople.

Finally, although the TRIPS agreement lays out theminimum standards of intellectual protection required,there has been an increase in “TRIPS-Plus Free Trade

Agreements,” which undercut the flexibilities availableunder TRIPS. Some FTAs require that patent life be ex-tended beyond the twenty-year TRIPS minimum, limitcompulsory licensing, or limit the exception allowing forprompt importation of generics.104 FTAs between theUnited States and Singapore and between the UnitedStates and Chile, for instance, set out higher standards ofprotection and enforcement for intellectual property in re-turn for trade benefits.105 TRIPS-plus clauses are also in-cluded in the controversial Free Trade Agreement of theAmericas proposal.106

Data Protection and Exclusive Marketing Rights

As a condition for registering pharmaceutical products,national authorities normally require registrants to

submit data related to drugs’ quality, safety, and efficacy, aswell as information on the composition and the physicaland chemical characteristics of the product.107 Whengeneric versions of a branded product are presented forregistration, most regulatory authorities issue approvalsbased on the data provided by the original company, re-quiring only bioequivalence tests of the generic version.The TRIPS agreement obliges WTO members to treatsuch test data as a component of intellectual property. Therationale is that this rule permits the entity that generatedthe data to recover its costs, much as patents permit recov-ery of research and development investments. Protectingthe data, it is assumed, provides private drug companieswith the incentive to expend the considerable costs need-ed to produce it (although marketing approval, itself an in-centive, often depends on the data).108

According to Carlos Correa, an expert on TRIPS, dataprotection rules under TRIPS are potentially problematicfor those developing countries that until recently did notprovide patent protection for drugs (and to those stillunder the transitional periods of the TRIPS agreement).In these countries, there is a large pool of unpatentedpharmaceutical products. If they provided exclusivity, dataprotection systems could become a partial substitute forpatent protection in these cases, and they could in practicenullify the transitional periods granted to developingcountries.109


Historically, patents have been considered a bar-gain between the individual inventor and societyas a whole: in exchange for disclosing his or her

invention to the public, the inventor is given a time-limited right to control who makes use of that inven-tion.110 One justification for the time-limited right (thepatent) is that it recognizes the inventor’s reasonable claimthat he or she has the “right” to profit from his or her cre-ative labor. That the patent right is classified as a kind ofproperty right significantly strengthens its legal standing.Indeed, E. Richard Gold and colleagues have argued thatthis classification has ethical consequences “because of asystematic bias in which property rights tend to trump allbut the most compelling competing rights, includinghuman rights.”111

Thus one can subject patents to a kind of rights-basedanalysis, where the impact of patent rights on other rights,including human rights, is considered. As describedabove, patents may in certain circumstances have an im-pact on health by affecting the price and availability oftreatments and the progress of biomedical research. Al-though there has been some debate about whether healthis a human right, the U.N. and WHO recognize it as afundamental human right necessary for human flourish-ing and as pivotal for the exercise of other humanrights.112 A right to health is also supported by the philo-sophical principle of equality because without minimumlevels of health, it can be argued, persons cannot mean-ingfully strive for equality.

When the promise of a patent encourages the creationof new treatments and technologies that improve health,patent rights may be compatible with health and equali-ty—in fact, patent rights arguably even promote healthand equality. On the other hand, once a technology ortreatment exists, patent rights may be a major reason whythose who need it can’t afford it. That is, patent rights maythen act as a barrier to improved health and improvedequality, begging the question whether in such situationsthey ought to nevertheless trump those concerns. Once anew vaccine or drug or device exists, concern often shiftsfrom providing incentives for the development of the in-novation to ensuring that the innovation reaches those inneed—at which stage the presence of patent rights canconstrain access, depending on how they are exercised.

The bargain between disclosure and time-limitedrights to control is also frequently justified on consequen-tialist grounds.113 Here the claim is that the promise ofwhat may effectively be a short-term legal monopoly helpsencourage innovation and attract the investment neces-sary “for large and expensive steps in scientific and tech-nological research.”114 An additional positive consequencethat flows from issuing a patent is that a detailed descrip-tion of the invention becomes part of the public record,

thereby advancing communal knowledge and providingthe basis for improving it or incorporating it into new in-ventions.

Insofar as patents are justified on the basis of their ex-pected positive consequences, they would appear unjusti-fiable if these intended positive outcomes do not result orif overall they generate more harm than good. Thus muchresearch has sought to measure the impact of patents onthe stated goal of innovation. But whether patents are nec-essary or sufficient to encourage innovation in biomedi-cine has proven difficult to measure.115 There are examplesof countries that lack patent systems, or where patents arenot available on particular kinds of biomedical invention.For example, until recently India would not issue patentson pharmaceuticals. History also contains examples ofdiscoveries or inventions that were not patented, includ-ing by agreement of multiple inventors, as was the casewhen many single nucleotide polymorphisms (SNPs)were placed in the public domain by members of the SNPConsortium.116 Yet scholars caution against drawingsweeping conclusions from these specific examples aboutthe impact of an absence of patents on biomedical inno-vation generally.117 There may be many reasons why thegeneric industry rather than original drug innovationflourished in India, and there may be many reasons whySNP research was able to progress without patents as anincentive or investment tool. Most likely, the impact ofpatents on innovation is mixed and highly dependent onother factors (including the presence of other incentives toinnovate and other mechanisms to ensure affordability).Patents probably encourage biomedical innovation undercertain circumstances (such as when the market is strongenough that the costs of developing, manufacturing, anddistributing the product can be recovered), but they can-not reliably do so when many patented inventions arenecessary for research to progress (especially if some ofthese are difficult to license) or when no reasonable mar-ket exists for any eventual product.

In addition to their impact on innovation, patents’ im-pact on other social goods is also measured. Dependingon one’s philosophical framework, these “other socialgoods” might be understood as utilitarian goals or asrights. If we employ a utilitarian understanding and agreethat the goals of law and policy are to improve the overallwell-being of individuals and society as a whole, then theprospect that patents might lead to high prices and re-fusals of access to important medical innovations must beconsidered potentially problematic. The possibility ofsome harms would be acceptable, however, if they weregenerally outweighed by benefits.

One understanding of the patent system assumes thatthe benefits outweigh the harms. The U.K. Commissionon Intellectual Property Rights makes this explicit:

IV. Proposals for Change: Improving Access and Encouraging Innovation

The assumption is that in the longer run, consumerswill be better off, in spite of the higher costs conferredby monopoly pricing, because the short term losses toconsumers are more than offset by the value to them ofthe new inventions created through additional R&D.118

Yet as we have seen in biomedicine, the assumption thatthe patent system will yield a positive result even overall ifsome restrictions on access occur along the way is some-times contested. To be clear: patents are not guaranteed tocause harms—much depends on the patenting and licens-ing practices of patent holders, the legal and political en-vironment, and the wealth of the individual, institution,or jurisdiction in question. Moreover, even in the absenceof patents, many problems persist. Yet in particular cases,

the “short term losses” to which patents contribute can beserious, and in the context of individual human lives andparticular research projects, those losses may not evenseem to be short term.

Regardless of whether one sees patents as propertyrights “owed” to inventors or as a policy tool designed toencourage biomedical innovation and reward manufac-ture and distribution, at the very least one must acknowl-edge the possibility that property rights may clash withmore important or fundamental rights, and that patentsmay fail to achieve their social goals. That is, we must seethat the patent system does not guarantee that all neededinnovation will occur, or that eventual innovations will beavailable to all those who need them to attain reasonablestandards of health and well-being. One radical responseto this possibility is to abolish the patent system altogeth-er or to put all health-related inventions outside its reach.But this solution is unlikely to be adopted by any na-tion—in fact, the WTO has successfully persuaded coun-tries to extend patent protection under the TRIPS agree-ment. A more moderate, realistic response maintains apatent system for biomedical inventions and supplementsit with laws, policies, and practices designed to ease anypatent-related access problems and to offer additional in-centives to innovate where patents alone do not suffice.

Indeed, a number of measures have been proposed thatessentially amount to this kind of “tinkering” with howand when patent rights are used in practice and in policy.Some of these measures are laws and treaties, like theTRIPS agreement, that require nations, organizations, or

individuals to act in a certain way. Others rely on volun-tary action.

Proposals to Improve Access and FacilitateInnovation

The proposals discussed below represent good faith ef-forts to avoid patents’ harmful effects or to supple-

ment their incentives for innovation. Some proposals seekchanges in the law, while others seek policy changes orchanges in practice. Not all these proposals will be adopt-ed by all nations, organizations, or individuals, nor arethey equally likely to succeed in their aims. Nevertheless,an awareness of these laws, policies, and practices, coupledwith an expectation that the consequences for health will

be a priority for those in both public and private sectors,can go a long way toward facilitating important researchand freeing up access to existing treatments.

