TCS Daily

Bureaucracy Kills Innovation

By Tomasz Teluk - December 27, 2007 12:00 AM

Today's main dangers to public health stem from taxies, duties, bureaucratic registration procedures and other impediments to free trade in pharmaceuticals, most notably violations of intellectual property rights.

We have seen enormous progress in medicine during the last 50 years. Many dangerous diseases that were incurable in the past are much easier to cure today, thanks to the rapid development of science and technology, especially by private companies and entrepreneurs who have invested billions in research and development. These private sector investors depend on intellectual property rights to earn a return on their investment. Without intellectual property rights, there will be very little research and development. Whether we like it or not, profit is the driving factor behind innovation.

It is easy to imagine the disastrous consequences of making the state responsible for public health research and development. Unfortunately, we hear more and more voices suggesting that this is the way to go. These voices advocate the expropriation of privately owned intellectual property to the benefit of government-run organizations "for the care of human lives and health." To me, this smacks of cynical opportunism and reminds me of the communist practices that set back the economies of Poland and other countries during the Cold War.

In late 2006 and early 2007, the military junta in Thailand expropriated the patents of European and American companies to the benefit of the Thai Government Pharmaceutical Organization. The motivation was not human health, but profits for people connected to junta. Let's look at the facts. Thailand is not a poor country! But the Global Fund for AIDS, Tuberculosis and Malaria gave this country a donation of $191,4 million. Out of 66 million inhabitants in the country, 135.000 are HIV positive and half of them receive regular treatment. There is no reason for compulsory licensing. There is no extraordinary situation, epidemic or emergency state. The motivation behind the compulsory licenses was not human health but money for a government-controlled company. The World Health Organization states that duties, taxes and registration fees have a greater influence on the final price of drugs than costs of production. The patient has a clear interest in low taxes and respect for intellectual property rights. If innovative companies are prevented from receiving a return on their investments, innovation will come to a halt.

The WHO Intergovernmental Working Group on Intellectual Property, Innovation and Public Health has been debating compulsory licenses. Thailand, Brazil and some left-wing Members of European Parliament are supporting compulsory licensing. They fight for their own interests. Not for the health of patients.

Dr. Tomasz Teluk is President of the Globalization Institute and Fellow of the Centre for the New Europe.


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