People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 08

February 21, 2010


Patent System: Who Benefits?

Amit Sen Gupta


THE  Indian government is presently engaged in framing a bill that seeks to strengthen modalities for patent protection of public funded research and development. While this exercise has attracted wide spread criticism from the scientific community and other public interest groups, it is moot to examine the present debates regarding the value of patenting itself. One of the major areas of contention as regards patenting has been medical care. A recent debate in Plos Medicine (an open access journal published by the public library of science), examines this issue in some detail.

Votaries of the patent system argue that the advances we see today in medical technologies are a consequence of the patenting system. We have heard the familiar argument often that companies would not invest in R&D if the patent system were not to provide incentives in the form of patent monopolies. However today there is room for real debate about whether the patent system actually leads to development of better health producers. There is evidence, in fact, that goes beyond this to suggest that the patent system may actually impede the development of new and useful medical technologies, and also restrict access to those who require them the most.




Let us retrace our steps and examine the logic that drives the patent system. Patents are a kind of a contract between the inventor and society (generally represented by governments). Any contract involves rights as well as obligations. In the case of the patent system the inventor is granted the right of monopoly over her or his invention, i.e. the unhindered ability to sell, duplicate or market the product of an invention in any way the inventor may wish to. It is a monopoly right because the right comes with the provision that the inventor can use the right to bar others from using the invention in any manner. The period of monopoly, under the harmonious system determined by the TRIPS agreement, is 20 years. In lieu of the monopoly right the inventor is supposed to make available all knowledge pertaining to the invention, so that society at large can benefit from the invention for future generations to come.

The widespread disquiet regarding the prevailing system of patents has its roots in the way the system works today. In the area of medical care, there is now unambiguous evidence, that there has been a perceptible slow down in the number of new inventions that benefit medical care. Curiously, this slow down has become especially prominent since 1995, that is after the TRIPS agreement, providing for strengthening patent systems in all parts of the world, came into force. While a causal relation between the two may be difficult to demonstrate conclusively, what is clear is that a strengthened patent system is not leading to newer and better medical technologies.



Within this lies another story. The patent system is also a major factor today in promoting inequity between developed and developing countries, and between the poor and the rich. The patent system is a creature of the market and operates in tandem with the logic of the market, where people with money can avail of products that they need, while others are �costed� out. The market does not understand concepts such as �public goods� or humanitarian needs. Thus, it is not surprising that the research system that is driven by patent monopolies is skewed to favour inventions for which there are enough buyers. The ability to buy certain products, thus, determines research priorities. Such priorities are not necessarily those that health needs would identify. In the globe today, malaria, pneumonia, diarrhea, and tuberculosis, together account for 21 per cent of the global disease burden, but receive just 0.31 per cent of all funds devoted to heath research. More than 1 billion people -- an overwhelming majority of whom live in developing countries such as India -- suffer from what are termed as �neglected diseases�. These are diseases like malaria, kala azar, chaga�s disease, etc. that are neglected not because they are not public health problems, but because generally the poorest of the globe�s population suffer from them. They are neglected by the research system because patenting remedies to treat them is of little value, as the poor do not have money to but these remedies. We thus have what has been called the 10-90 gap, where 10 per cent of research funds are spent on diseases that affect 90 per cent of the global population.

The patent system, thus, drives research in areas where new products have rich buyers. A study shows that of the 1,556 new pharmaceutical compounds that appeared on the market between 1975 and 2004, just 20 were for tropical diseases and tuberculosis. Such a situation has prompted the United Kingdom's Royal Society, an independent academy of science, to argue that �uses of intellectual property that benefit people in one part of the world but conspicuously fail to benefit others, or even act to their detriment, are not what the [patent] system is supposed to be about�.




The story does not end here. When medical products that are useful are researched, the monopoly pricing resorted to by companies ensures that they are out of the reach of an overwhelming majority of people who live in countries such as India. Pharmaceutical companies do not tailor prices to national situations but price their products based on what the developed country markets can absorb. To set things in perspective, the entire Indian market for medicines accounts for less than 2 per cent of the global market while the US market alone accounts for more than 25 per cent of the global market. Look at it in another way � Pfizer�s global sales of its anti-cholesterol medicine, Lipitor, was US$ 14.38 billion, i.e. about 25 per cent of the value of the entire Indian market for medicines. Companies, thus, would have little or no interest in selling in the Indian market. A stark example of this is the way Novartis has priced its leukemia (blood cancer) drug, Gleevec, in India. A course of Gleevec, which has to be taken life long, costs Rs 120,000 per month. Clearly Novartis has little interest in actually making the drug available in India.

Recent data indicates that about 3.8 billion people in the world (that is 60 per cent of the world�s population) live on less than US$2 per day. For them, the patent driven research system is a distant notion that does not touch their lives in any manner. In a different era, before India was seduced to sign the TRIPS agreement, Indian companies were the lifeline for poor people across the globe. Protected by the �no product-patent� provision of the 1970 Patent Act in India, Indian companies could sell medicines at a fraction of the cost that is charged by MNCs. They could do so because the monopoly pricing of medicines that MNCs resort to is not based on how much it costs to manufacture, but on how much they can charge. It was Indian companies such as Cipla that brought down the cost of treating HIV-AIDS patients to $100 per year, from $15,000 charged by MNCs.




The most profound impact of the patent system, however, lies in the evidence that it is impeding efforts to develop truly innovative products. The patents system blocks research because many more patents are taken out today to stop others from working in a certain area than to actually protect a developed product. The monopoly over the actual product comes much later � the monopoly power of patents is initially used to block others from researching, and thereby developing a useful product. Such blocking patents cover a number of areas, such as reagents, methods, or devices.

The obvious question that we are confronted with is, how was such a system allowed to develop if it does not serve any of the basic purposes of research, i.e. stimulate the right kind of research, allow research to take place unhindered, and allow the fruits of research to reach the largest numbers possible. The answer lies in a simple fact. The present patent system is an anachronism. It developed in the 16th century to promote individual inventors and to ensure that their inventions were not lost to humanity. The patent system, thus, developed to promote disclosure and not secrecy. Yet, five centuries later, that is exactly what it does. Nor does the patent system, generally, benefit individual inventors as a majority of patents are owned by corporations.




Clearly a different paradigm to promote research is needed. Such a paradigm is being debated in India and abroad. In this new framework, research needs to be delinked from profits and the market. The biggest argument in favour of patents is that there is no other system available to incentivise research. The argument is flawed at two levels. True, such a system does not exist on a global level today. But the reason it does not exist is because global capital, especially US capital, needs rent incomes to survive. The US has long lost its edge in the manufacturing sector, first to the EU and Japan, and now to China. It clings on to the patent system as its lifeline and obstructs all attempts to restructure the architecture of the research system.

The argument is also flawed because we are seeing new ways of doing research. The free and open software movement has challenged the might of the largest patentee in the world � Microsoft Corporation. Linux, a product of this movement, is the industry standard for many applications. We are starting to see this happening in biological research. In India, our own CSIR, has pioneered the Open Source Drug Discovery programme. These new ways of doing research also incentivise research, but they do not do so through provision of monopoly control over the products of research or research itself.

All systems of research develop through the enabling environment that is provided by public policy. Those who argue that Indian research systems would benefit by strengthening patent based systems are either na�ve, or motivated, or both. The future lies in research systems that are open and unencumbered by patents and other such monopolies. The moot point is if we have the vision to look into the future and choose judiciously.