Encouraging Innovation

The Medical Research and Development Treaty. Thebasic premise underlying the MRDT is that we needmore than the patent system’s promise of highly profitablesales to spur pharmaceutical research and development.119

The MRDT would establish a new framework for fund-ing research for neglected diseases and act as a supplementto incentives offered by the patent system. It seeks to:

Create a new global framework for supporting medicalresearch and development that is based upon equitablesharing of the costs of research and development, incen-tives to invest in useful research and development in theareas of need and public interest, and which recognizeshuman rights and the goal of all sharing in the benefitsof scientific advancements.120

Nations that sign the MRDT would shoulder an obliga-tion to fund research in areas chosen by the treaty’s gov-erning body. Research funds would represent a percentageof gross national product, with other funds coming frommarket transactions such as purchases of medicine, phil-anthropic contributions, payment of royalties to patentholders, tax credits, innovation prizes, investments incompetitive research mediators, and research and develop-ment obligations.121 The treaty would also adopt mecha-


When the promise of a patent encourages the creation of new treatments and technologies that improve health, patent rights may be compatible with health and equality. Once that treatment or technology exists, patent rights might help make it unaffordable.


nisms to limit patents on inventions developed throughpublicly funded research efforts.

The MRDT is an ambitious global effort aimed at clos-ing the unacceptable research gap that currently exists be-tween treatments aimed primarily at people who live inpoor countries and those aimed mainly at people in devel-oped nations. Much of the proposal assumes that govern-ment coordination of research and development will befairer and more efficient than the current market system.There is, however, still no consensus on this question, andno hard evidence that this solution would work. In addi-tion, given the vast social, political, and economic differ-ences between the various signatory countries, building aconsensus around the issues in the treaty will be difficult.A committee of eighteen experts is expected to meet twicea year to evaluate targets for priority research, make rec-ommendations, and improve access to knowledge, tech-nology, and other products. However, what criteria thiscommittee will use in reaching consensus is not clear.

Finally, while the broad goals of the MRDT are impor-tant and necessary, much groundwork must be done tobuild the political buy-in needed to fulfill its essential ele-ments. Several governments in developing countries havecompletely failed to give priority to their health care sys-tems; they spend far more of their budgets on defense andother sectors.122 If developing countries spent more moneystrengthening their health care systems, this would im-prove the health of their citizenry both immediately and inthe long term.123 While these countries may not hesitate tosign such a treaty, it will be important for them to followthrough, adhere to its terms, and meet their obligations,including providing a percentage of their country’s grossnational product to research, to ensure a sustainable sourceof income for the goals that the treaty lays out.

Advance purchase commitments. To deal specificallywith the problem of few incentives in vaccine research,some analysts have proposed that governments, founda-tions, or international consortia make an advance com-mitment to purchase a certain quantity of vaccines at acertain price.124 Such a commitment could take the formof a contract or binding agreement to buy from a prospec-tive vaccine developer any new vaccine that meets speci-fied criteria, including Food and Drug Administration ap-proval.125 Those sponsoring the deal could then pledge tomake the vaccine available to poor countries at muchlower prices.

The advance purchase commitment, which could beapplied to vaccines and other target treatments, wouldprovide a strong financial incentive to focus research anddevelopment in particular target areas that might other-wise not be financially attractive.126 Critics of the proposalhave argued that advance purchase commitments favorlarge pharmaceutical companies over small companies andnonprofit organizations.127

Prizes for innovation. Prizes have been used since theearly nineteenth century as an alternative to patents andgovernment subsidies for providing an incentive to inno-vate. Oft-cited examples include Napoleon Bonaparte’soffer of a prize to anyone who could find better ways tofeed his troops, leading to the development of food can-ning, and the French government’s prize for food preser-vation, leading to the discovery of how to prevent spoilagein glass bottles.128 Prizes reward inventors only if theirwork succeeds, and they can spur only specific kinds of in-novation—namely, innovation for which the desired out-come can be identified ahead of time.129

Economist Michael Kremer and others have proposedprizes for pharmaceutical research on diseases that primar-ily affect the developing world. Kremer argues that suchresearch could be encouraged by a public precommitmentto buy desired innovations at a price that reflects their es-timated social value.130 Prizes would essentially be pay-ments to innovators for the public’s gains from their tech-nology.

One of the challenges of this proposal is determininghow large the prize ought to be. Historically, “prizes andrewards have been a small fraction of the social value of in-novations.”131 Kremer suggests a “patent buy-out” mecha-nism in which a prize amount is determined by the priceat which firms would be willing to purchase the patent ifit were for sale.132 A prize system that produces patentbuy-outs would ideally place those patents in the publicdomain. Others have suggested that there should be a sys-tem of optional patent rewards under which governmentscould offer prizes greater than the patentee’s monopolyprofits, but smaller than the social value of the innova-tion.133 Still others argue that governments should awardprizes based on the profits obtained by a product in a testmarket.134

Prizes are a viable alternative to patents in limited cir-cumstances; however, there is not much consensus eitheron how research prize systems should work or on how orwhich international, government, or private agenciesshould administer the prize programs.135 How the signifi-cant costs associated with the administration of prizeswould be met in global, multi-institution research is alsonot clear.

The U.S. Congress is currently considering a researchprize model. The U.S. Medical Innovation Prize Fundproposes allocating 0.5 percent of U.S. gross domesticproduct for rewarding innovative medical research. Underthis program, a “winning” drug that receives approvalfrom the FDA immediately becomes a generic, and the in-novator is rewarded from the prize fund (spread out overthe first ten years of the medicine’s use) rather than by re-couping costs through drug sales. The amount of prizemoney is linked to the relative therapeutic benefit of thenew drug. Thus drugs for diseases that affect the poor pri-marily receive higher rewards, while “me-too” drugs withlittle new therapeutic benefit would be of lower priority.136


The political philosopher Thomas Pogge has also de-veloped a scheme of rewards under which inventorswould have the option to forego the conventional patentfor essential drugs and claim instead an alternative multi-year patent that would reward them out of public fundingin proportion to the health impact of their invention.137

Pogge argues that this alternative approach would spurdrug development for neglected diseases that primarily af-fect the poor by providing financial incentives for drugcompanies to develop cost-effective interventions, sincethe reward would be contingent on the impact of their in-ventions in those markets rather than on the price theycould charge. He proposes that such a plan would actual-ly provide incentives for drug companies to sell theirproducts cheaply, even below the production cost, so as toachieve health improvements among the very poor. Theplan would allow the results of any successful effort to de-velop essential drugs to be provided freely, even to drug

companies, as a public good. Pogge argues that this wouldallow for competition among manufacturing firms, andthis would drive down the prices of drugs globally.

The proposal’s feasibility depends, of course, on thedetails, and these are still being worked out. Pogge con-cedes that the bulk of the funding for such a plan wouldhave to come from the governments of rich countries, andthe arguments justifying his approach would have to bepersuasive from political, economic, and moral perspec-tives to gain any sort of traction.

Still others have proposed “pull mechanisms” underwhich vouchers are awarded for creating and licensingdrugs that treat neglected diseases. To receive a “priority-review” voucher, the therapy would have to treat neglect-ed diseases, receive approval by the FDA or EuropeanAgency for the Evaluation of Medicinal Products, be clin-ically superior to existing treatments, forgo patent rights,and find at least one manufacturer for the product. Theawarded transferable voucher would entitle the bearer toorphan drug tax credits and priority review for anotherdrug.138

Lowering the Price of Patented Treatments

Local manufacture. A proposed solution to the costissue is to manufacture drugs and devices locally. Yet asWarren Kaplan and Richard Laing have argued, although

local drug production in developing countries might ap-pear to stimulate industrial policy and improve access,local manufacture of drugs might do little to ease access ifthe developing country has to purchase the raw materials(commonly referred to as “active pharmaceutical ingredi-ents,” or APIs) from developed countries at high costs.139

In the case of drugs to treat HIV/AIDS, producing APIsis expensive and requires a high level of expertise, andonly a few companies do it. Since small or poor countriescannot produce their own APIs, they must compete withlarge pharmaceutical companies for them in the mar-ket.140 They therefore must continue to import drugs andother treatment supplies that may be priced outside theirreach.

Potential local manufacturers face several other prob-lems, including a shortage of skilled labor, lack of PhD-level scientists, unreliable and excessively high-priced util-ities, a weak financial sector, inflation, corruption, and

weak legal, regulatory, and enforcement mechanisms,among others.141 These obstacles may greatly increase thecost of production. In fact, as Kaplan and Laing persua-sively argue, it makes little economic sense for many de-veloping countries to begin local production becauseeconomies of scale may be lost with the proliferation ofproduction facilities.142

Differential pricing. Another proposed solution to thecost issue is to price the same treatment differently in dif-ferent countries. The classic theory of differential pricing(sometimes referred to as discriminatory pricing, tieredpricing, or equity pricing) is that “it is necessary to recov-er a substantial block of fixed costs (e.g. for research anddevelopment), by setting prices in a diversity of marketswith differing demand elasticities.”143 Differential drugpricing is a common practice in pharmaceutical markets.With the support of legal institutions, drug companies di-vide their markets along political and economic bound-aries, offering price breaks to disadvantaged populations.GlaxoSmithKline’s best-selling combination ARV drugCombivir, for instance, costs approximately $7,215 peryear in the United States, whereas in sub-Saharan Africa,the drugs is sold to health agencies for $329 per year. It isnot clear either here or in other cases what the true mar-ginal manufacturing costs of patented drugs are—that in-formation is hardly ever made public.144

One proposed solution to the cost issue is to price the same treatment differently in different countries. Where it is technically feasible, this approach is ethical and economically sound and, applied along with other strategies, should greatly improve access to drugs in poor countries.


