Research Paper 70, August 2016

Innovation and the Global Expansion of Intellectual Property Rights: Unfulfilled Promises

The incorporation of intellectual property into trade agreements has not proven to bring about the promised benefits. The premises that have underpinned the global strengthening and expansion of intellectual property through such agreements – namely that the same standards of protection are suitable for countries with different levels of development and that innovation will be boosted – do not match the reality.

The effects of high standards of protection – as those mandated under the TRIPS Agreement and further extended under FTAs – have been critically examined in the developed countries themselves: “[i]ntellectual property is …a social contrivance purportedly designed to increase welfare, by supposedly enhancing innovation (though… it may actually have exactly the opposite effect)”. If intellectual property does not work in developed countries as generally described by their proponents, the situation can only be worse in developing countries with weak science and technological infrastructures, scarcity of risk capital and unsophisticated production profiles. These countries are currently paying the price of a system which primarily serves as a platform to extract rents (in the form of royalty payments and high prices) and which does little to promote local innovation and economic development.

The scenario for innovation in the pharmaceutical sector clearly illustrates that the conception underpinning the TRIPS Agreement was flawed from a global perspective. The rate of innovation has not increased, rather, it has declined and while developing countries struggle with high prices for medicines, R&D necessary to address their particular health needs continues to be marginalized.

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