Harmonisation of TRIPS-plus IPR policies and potential impacts on technological capability: A case study of the pharmaceutical industry in Thailand

Harmonisation of TRIPS-Plus IPR Policies and Potential Impacts on Technological Capability: A Case Study of the Pharmaceutical Industry in Thailand

Jakkrit KUANPOTH

November 2006

Executive Summary

Bilateral trade and investment agreements are increasingly used in a strategic fashion
by powerful countries to incorporate TRIPS-Plus commitments that have been
politically difficult to achieve in multilateral settings (notably at the World Trade
Organisation). Powerful developed country economies who have been dissatisfied
with the multilateral forum have resorted to bilateral agreements as a form of forum
shopping to better achieve their own interests, in disregard of a more balanced
approach to intellectual property right (IPR) negotiations.

The justifications in favour of pharmaceutical patenting in developing countries are
that it induces foreign direct investment (FDI); it stimulates local inventive activities;
and that it encourages transfer of new technologies into the country. This study is
aimed at examining whether TRIPS-Plus rules on pharmaceutical patents generate
benefits to developing countries by looking at the situation in Thailand. The TRIPS-
Plus rules under the proposed Thailand-United States Free Trade Agreement
(TUSFTA) are comprehensive, covering the following issues: restricting the grounds
for exclusion of patentability; patents for any new uses or methods of using a known
product; prohibiting pre-grant opposition and revocation of patents; limitations on the
issuing of compulsory licenses; extension of patent term; data exclusivity; linkage of
drug registration and the patent status of a drug; trade marks, and linkage of IPRs and
investment.

This study finds that Thailand does not have a functional technological base and this
makes the country industrially and technologically dependent on foreign interests. It
consistently loses trade balance in the pharmaceutical sector to its trading partners. It
is also evident that a stringent patent regime, as enshrined under TUSFTA, will have
no impact whatsoever in promotion of R&D in the country. By contrast, the inherent
monopoly privileges proposed in the form of TRIPS-Plus will hinder local R&D and
impede inflow of technology. Patents will continue to be used by foreign drug
companies as a mechanism for overpricing, transfer pricing and insertion of restrictive
clauses in technology transfer agreements.

The TUSFTA provisions will have a tremendous impact on technology prices. The
rules on data exclusivity, extension of patent term, and extension of the scope of
patentability will increase the ability of the patent holders to maintain high prices. The
rules will reduce generic competition, prohibit the use of a compulsory license to
make the patented drug available, and allow the patent holder to maintain a longer
monopoly position, charging a high price for its medicines. The TRIPS-Plus
provisions that link drug registration and the patent status of a drug will unnecessarily
restrain the entry of generic medicines, threaten the existence of the Thai generic
companies, and inhibit the capacity of the Thai generic industry to expand its market.
The prohibition of the pre-grant opposition will allow multinational companies to use
invalid or spurious patents to increase prices and prevent the local manufacturers from
producing the medicine.

Download the study: http://www.iprsonline.org/unctadictsd/docs/Jakkrit-edited%20final%20draft%2001%20Nov%2006-.pdf

source: ICTSD