Several mechanisms designed to induce differentialpricing in developing countries have been put forward bydrug manufacturers, including voluntary price discountsand drug donations. Differences in price may also be dueto diverse systems of government regulation and interven-tion, including government and institutional price con-trols and domestic IP legislation.145

In the last decade there has been a sharp reduction inprices of HIV/AIDS drugs due to a variety of factors, in-cluding pressure from civil society (see the case againstNelson Mandela and the government of South Africa). InBrazil, threats of compulsory licensing have also led to areduction in prices of ARV drugs for the Brazilian mar-kets. Many pharmaceutical companies also have policiesthat specify which countries qualify for differential pricingfor certain drugs. Unfortunately, in most voluntary differ-ential pricing programs drugs are still more expensive thangenerics and are thus out of reach for many in developingcountries.146

One of the prime concerns drug companies have aboutdifferential pricing is “pharmaceutical arbitrage”—that is, the seepage of cheap drugs from poorer markets to rich markets. And over time, arbitrage erodes price-differentiated markets, moving all drug prices toward anequilibrium.147 There are several ways to prevent this seep-age, however. Examples include contracts that simply for-bid arbitrage (with arrangements for compliance), productdifferentiation supported by trademarks, and the creationof appropriate regulatory structures.

Despite the potential for arbitrage, differential pricingschemes for drugs in developing countries are growing inpopularity. The European Commission, for example, re-cently stated that differential pricing is the “principalmeans of rendering essential medicines affordable . . . tothe poorest populations.”148 The United Kingdom like-wise supports a widespread commitment to differentialpricing, as long as diversion of drugs to the EU markets isprevented through appropriate legislation and enforce-ment mechanisms.149 Provided that differential pricing istechnically feasible, it is ethical and economically soundand, when applied along with other possible solutions,should greatly improve access to drugs in poor countries.One way to ensure that differential pricing is at least con-sidered is to make it a condition of research funding or in-clude it as a condition in licensing agreements (see below).

Bulk and pooled purchasing. Another way of reducingthe price of patented and unpatented treatments isthrough bulk purchasing, which can be used to leveragesubstantially reduced prices locally, regionally, and inter-nationally. There are currently several international bulkpurchasing initiatives for contraceptives, vaccines, tuber-culosis drugs, and first-line ARVs. Organizations such asthe Global Fund, Doctors Without Borders, The ClintonFoundation’s HIV/AIDS Initiative, and the World HealthOrganization help developing countries secure lower

prices by aggregating demand (that is, combining mar-kets) and by obtaining advance purchase commitmentsthat are credible, sufficiently financed, and that stipulateeligibility requirements and marketing exclusivity arrange-ments.150

Bulk purchasing can have the effect of driving downdrug prices by improving economies of scale, increasingthe bargaining power of buyers, and reducing marketasymmetries by sharing information between disparatepurchasers. The Eastern Caribbean region has in recentyears greatly increased access to drugs through regionalbulk procurement and harmonization of essential medi-cine lists and regulatory systems. With the help of theClinton Foundation, countries in that region have negoti-ated favorable ARV procurement deals with generic drugproducers in India and South Africa, generating a savingsof more than 60 percent on price currently paid by theOrganization of Eastern Caribbean States.151

Limiting the Number of Patented BiomedicalInventions

Changes to patent law. Occasionally those worriedabout the effects of patenting call for changing nationalpatent law, or the application of that law, in order to limitwhat can be patented. Two possible approaches include re-vising (and tightening) the patentability criteria and ex-cluding certain inventions from patentability on moralgrounds.

Certainly jurisdictions should periodically review boththe laws that set out their patentability criteria and the op-eration of these laws. For example, new standards were re-leased by the USPTO in 2001 in response to criticism ofthe utility requirement.152 In addition, as described above,scholars have called for better implementation of the legalpatentability standards by U.S. patent examiners.153 Thismight be achieved through more funding for the patentoffice and availability of stronger opposition procedures.

We have already noted that a jurisdiction can excludesome inventions from patentability under the TRIPSagreement, and that Europe has denied patents on thisbasis. But while one ought to take seriously the moral ar-guments against patenting certain kinds of inventions—including those involving human biological materials—these arguments do not resonate with all people at alltimes. That is, such exclusions may not be universalizable,and their applicability in a given jurisdiction may need tobe revised and revisited on a regular basis as attitudeschange (both for and against the exclusion). Because juris-dictions have the option to craft patent law that takes ac-count of their moral concerns, and because moral con-cerns differ among as well as within cultures, morality-based exclusions ought to be respected and treated withsensitivity. Homogenous patent laws may facilitate inter-national trade, but such homogeneity should not be at theexpense of deeply held moral beliefs.


Changes to laws governing publicly funded research.Some legal reformers have called for restrictions onpatenting by inventors whose research was funded usingpublic monies (frequently academic researchers and theirinstitutions). Arti Rai and Rebecca Eisenberg, among oth-ers, have called for specific changes to U.S. law so thatfederal funders have the power to restrict grantees’ patent-ing and licensing activities (they can currently recom-mend certain practices but cannot make them a conditionof funding).154 This proposal seeks to reduce the discre-tion available to institutions as to how to handle their in-tellectual property. It is a direct response to the perceptionthat profit rather than the public good has been the goalof academic technology transfer—a perception some aca-demic technology transfer offices are seeking to change.

Electing not to patent. Patents are not international innature. They apply only in those jurisdictions in whichthey have been filed and awarded. Individuals or organi-zations can therefore elect not to patent an invention ordiscovery at all, thereby dedicating it to the public realm;or they can decide to patent it only in some jurisdictions.The former strategy should be considered where inven-tions or discoveries do not require any further develop-ment to be useful, such as research tools that are ready forapplication. A decision not to patent sometimes followsfrom an agreement between researchers working on relat-ed work to make their findings available to each other andthe public. Thus, for example, in the Human GenomeProject and the SNP Consortium, agreements not topatent findings were adopted in advance. One term forthis practice is “open source,” and it is an excellent way tomake a collection of related inventions widely available.But this strategy may not always be financially desirableor feasible.

Individual inventors and their employers can also electnot to patent inventions in specific countries, thus leavingthe market open in those jurisdictions for generic manu-facturers.155 This is a particularly attractive option for in-ventions used to treat diseases prevalent in both poor andrich countries. Revenue can be generated through patentsfiled in wealthy jurisdictions, leaving the invention patentfree in the other jurisdictions. As an additional incentive,inventors are saved the costs of filing for and maintainingpatents in multiple jurisdictions.

Companies that rely on revenue from inventions (eveninventions ready for use and requiring no further devel-opment) to fund ongoing research might not be able tosurvive if they elected not to patent such inventions. Thewisdom of not patenting will be a judgment, and we can-not ask companies to go bankrupt. But we can ask inven-tors and their employers to be honest with themselvesabout the reasons for patenting and the possible impact ofpatenting on more than profit.

Proposals to Make Patented Inventions MoreWidely Available

Legislating for a research exemption. A legislative op-tion targeted at making patented inventions freely avail-able for research would be to enact a research exemption.In the United States, there was some debate aboutwhether an exemption to patent infringement existed atcommon law if the unauthorized use was for academic re-search. However, the absence of such an exemption wasrecently made clear in a court case (the United States hasa specific statutory exemption for research leading to anFDA submission, but there is no general exemption foracademic research).156 The United States and other na-tions could choose to exact an exemption for specifickinds of research or research for specific purpose, al-though in the current biomedical research environment itmay be difficult to draw clean lines between nonprofitand for-profit research. As the judges in the U.S. casepointed out, research is often a commercial activity evenin academic institutions. Nevertheless, legislation creatingcircumscribed research exemptions remains an option fornations. Like any legislative reform of the patent system,it would need to be carefully thought out and would like-ly meet with considerable resistance. A similar effect canbe obtained by including circumscribed research exemp-tions as licensing terms (see below).

Licensing practices and strategies. Electing not topatent at all or to patent only in certain jurisdictions canhave an enormous impact on the availability of an inven-tion for further research or therapy. But since patent hold-ers may not always be able to clearly anticipate the enduse of an invention, they may elect to patent in order toencourage further commercial development of an “em-bryonic” invention. Nevertheless, once an invention or

Those funding biomedical research can require specific patenting and licensing practices as conditions of funding. The existing legal system makes possible a variety of licensing strategies that different players can adopt to improve access and encourage innovation.


discovery is patented, they can use sophisticated licensingstrategies to promote access and retain opportunities forresearch and development by organizations working inspecific countries or on specific disease targets.

Too frequently, licenses are categorized as either exclu-sive or nonexclusive, depending on whether the patentwas licensed to only one licensee or to many. But in lightof the range of licenses and licensing terms now available,“simple reports on exclusive and nonexclusive licensingmiss important nuances of licensing practice.”157 In recog-nition of the potential impact of decisions made by indi-vidual inventors and their employers, those funding bio-medical research can require specific patenting and licens-ing practices as conditions of funding. The existing legalsystem makes possible a variety of licensing strategies thatdifferent players can adopt to improve access and encour-age innovation.

