Despite the warm reception President Trump received when he visited Saudi Arabia in May, and the signing of a major weapons deal, the Saudi government has not been very hospitable to many other American companies trying to do business within its borders.
In modern times, many treaties and trade agreements recognize the need for effective patent protection. And until recently, there were relatively few complaints that Saudi Arabia wasn’t living up to those standards.
However, in April the Saudi government gave approval to a local company to manufacture and sell a medical treatment created and patented by an American company. That comes on the heels of another instance in which marketing approval for American health care products was given to Saudi companies who were also allowed to free ride on American research and development.
The government of Saudi Arabia is giving permission to domestic companies to sell medicines when doing so will violate the rights of American innovators despite the fact that the treatments are already available in Saudi Arabia. And with one of the world’s highest income levels, the Saudis shouldn’t even try to pretend they can’t afford the legitimate market price.
They are literally putting the government’s stamp of approval on companies stealing from Americans. That way they can create manufacturing jobs in Saudi Arabia without spending the time and money needed to develop the actual innovation behind the product.
Of course, those jobs in Saudi Arabia may mean fewer jobs here in the U.S.; in this case, Indiana and California, where the legitimate treatments are formulated.
American biopharmaceutical companies are the envy of the world. They are leaders in innovations that literally save lives. But those breakthroughs don’t come easily or cheaply; it takes years and billions of dollars of research and development to bring a new treatment to market.
We have seen this type of industrial policy before. For decades countries like India and China have had loopholes in their patent systems that allow domestic manufacturers to produce and sell the breakthroughs created by American companies, especially in the health care field.
And now it appears that Saudi Arabia has jumped on that bandwagon.
This not only moves American jobs overseas, it drains off money that would otherwise be available for further research into new and better treatments.
President Trump has rightly pointed to the need to hold other countries to their commitments in trade agreements and to fair treatment of American competitors. There could hardly be a clearer case of that when a foreign government is authorizing violations of the rights of Americans under its own law.
At least on the surface, it seems like Saudi Arabia is making a conscious decision to allow domestic copycats to build their business off the investment in innovation made by Americans. And that is precisely the sort of thing the Trump Administration has vowed to stop.
Steven Tepp is President & CEO of Sentinel Worldwide and Professorial Lecturer in Law at George Washington University Law School