A recent tussle involving Yale University illustratesboth the perils of not thinking things through and the op-portunity for great social good when certain licensingstrategies are employed, providing some hope that prac-tices can change in the face of protest and convincing ar-gument. Yale University is the patent holder for the AIDSdrug stavudine, and Bristol-Myers Squibb had an exclu-sive license to sell the drug. Over the years, the partner-ship with BMS earned Yale profits of more than $129million. In 2000, Cipla (a drug manufacturer in India)and Doctors Without Borders requested a nonexclusive li-cense from Yale and BMS to sell a generic version ofstavudine, at a fraction of the cost, in South Africa. In thewake of pressure from Yale students, Doctors WithoutBorders, South African activists, and other humanitarianorganizations, the university was able to renegotiate the li-cens with BMS to permit the sale of the generics in SouthAfrica. At the same time, BMS announced that it wouldlower the price of its brand-name stavudine to approxi-mately $55 per year throughout sub-Saharan Africa forgovernments and nongovernmental organizations.158

Voluntary licensing arrangements for HIV/AIDSdrugs—also known as humanitarian licensing strategies—are gaining popularity. In 2004, for instance, GlaxoSmith-Kline issued a voluntary license to South Africa’s Them-balami Pharmaceuticals to produce generic versions oftwo of GSK’s antiretroviral drugs—lamivudine and zi-dovudine. GSK has since issued more voluntary licensesfor AIDS drugs in South Africa, Kenya, and India. Thisyear, Bristol-Myers Squibb agreed to voluntarily license itsnew AIDS drug atanazavir to two generic drugs compa-nies for reproduction—Emcure Pharmaceuticals Ltd. ofIndia and Aspen PharmaCare of South Africa. AspenPharmaCare is also producing generic versions of theARVs Truvada and Viread under a voluntary licensingarrangement with Gilead. These companies will be al-lowed to set their own prices for the drugs to make themmore affordable for developing world markets.159

Limited exclusive licenses. A number of strategies haveemerged that use limited exclusive licenses, including li-censes that are exclusive to particular countries. Licensesmight provide for exclusive use of the patented inventiononly in developed nations, or only in developing ones(some licensees may intend to develop an affordable orfree medicine for the poor countries under an exclusive li-cense limited to those countries). As Brewster and col-leagues note, the challenges confronting this kind of“market segmentation” licensing strategy include the diffi-culty of containing products within the intended mar-ket160 (although, as already discussed, this potential prob-lem of arbitrage appears not to be as serious as oncethought).

Licenses can also be exclusive to particular fields of use,which in effect means that they can be exclusively licensedmultiple times for use in different kinds of research orproduct development. Where nonexclusive or limited ex-clusive licenses are issued, patent holders may retain theability to license the invention or discovery to an organi-zation, like a public-private partnership, that is seeking todevelop a medicine or vaccine for a particular disease oran underserved or unprofitable market.161

Licensing to public-private partnerships. Because ofthe dearth of research into diseases that mostly affect poorcountries, international health players—primarily philan-thropic institutions, public agencies, and private sectordevelopers—have begun entering into collaborative agree-ments to develop drug candidates for neglected diseases.There are an estimated sixty to eighty public-private part-nerships (PPPs) in the global health arena. Examples ofthese partnerships include consortiums like the Interna-tional AIDS Vaccine Initiative, Medicines for MalariaVenture, the Global Alliance for Tuberculosis Drug De-velopment, and the Drugs for Neglected Diseases Initia-tive. These international joint ventures essentially reducethe developer’s risks and initial costs by subsidizing the re-search inputs, and they allow the donors to have greatercontrol over product development.162 Because of theasymmetry of information between the donors and theprivate sector developers, it is not always possible fordonors to determine which projects are the most promis-ing and which costs are appropriate.163 It is important,however, to point out that most PPPs recognize the basicvalidity of intellectual property rights, with some caveats,and this has made it easier for them to partner with drugcompanies.164

While some partnerships aim essentially to ensure thatresearch and development funding is available to battlediseases affecting poor countries, other partnerships—col-lectively known as product development partnerships(PDPs)—bring together within a single mechanism thework from various sectors that is crucial to the develop-ment of new health technologies. An example of a PDP isthe International Partnership for Microbicides (IPM),


which was established in 2002 to accelerate the discovery,development, and accessibility of microbicides to preventtransmission of HIV. The IPM has entered into licensingagreements for the development of active compounds aspotential microbicides with Merck, Bristol-MeyersSquibb, and Tibotec Pharmaceuticals, a subsidiary ofJohnson & Johnson. Under separate agreements, each ofthese drug companies has granted to IPM a royalty-free li-cense to develop, manufacture, and distribute their com-pounds for use as microbicides in developing countries.

According to a recent report of the Rockefeller Foun-dation (which provides a significant amount of fundingfor PDPs), these partnerships pursue accelerated productdevelopment and testing, as well as strategies to ensure ac-cess, using a clearly articulated business plan, and themanagement of a portfolio of candidate products.165 Theportfolio approach serves to insulate donors from risks in-herent in selecting and funding individual candidateproducts. These PDPs use a business approach to bring

new products for neglected diseases into the market as ef-ficiently and cost-effectively as possible.

There are also partnerships to bring drugs already inthe market to those who need them in developing coun-tries. Pfizer, for instance, freely provides to fourteenAfrican countries the antifungal drug Diflucan to treattwo opportunistic infections—cryptococcal meningitis(CM) and oesophageal candidiasis (OC). These infectionsare estimated to occur in 10 to 40 percent of patients withadvanced AIDS. Pfizer partners with ministries of healthand other developing partners in those countries to ensureadequate support to successfully administer the pro-gram.166 Likewise, the Merck Mectizan Donation Pro-gram works with public health agencies and nongovern-mental organizations in poor countries to combat riverblindness, the second leading cause of blindness in theworld.167

There are several problematic issues that PPPs andPDPs have to address, the most critical of which is finan-cial sustainability. Some of these partnerships rely heavilyon the good will of the private sector, and this makes fora particularly precarious situation with regard to the long-term fiscal health of the partnerships. PPPs and PDPs alsosuffer from a host of other problems, including a lack of

global norms and principals—each partnership sets itsown rules, sometimes with little reference to a broaderglobal public health framework. Some of the more pow-erful PPPs have been accused of redirecting nationalhealth policies and priorities, thus defeating or undermin-ing local and national efforts. If countries with weakhealth systems institute PPPs, they could potentially frag-ment the health care system by creating independent, ver-tical programs that compete with the central system. PPPsand PDPs also have operational challenges, including ill-defined governance structures, imbalances in power andinfluence among partners, diverse motives and goals, anda lack of transparency and accountability.168

Despite these problems, PPPs and PDPs have the po-tential to greatly narrow the research gap for neglecteddiseases, and they have the power to leverage broad pri-vate sector support (both domestically and international-ly) for health development programs in poor countries.Patent holders should consider working with PPPs and

PDPs, and this work should include donating patentedinventions and reserving the rights in license agreementsto execute limited licenses to PPPs or PDPs.

Attaching conditions to licenses. As Brewster and col-leagues note, conditions can be included in licenses thatrequire the licensee to do certain things, such as “market-ing a product in developing nations at a reduced royaltyor price.”169 They note that the U.S. NIH often includesthese “white knight” clauses in its licenses to ensure thatthe licensee takes specific actions to benefit the pubic sec-tor, including mandating supply-back of licensed prod-ucts or services and creating a “worldwide developmentand marketing plan to facilitate developing country accessto licensed products, implementation of which it moni-tors through agreed upon benchmarks.”

Licenses can also include performance milestones toensure that the licensed technology is developed. As an ex-ample of such a license condition, Brewster et al. describe“a requirement that on or before the date of the first phaseof a clinical trial for a new drug, the licensee will haveidentified a generic manufacturer in a middle-incomecountry to produce the licensed technology at a reason-able price for developing countries.” In their survey, Press-

Commercial entities—particularly those in biomedicine—receivepublic assistance in the form of tax breaks, access to publicly funded research, access to markets and employees, and advocacy in international trade. These benefits arguably oblige a company to take public interest into account when making important patenting and licensing decisions.


man and colleagues found that one or more diligencemilestones is included in approximately 80 percent of ex-clusive or limited exclusive licenses.170

Retention of research rights. Finally, an increasinglypopular condition in licenses is the retention of researchrights. The Pressman survey found “evidence of a strongand expanding retained and transferable research-useright, even within exclusive, all fields of use licenses.”171

Brewster et al. suggest that patent holders “could insert aresearch exemption clause into licensing agreements thatexempts specified categories and types of research frompatent infringement.”172 Although a recent survey of overfour hundred biomedical researchers in universities, gov-ernment, and nonprofit research patent holders found lit-tle evidence of researchers altering or abandoning their re-search due to another’s patents, the study also noted thatonly 5 percent of researchers regularly checked whethertheir research might infringe a patent.173 Explicitly includ-ing a research exemption is a prudent way to protect re-searchers, including researchers at other nonprofit researchpatent holders, from any possibility of legal challenge.

Among the drawbacks of all these new practices is thefact that they often require additional drafting and negoti-ating time. However, as new terms become more com-mon, they will be easier to negotiate, and standard lan-guage will become available for easy inclusion in agree-ments.

Making Change in the Public and PrivateSectors

Arange of individuals and organizations play a role inpatent policy and practice. International and national

policy-makers are responsible for crafting treaties and lawsthat regulate patent rights, biomedical research, and drugdelivery. National and international charitable organiza-tions and national governments set funding policies andguidelines, which can require or recommend patentingand licensing practices. Individual and institutional patentholders—including nonprofit institutions, companies,and inventors—decide when and where to patent inven-tions. If they obtain a patent, they then negotiate withother individuals, institutions, or companies to determinewho will access the invention and under what conditions.These different players exist for different reasons, are ac-

countable to different constituencies, and have differentfundamental goals. Yet they have the ability to adopt oneor more of the policies or practices described above.

The idea that some of these individuals and organiza-tions should use their intellectual property to improvehealth and not simply to improve their own goals can becontroversial. Although it is often accepted that the publicsector (including governments and public universities) isunder an obligation to consider the impact of patent rightson health of local and national communities (and perhapseven the health of people in other countries), the argu-ment that companies are under similar moral obligationsis less widely accepted.

Public sector. Public sector actors—governments, char-ities, and many nonprofit organizations and institutions—often explicitly try to benefit the public good. Universities,for example, may express a commitment to benefiting so-ciety in their missions and the missions of their technolo-gy transfer offices.174 Obligations to benefit the public mayalso be inferred from their receipt of public monies,whether in the form of direct appropriations, grants, gifts,tax breaks, or other public assistance. Their patenting andlicensing choices can therefore be assessed with referenceto their missions, the stated goals of public funding, andany relevant laws or policies. The organizations that fundthis public sector research—including the government,private charities and foundations, and individualdonors—may be able to require certain patenting and li-censing practices as conditions of funding (although insome cases that power may be limited by other policy andlaw).

Within the public sector, significant attention has fo-cused on the policies and practices of universities, particu-larly in the United States, but increasingly in other coun-tries. Although some academic institutions have alwayspatented the results of some of their research, such patent-ing was not routine in the United States until after 1980,when legislation known as the Bayh-Dole Act encouragedthe recipients of federal research funding, including acad-emic research institutions, to patent the results of their re-search and license these inventions and discoveries to com-panies for further development.175 This legislation hassince been internationally influential.176

As discussed above, controversies have erupted overuniversities’ patenting and licensing strategies when insti-

The biomedical industry deals in lifesaving or dramatically life-improving technologies. Its self-proclaimed role in societyis to foster health. Responsibilities attaching to that honor could include the obligation to take account of the interests of those who are affected by its decisions.


tutions have held patents on essential drugs and licensedthem without provision for humanitarian use.177 Similaraccess-based criticisms have been leveled at academic in-stitutions holding patents on materials or inventions use-ful for ongoing research. In the case of treatments, it is ar-gued that academic institutions have an obligation to thepublic good, which includes an obligation to improvehealth worldwide; in the case of research materials andprocess, the obligation can be expressed as a broad com-mitment to the pursuit of knowledge, which forms thebasis for the norm of communism (or communalism) inscience.178 Perhaps because of these arguments, many aca-demic institutions and technology transfer offices areworking to adapt their patenting and licensing practices,as described above.

Private sector. Although generally considered to be fo-cused primarily or even solely on generating profit forowners or shareholders, some scholars have argued thatcommercial entities should also seek to advance the publicgood.179 In the case of health-related inventions, advanc-ing health, promoting biomedical research, and generat-ing a profit may go hand in hand. But even if they do not,researchers from the American Association for the Ad-vancement of Science have argued that acting to advancehealth is unlikely to harm a company’s bottom line inmarkets in which they do not operate or in which they donot make any money anyway (this argument relies on

being able to keep markets separate), and that “a corpora-tion may advance its reputation for social responsibilityand win greater esteem from the public” (and perhapsthereby win customers) by changing some of its patentingand licensing practices.180

The argument can go further. There is an importantanalogy between private to public sector here. Commer-cial entities—particularly those in biomedicine—receivepublic assistance in the form of tax breaks, access to pub-licly funded research, access to markets and employees,and advocacy in international trade. These benefits ar-guably oblige a company to take public interest into ac-count when making important patenting and licensingdecisions (although such an obligation might be logicallylimited to the national or local “public” that has providedthe assistance, rather than extending to individuals inother countries). In the case of the biomedical industry,the obligation is arguably heightened due to the very na-ture of their product. Unlike other companies, such asmanufacturers of compact discs, the biomedical industrydeals in lifesaving or dramatically life-improving technolo-gies. Its self-proclaimed role in society is to foster health,and for that it has been long and justly honored.181 Re-sponsibilities attaching to that honor could include theobligation to take account of the interests of stakehold-ers—those who are affected by the manufacturers’ deci-sions—as well as shareholders.182


In this report we have tried to contextualize the debateover the impact of patents on innovation and access inbiomedical research and treatment. It is a context in

which patents are only one of the forces spurring and re-warding research and development, and only one of theforces influencing who can access those innovations formore research and treatment. We have considered partic-ular debates over patent rights on particular kinds of bio-medical inventions, and we have canvassed some particu-lar attempts to tinker with the existence and exercise ofthese rights.

Our conclusions are: (1) that patents are not always theoptimal tool for encouraging biomedical innovation—in-deed, they may sometimes be quite ineffective, and otherpolicy tools may be required; (2) that the presence ofpatents on innovations useful in ongoing research make

may conducting that research difficult, but generally onlywhen those controlling the patent rights do not seek tomake their innovations widely available; and (3) that thepresence of patents can be a key reason that biomedicaltreatments (and vaccines) are too expensive for some ofthe world’s populations, but that the absence of patentsalone is not enough to guarantee access. Finally, we con-clude (4) that creative and targeted policies can andshould be used to encourage innovation not sufficientlyencouraged by the presence of the patent system alone,and (5) that as long as a patent system persists (and we arenot suggesting that it be abolished), developing sophisti-cated patenting and licensing practices that are sensitive topotential access problems, particularly if resolving thoseproblems could greatly improve the lives of the world’spoor and sick, is key to improving the biomedical researchand treatment systems.

Given the importance of biomedical research and bio-medical treatments to the fundamentally important socialgoods of health and equality, patents should not always betreated as absolute property rights by those who controlthem. At a minimum, public and private actors world-

wide ought to consider the possible impact of their bio-medical patent rights on research and treatment and, if fi-nancially possible, consider actions that will facilitate ac-cess and promote ongoing innovation. Policy-makersshould do what they can to facilitate and encourage suchpractices.

Although practice is generally voluntary (unless im-posed as a funding condition or under institutional poli-cy), it may well be the area in which the most dramaticchanges can be achieved most quickly and with the mostsensitivity to the particular context. Indeed, we suspectthat changes in patenting and licensing practices—espe-cially inclusion of research exemptions and limited exclu-sive licensing for humanitarian reasons—will dramaticallyreduce the impact of patents on access. Fortunately, suchchanges already appear to be taking place with the acade-

mic technology transfer community.183 To that end,greater awareness of the consequences of patent laws andpolicies—especially policies aimed at improving access forresearch and treatment realistic expectations about theprofitability of patents and licenses, responsiveness tochanging situations, and a shared view of the importanceof access for health and well-being—will be key. Withoutawareness, realistic expectations, a willingness to be re-sponsive, and a shared belief in the importance of pro-moting health, changes in common practice (let alone inlaw and policy) will not be possible.

Generating new inventions and discoveries that ad-dress important health problems and making existing in-ventions and discoveries available to those in need are im-portant policy goals that lawmakers, policy-makers, re-search funders, and those controlling patent rights shouldbear in mind. Health-related patent rights should not al-ways be treated as absolute by the individuals and organi-zations controlling them. Nor are they always the optimalpolicy tool to encourage innovation or to ensure wide-spread access to biomedical inventions and discoveries.

Conclusion

Patent rights should not always be treated as absolute, nor arethey always the optimal policy tool to encourageinnovation or to ensure access to biomedical inventions and discoveries.


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31. Ibid.32. Organisation for Economic Co-opera-

tion and Development, “Patents and Innova-tion”; J. Johnston, “Health-Related AcademicTechnology Transfer: Rethinking Patentingand Licensing Practices,” International Journalof Biotechnology, forthcoming.

33. Organisation for Economic Co-opera-tion and Development, “Turning Science intoBusiness: Patenting and Licensing at PublicResearch Organisations” (Paris, France: Organ-isation for Economic Co-operation and Devel-opment, 2003).

34. U.S. Code, title 35, Part II, chapter 18,Sec. 202.

35. The Stevenson-Wydler Technology In-novation Act of 1980 and the Federal Technol-ogy Transfer Act of 1986.

36. Office of Technology Transfer, NationalInstitutes of Health, “Statistics,” December2004, http://ott.od.nih.gov/about_nih/statis-tics.html (accessed June 7, 2006).

37. National Science Board, Science and En-gineering Indicators 2006.

38. Mowery et al., Ivory Tower and Industri-al Innovation.

39. Ibid.40. Organisation for Economic Co-opera-

tion and Development, “Patents and Innova-tion.”

41. Ibid.42. Parke-Davis & Co. v. H.K. Mulford &

Co., 196 F. 496 (2d Cir. 1912).43. Diamond v. Chakrabarty, 447 U.S. 303

(1980), p. 151.44. Harvard College v. Canada (Commission-

er of Patents) [2002] 4 S.C.R. 45, 2002 SCC76.

45. L.B. Andrews and J. Paradise, “GenePatents: The Need for Bioethics Scrutiny andLegal Change,” Yale Journal of Health Policy,Law, and Ethics 5, no. 1 (2005): 403-412, at405.

46. Nuffield Council on Bioethics, “TheEthics of Patenting DNA: A Discussion Paper”(London: Nuffield Council on Bioethics,2002).

47. J. Paradise, L. Andrews, and T. Hol-brook, “Patents on Human Genes: An Analysisof Scope and Claims,” Science 307, no. 5715(2005): 1566-67.

48. United Nations Educational, Scientificand Cultural Organization, “Universal Decla-ration on the Human Genome and HumanRights,” 1997, http://portal.unesco.org/shs/en/ev.php-URL_ID=1881&URL_DO=DO_TOPIC&URL_SECTION=201.html ;Nuffield Council on Bioethics, “The Ethics ofPatenting DNA.”

49. Diamond v. Chakrabarty.


50. European Patent Office, “Conventionon the Grant of European Patents” (EuropeanPatent Convention), 12th ed., April 2006, arti-cle 53, http://www.european-patent-office.org/legal/epc/e/ma1.html#CVN.

51. The European Parliament and TheCouncil of the European Union, “EuropeanDirective on the Legal Protection of Biotech-nological Inventions,” 1998, article 6, http://europa.eu/eur-lex/pri/en/oj/dat/1998/l_213/l_21319980730en00130021.pdf.

52. Nuffield Council on Bioethics, “TheEthics of Patenting DNA.”

53. E.R. Gold and T.A. Caulfield, “TheMoral Tollbooth: A Method That Makes Useof the Patent System to Address Ethical Con-cerns in Biotechnology,” Lancet 359, no. 9325(2002): 2268-70.

54. Working Group on Research Tools, Na-tional Institutes of Health, “Report of the Na-tional Institutes of Health (NIH) WorkingGroup on Research Tools,” 1998, http://www.nih.gov/news/researchtools/.

55. M.A. Heller and R.S. Eisenberg, “CanPatents Deter Innovation? The Anticommonsin Biomedical Research,” Science 280 (1998):698-701, at 700.

56. Commission on Intellectual PropertyRights, “Integrating Intellectual PropertyRights and Development Policy,” http://www.iprcommission.org/graphic/documents/final_report.htm (2002, accessed June 7, 2006).

57. Working Group on Research Tools, “Re-port of the National Institutes of Health Work-ing Group on Research Tools.”

58. Department of Health and Human Ser-vices, National Institutes of Health, “Principlesand Guidelines for Recipients of NIH ResearchGrants and Contracts on Obtaining and Dis-seminating Biomedical Research Resources:Final Notice,” Federal Register 64, no. 246 (De-cember 23, 1999): 72090-72096.

59. Department of Health and Human Ser-vices, National Institutes of Health, “Best Prac-tices for the Licensing of Genomic Inventions,”Federal Register 69, no. 223 (November 19,2004): 67747-67748.

60. Organisation for Economic Co-opera-tion and Development, “Guidelines for the Li-censing of Genetic Inventions” (Paris, France:Organisation for Economic Co-operation andDevelopment, 2006).

61. J.P. Walsh, C. Cho, and W.M. Cohen,“View from the Bench: Patents and MaterialTransfers,” Science 309, no. 5743 (2005):2002-2003, at 2002.

62. Ibid.63. S. Hansen, A. Brewster, and J. Asher,

“Intellectual Property in the AAAS ScientificCommunity: A Descriptive Analysis of the Re-sults of a Pilot Survey on the Effects of Patent-ing on Science” (Washington, D.C.: AmericanAssociation for the Advancement of Science,2005).

64. Walsh, Cho, and Cohen, “View fromthe Bench.”

65. Committee on Assessing Integrity in Re-search Environments, Institute of Medicineand National Research Council of the Nation-al Academies, “Integrity in Scientific Research”(Washington, D.C.: The National AcademiesPress, 2002).

66. Madey v. Duke University, 266 F. Supp.2d 420 (MDNC 2001).

67. C. Dent et al., “Research Use of Patent-ed Knowledge: A Review” (Paris, France: Or-ganisation for Economic Co-operation andDevelopment, 2006).

68. UNAIDS/WHO, “AIDS Epidemic Up-date: December 2005,” Joint United NationsProgramme on HIV/AIDS (UNAIDS) and theWorld Health Organization (WHO), Geneva,Switzerland 2005, http://www.unaids.org/epi/2005/doc/EPIupdate2005_pdf_en/epi-up-date2005_en.pdf.

69. S. Rosen et al., “The Cost of HIV/AIDSto Businesses in Southern Africa,” AIDS 18(2004): 317-24.

70. R. Bonnel, “HIV/AIDS: Does it In-crease or Decrease Growth in Africa?”http://siteresources.worldbank.org/INTAFR-REGTOPHIVAIDS/Resources/Growth_in_Africa.pdf.

71. M. Ainsworth and A.M. Over, “TheEconomic Impact of AIDS in Africa,” in AIDSin Africa, ed. M. Essex et al. (New York: Raven,1994); J.M. Seghal, The Labour Implications ofHIV/AIDS (Geneva, Switzerland: InternationalLabour Organisation, 1999).

72. R. Park, “The International Drug Indus-try: What the Future Holds for South Africa’sHIV/AIDS Patients,” Minnesota Journal ofGlobal Trade 11, no. 1 (2002): 125-54.

73. See World Health Organization, “Anti-retroviral Treatments for HIV/AIDS,” 1997,http://www.who.int/inf-fs/en/fact163.html.

74. The three drugs are didanosine (ddI),zalcitabine (D4T) and idovudine (AZT). See P.Boulet, C. Garrison, and E. ’t Hoen, “DrugPatents under the Spotlight: Sharing PracticalKnowledge about Pharmaceutical Patents”(Geneva, Switzerland: Médecins Sans Fron-tières, May 2003).

75. World Health Organization, “Coordi-nates 2002, Charting Progress Against AIDS,TB and Malaria” (2002), 1, http://whqlib-doc.who.int/hq/2002/WHO_CDS_2002.11.pdf.

76. The Pharmaceutical Manufacturers Asso-ciation and Others v. The President of the Repub-lic of South Africa and Others, case no: 4183/98,High Court of South Africa (Transvaal Provin-cial Division); H. Sun, “The Road to Dohaand Beyond: Some Reflections on the TRIPSAgreement and Public Health,” European Jour-nal of International Law 15, no. 1 (2004): 123-50.

77. M. Heywood, “Debunking ‘Conglomo-talk’: A Case Study of the Amicus Curiae as anInstrument for Advocacy, Investigation andMobilisation” (presentation at “Health, Lawand Human Rights: Exploring the Connec-tions: An International Cross-DisciplinaryConference Honoring Jonathan M. Mann,”September 29 to October 1, 2001, Philadel-phia, Pa.).

78. See Médecins Sans Frontières, “Cam-paign Accomplishments for 2001, Campaignfor Access to Effective Medicines” (Brussels,Belgium: Médecins Sans Frontières, April 23,2001).

79. A. Stoppard, “Drug Companies DropLawsuit against South Africa,” MIsanet.comhttp://www.afrol.com/News2001/sa021_drug-case_dropped.htm (accessed February 14,2005).

80. P. Basu, “International Patent Law: Boonor Bane of Biotech?” Nature Biotechnology 23,no. 1 (2005): 13-15.

81. World Trade Organization, “Declarationon the TRIPS Agreement and Public Health,Ministerial Conference” (Doha declaration,adopted November 14, 2001), http://www.wto.org/English/thewto_e/minist_e/min01_e/mindecl_e.htm, at para.2-4.

82. C. Correa, “Integrating Public HealthConcerns into Patent Legislation in Develop-ing Countries” (Geneva, Switzerland: TheSouth Center, 2000).

83. F.M. Scherer and J. Watal, “Post-TRIPSOptions for Access to Patented Medicines inDeveloping Nations,” Journal of InternationalEconomic Law 5, no. 4 (2002): 913-39.

84. F. Abbott and R.V. Van Puymbroeck,“Compulsory Licensing for Public Health: AGuide and Model Documents for Implementa-tion of the Doha Declaration Paragraph 6 De-cision” (World Bank Working Paper No. 61,The World Bank, Global AIDS Program,2005).

85. Sun, “The Road to Doha and Beyond.” 86. World Trade Organization, Doha decla-

ration, Para. 5 (c).87. John Barton, “TRIPS and the Global

Pharmaceutical Market,” 151.88. World Trade Organization, Doha decla-

ration, Para 5 (d). See also H. Sun, “The Roadto Doha and Beyond.”

89. “Treatment Access: Patent MailboxOpened in India,” HIV Treatment Bulletin 6,no. 4 (April 2005), http://www.i-base.info/htb/v6/htb6-4/Patent.html.

90. S. Kontic, “An Analysis of the GenericPharmaceutical Industries in Brazil and Chinain the Context of TRIPS and HIV/AIDS,”(2005), http://www.law.utoronto.ca/docu-ments/ihrp/HIV_kontic.doc; see also S.Basheer, “India’s New Patent Regime: Aiding‘Access’ or Abetting ‘Genericide’?” InternationalJournal of Biotechnology, forthcoming. Howev-er, generic production of second-line drugs


such as ritonavir, lopinavir plus ritonavir, andnelfinavir may be granted patent protection ifthe mailbox system accepts applications fordrugs that have pre-1995 filing dates but werenot marketed prior to 1995.

91. World Trade Organization, TRIPSagreement, Article 66.2 http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm.

92. Doha declaration, Paragraph 6.93. F. Abbott, “The Doha Declaration on

the TRIPS Agreement and Public Health:Lighting a Dark Corner in WTO,” Journal ofInternational Economic Law 5, no. 2 (2002):469-505.

94. See B. Condon and T. Sinha, “GlobalDiseases, Global Patents and Differential Treat-ment in WTO Law: Criteria for SuspendingPatent Obligations in Developing Countries,”Northwestern Journal of International Law andBusiness 26, no. 1 (2005): 1-42.

95. Ibid.96. Ibid., at 11-12.97. Y. Nkrumah and P. Osewe, “TRIPS

Compliance and Public Health: Opportunitiesand Obstacles for African Countries,” Interna-tional Journal of Biotechnology, forthcoming.

98. Sun, “The Road to Doha and Beyond,”at 147. See also Joint Oxfam-MSF Press Re-lease, August 30, 2003, http://www.oxfam.org.

99. S. O’Carroll, “Importing Indian Gener-ic Drugs Following TRIPS: Case Studies ofZambia and Kenya,” (2005) http://www.law.utoronto.ca/documents/ihrp/IV_Ocarroll.doc.See also C. Grace, “The Effect of Changing In-tellectual Property Protection on the Pharma-ceutical Industry Prospects in India and China:Considerations for Access to Medicines” (Lon-don: Department for International Develop-ment Health Systems Resource Centre, IssuesPaper—Access to Medicines, 2004, http://www.dfid.gov.uk/pubs/files/indiachinadom-produce.pdf); and N. Druce, “Access to Medi-cines in Underserved Markets: What Are theImplications of Changes in Intellectual Proper-ty Rights, Trade and Drug Registration Poli-cy?” (London: Department for InternationalDevelopment Health Systems Resource Cen-tre, 2004, http://www.dfidhealthrc.org/Shared/ p u b l i c a t i o n s / I s s u e s _ p a p e r s / AT M /DFID_synthesis_aw.pdf).

100. J.H. Reichman, “Taking the Medicine,with Angst: An Economist’s View of theTRIPS Agreement,” Journal of InternationalEconomic Law 4, no. 4 (2001):795-807.

101. See R. Bate, R. Tren, and J Urbach,“Taxed to Death” (Washington D.C.: AEI-Brooking Joint Center for Regulatory Studies,2005, http://www.fightingmalaria.org/pdfs/taxed_to_death1.pdf).

102. A. Wasunna, “Brinkmanship andCompulsory Licensing: Policy Lessons fromBrazil,” International Journal of Biotechnology,forthcoming, and Nkrumah and Osewe,“TRIPS Compliance and Public Health.”

103. Sun, “The Road to Doha and Be-yond.”

104. Ibid., at 146. See the U.S.-SingaporeFree Trade Agreement, http://www.ustr.gov/Trade_Agreements/Bilateral/Singapore_FTA/Section_Index.html and the U.S.-Chile FreeTrade Agreement, http://www.ustr.gov/Trade_Agreements/Bilateral/Chile_FTA/Section_Index.html.

105. See the Free Trade Area of the Americ-as, http://www.ustr.gov/Trade_Agreements/Regional/FTAA/Section_Index.html. See alsoD. Vivas-Eugui, “Regional and Bilateral Agree-ments in a TRIPS-plus World: The Free TradeArea of the Americas (FTAA)” (Geneva,Switzerland: Quarter United National Office,2003), http://www.quno.org/geneva/pdf/eco-nomic/Issues/FTAs-TRIPS-plus-English.pdf.

106. Park, “The International Drug Indus-try.”

107. C. Correa, “Protection of Data Sub-mitted for the Registration of Pharmaceuticals:Implementing the Standards of the TRIPSAgreement” (Geneva, Switzerland: The SouthCenter, 2002).

108. Ibid.109. Ibid.110. T.G. Field, “Intellectual Property: The

Practical and Legal Fundamentals?” Idea 35(1994): 79-128.

111. E.R. Gold et al., “The UnexaminedAssumptions of Intellectual Property: Adopt-ing an Evaluative Approach to PatentingBiotechnological Innovation,” Public AffairsQuarterly 18 (2004): 299-344, at 316.

112. World Health Organization, “Consti-tution of the World Health Organization,”http://www.who.int/about/en/; United Na-tions Office of the High Commissioner forHuman Rights, “International Covenant onEconomic, Social and Cultural Rights,”http://www.unhchr.ch/html/menu3/b/a_cescr.htm.

113. World Intellectual Property Office,“What Is Intellectual Property?” http://www.wipo.int/about-ip/en/.

114. M. Kirby, “Report of the IBC onEthics, Intellectual Property and Genomics”(Paris, France: United Nations Educational,Scientific and Cultural Organization, Interna-tional Bioethics Committee, 2002), 2.

115. Gold et al., “The Unexamined As-sumptions of Intellectual Property.”

116. The SNP Consortium, “About theSNP Consortium,” http://snp.cshl.org/about/(accessed December 13, 2006).

117. Mowery et al., Ivory Tower and Indus-trial Innovation.

118. Commission on Intellectual PropertyRights, “Integrating Intellectual PropertyRights and Development Policy,” 114.

119. M.F. Schultz and D.B. Walker, “HowIntellectual Property Became Controversial:

NGOs and the New International IP Agenda,”Engage 6, no. 2 (2005), 82-98.

120. See Consumer Project on Technology,“Medical Research and Development Treaty,”http://www.cptech.org/workingdrafts/rndtreaty4.pdf.

121. Ibid.122. P. Stevens, “International Policy Net-

work, Diseases of Poverty and the 10/90 Gap”(London: International Policy Network,2004), http://www.fightingdiseases.org/pdf/Diseases_of_Poverty_FINAL.pdf.

123. World Health Organization, “TheWHO Report on Infectious Diseases 1999:Removing Obstacles to Healthy Develop-ment,” (Geneva, Switzerland: WHO, 1999).See also Schultz and Walker, “How IntellectualProperty Became Controversial.”

124. R. Glennerster and M. Kremer, “A Bet-ter Way to Spur Medical Research and Devel-opment,” Regulation 23, no.2 (2000): 34-39.

125. Ibid. See also M. Kremer, “Pre-Com-mitments to Purchase New Vaccines: Ratio-nale,” 1999, http://adfdell.pstc.brown.edu/classes/readings/kre99a.pdf.

126. Ibid.127. P. Shetty, “More Creative Thinking

Needed on Drug R&D,” Sci-DevNet, May 3,2005.

128. Glennerster and Kremer, “A BetterWay to Spur Medical Research and Develop-ment,” at 38. See also W.A. Masters, “ResearchPrizes: A New Kind of Incentive for Innovationin African Agriculture,” International Journal ofBiotechnology 7, nos 1, 2, 3 (2005): 195-211.

129. Glennerster and Kremer, “A BetterWay to Spur Medical Research and Develop-ment.”

130. M. Kremer, “Creating Markets forNew Vaccines,” in Innovation Policy and theEconomy, vol. 1, ed. J. Adam, L. Joshua, and S.Scott (Cambridge, Mass.: The MIT Press,2001).

131. A. Hollis, “An Efficient Reward Systemfor Pharmaceutical Innovation” (unpublishedpaper, http://econ.ucalgary.ca/fac-iles/ah/drug-prizes.pdf, accessed December 6, 2006), 3.

132. M. Kremer, “Patent Buy-Outs: AMechanism for Encouraging Innovation,”Quarterly Journal of Economics 113, no. 4(1998): 1137-67.

133. S. Shavell and T. Van Ypersele, “Re-wards vs. Intellectual Property Rights,” Journalof Law and Economics 44 (2001): 525-47; Hol-lis, “An Efficient Reward System for Pharma-ceutical Innovation.”

134. R.C. Guell and M. Fischbaum, “To-ward Allocative Efficiency in the PrescriptionDrug Industry,” Milbank Quarterly 73 (1995):213-29.

135. M. Abramowicz, “Perfecting PatentPrizes,” Vanderbilt Law Review 56 (2003): 115-236.


136. Shetty, “More Creative Thinking Need-ed on Drug R & D.”

137. T. Pogge, “A New Approach to Phar-maceutical Innovation,” ON LINE Opinionhttp://www.onlineopinion.com.au.print.asp?article=3559.

138. D.B. Ridley, H.G. Grabowski, and J.L.Moe, “Developing Drugs for DevelopingCountries,” Health Affairs 25, no. 2 (2006):313-23.

139. W.A. Kaplan and R. Laing, “Local Pro-duction: Industrial Policy and Access to Medi-cines: An Overview of Key Concepts, Issuesand Opportunities for Future Research” (healthand nutrition discussion paper prepared forWorld Bank meeting on the role of genericsand local industry in attaining the millenniumdevelopment goals in pharmaceutical and vac-cines, Washington, D.C., June 24, 2003).

140. Ibid.141. J. Tybout, “Manufacturing Firms in

Developing Countries: How Well Do TheyDo, and Why?” (World Bank, Washington,D.C., policy research working paper no. 1965,1998).

142. Ibid.143. Scherer and Watal, “Post-TRIPS Op-

tions for Access to Patented Medicines in De-veloping Nations,” at 928.

144. The above draws from K. Outterson,“Pharmaceutical Arbitrage: Balancing Accessand Innovation in International PrescriptionDrug Markets,” Yale Journal of Health Policy,Law, and Ethics 5, no. 1 (2005): 195-291.

145. Ibid.146. See Médecins Sans Frontières, “Untan-

gling the Web of Price Reductions: A PricingGuide for the Purchase of ARVs for DevelopingCountries,” 8th ed., (Geneva, Switzerland:Médecins Sans Frontières, 2004).

147. Outterson, “Pharmaceutical Arbitrage.”148. Director General Trade (Unit F4),

“Tiered Pricing for Medicines Exported to De-veloping Countries, Measures to Prevent TheirRe-Importation into the EC Market and Tariffsin Developing Countries” (Brussels, Belgium:European Commission, 2002). See also Out-terson, “Pharmaceutical Arbitrage,” at 252.

149. Department for International Develop-ment, “Increasing Access to Essential Medicinesin the Developing World: U.K. GovernmentPolicy and Plans” (London: Department for In-ternational Development, 2004), http://www.dfid.gov.uk/pubs/files/accessmedicines.pdf.

150. M.R. Morgan, “Medicines for the De-veloping World: Promoting Access and Innova-tion in the Post-TRIPS Environment,” Univer-sity of Toronto Faculty of Law Review 64, no. 1(2006): 45-111. See also http://www.clinton-foundation.org.

151. DFID, “Increasing Access to EssentialMedicines in the Developing World.”

152. Department of Commerce, UnitedStates Patent and Trademark Office, “Utility

Examination Guidelines,” Federal Register 66,no. 4 (January 5, 2001): 1092-1099.

153. Andrews and Paradise, “Gene Patents,”405.

154. A.K. Rai and R.S. Eisenberg, “ThePublic Domain: Bayh-Dole Reform and theProgress of Biomedicine,” Law and Contempo-rary Problems 66 (2003): 289-314.

155. L. Nelson, “The Role of UniversityTechnology Transfer Operations in AssuringAccess to Medicines and Vaccines in Develop-ing Countries,” Yale Journal of Health Policy,Law, and Ethics 3, no. 2 (2003): 301-308.

156. Madey v. Duke University, 307 F.3d1351 (Fed. Cir. 2002).

157. P. Pressman et al., “The Licensing ofDNA Patents by U.S. Academic Institutions:An Empirical Survey,” Nature Biotechnology 24,no. 1 (2006): 31-39.

158. See A. Kapczynski et al., “AddressingGlobal Health Inequities: An Open LicensingApproach for University Innovations,” BerkeleyTechnology Law Journal 20, no. 2 (2005): 1032-1114, at 1031.

159. For more on voluntary licensing strate-gies, see A. Brewster et al., “Facilitating Hu-manitarian Access to Pharmaceutical and Agri-cultural Innovation,” Innovation Strategy Today1, no. 3 (2005): 203-216. See also an indepen-dent working group convened by UniversitiesAllied for Essential Medicines, “Model Provi-sions for an ‘Equitable Access and NeglectedDisease License,’” (New Haven, Conn.: Uni-versities Allied for Essential Medicines), http://www.essentialmedicine.org/EAL.pdf, (accessedDecember 13, 2006).

160. Brewster et al., “Facilitating Humani-tarian Access to Pharmaceutical and Agricultur-al Innovation.”

161. Ibid.162. Ridley, Grabowski, and Moe, “Devel-

oping Drugs for Developing Countries.”163. Ibid.164. R.M. Schefler and V. Pathania, “Medi-

cines and Vaccines for the World’s Poorest: IsThere Any Prospect for Public-Private Cooper-ation?” Globalization and Health 1 (2005): 10.

165. Rockefeller Foundation, “Partnering toDevelop New Products for Diseases of Poverty:One Donor’s Perspective,” (New York: TheRockefeller Foundation, 2004) http://prelive.rockfound.org/Library/Partnering_to_Devel-op_New_Products_for_Diseases_of_Poverty.pdf.

166. http://www.pfizer.com/pfizer/subsites/philanthropy/access/global.health.hiv.diflucan.jsp.

167. http://www.merck.com/cr/enabling_access/developing world_mectizan/.

168. Some of the above is from S. Nishtar,“Public-Private Partnerships in Health: A Glob-al Call to Action,” Health Research Policy andSystems 2 (2004): 5.

169. Brewster et al., “Facilitating Humani-tarian Access to Pharmaceutical and Agricultur-al Innovation.”

170. Pressman et al., “The Licensing ofDNA Patents by U.S. Academic Institutions.”

171. Ibid. 172. Brewster et al., “Facilitating Humani-

tarian Access to Pharmaceutical and Agricultur-al Innovation,” 212.

173. Walsh, Cho, and Cohen, “View fromthe Bench.”

174. Johnston, “Health-Related AcademicTechnology Transfer.”

175. U.S. Code, title 35, Part II, chapter 18,Sec. 202.

176. See policies in Japan, Italy, Germany,Sweden, New Zealand, and Australia.

177. Kapczynski et al., “Addressing GlobalHealth Inequities”; R.K. Merton, “The Nor-mative Structure of Science,” in The Sociology ofScience, ed. R.K. Merton and N.W. Storer(Chicago, Ill.: University of Chicago Press,1973): 267-78.

178. Johnston, “Health-Related AcademicTechnology Transfer”; R.K. Merton, “The Nor-mative Structure of Science,” in The Sociology ofScience, 267-78.

179. K.D. Jackson, “Global Distributive Jus-tice and the Corporate Duty to Aid,” Journal ofBusiness Ethics 12, no. 7 (1993): 547-51; A.Ho, “Pharmaceutical Corporations and theDuty to Aid in HIV/AIDS Epidemic,” Businessand Professional Ethics Journal, forthcoming.

180. Brewster et al., “Facilitating Humani-tarian Access to Pharmaceutical and Agricultur-al Innovation,” 208.

181. Callahan and Wasunna, Medicine andthe Market.

182. M. Herder and J. Dyck Brian, “Cana-da’s Stem Cell Corporation: Aggregate Con-cerns and the Question of Public Trust,” Jour-nal of Business Ethics, forthcoming.

183. Johnston, “Health-Related AcademicTechnology Transfer.”


Patents: legally enforceable property rights issued by re-gional patent offices to inventors, allowing them to con-trol who may make and use their invention or discovery.When the patent expires the invention is “off patent.”

Licenses: permission from the patent holder to make oruse a patented invention, usually in exchange for a fee.

Generics: pharmaceutical products—drugs and vac-cines—that are exact copies of patented products but areproduced without a license from the patent holder.

Parallel imports: importing a patented invention into ajurisdiction in which that invention is already sold.

Compulsory licenses: allows a government to declare thatit or an identified other may manufacture, use, or importa patented invention without the patent holder’s permis-sion. Patent holders are usually entitled to “reasonablecompensation.”

Differential pricing: also known as tiered pricing or pref-erential, means that different classes of buyers are chargeddifferent prices for the same product.

Exclusive license: a license specifying that only the licenseemay make and use the patented invention (that is, thepatent holder agrees not to issue any other licenses).

TRIPS agreement: Agreement on Trade-Related Aspectsof Intellectual Property signed by members of the WorldTrade Organization (WTO) in 1995.

DOHA declaration: a WTO declaration of 2001 thatclarified the TRIPS agreement’s provisions concerning theflexibility of intellectual property rights in the face of pub-lic health concerns.

Pharmaceutical arbitrage: arbitrage occurs when drugssold cheaply in poor countries under differential pricingschemes find their way into richer markets where identi-cal drugs are sold for much more.

Patents: A Glossary

Acknowledgments

Although this report is the independent work of theauthors, we benefited greatly from the following schol-ars and practitioners who presented their research andinsights and engaged in sustained discussion and de-bate at a series of meetings at The Hastings Center:Dean Baker, Shamnad Basheer, John Barton, Gary A.Cohen, O. Prem Das, Victoria Eyo, Lila Feisee, LeeGillespie-White, Richard Gold, Nicholas Groom-bridge, Matthew Herder, Tim Hubbard, Paul Kweng-were, Karen Maschke, Arthur Mpeirwe, Susan Nial,Yvonne K. Nkrumah, Rajesh Sagar, Wendy Sanhai,Jack Spiegel, and Brian Stanton.

The research was supported by a grant from TheSasakawa Peace Foundation.

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