On Friday, the Colombian government announced it would issue a “public interest declaration” allowing their nation to forcefully set a lower price on Novartis’s lifesaving cancer drug Glivec. This move flies in face of the legal bind between private industry, autonomous governments and the people they represent – jeopardizing the availability of existing and future therapies used to treat the biggest threats to public health. By taking this route of action, Colombia has set a dangerous precedent, threatening the sanctity of international patent law and thus the industries that rely most on strong IP protections.
Patents like the one on Glivec are absolutely vital to ensuring that we continue to make advancements in the worlds of medicine and technology. Violations of these patents de-incentivize investment in research and development – the core of innovation that comes out of both the public and private sector. From prescription drugs and medical devices to new mobile technology and software development, the companies making the biggest leaps forward for our society depend on the profitability of the IP to continue doing so.
Consider the following: Novartis spent over $9.9 billion dollars on R&D in 2014 to fund projects ranging from cardio and anti-inflammatory treatments to promising cancer therapies. Without the reassurance that these treatments could one day become profitable, thanks to the protections of the patents they earned through R&D, companies like Novartis cannot continue to invest in discovering these treatments. These are the realities of the free market.
Additionally and not surprisingly, nations with strong IP protections lead the world in developing these breakthroughs. According to the Global Intellectual Property Center’s Global IP Index, countries with strong IP protections have, on average, 2.5 times as many R&D focused employees than those that do not have strong IP protections. Citizens who live in these countries have 30 percent more access to new technologies. Facts such as these point to a simple truth – that recognizing patents moves economies forward.
With that, one of the best ways to standardize IP protections is through official recognition in free trade agreements. Moving Congress to ratify the Trans Pacific Partnership and in American representatives’ work to resolve other agreements like TTIP – patent recognition must be front-and-center in negotiations. Indeed, Colombia has acknowledged the importance of robust IP provisions in free trade agreements (FTA) as the U.S.-Colombia FTA includes a substantive IP chapter. While some of the obligations included in the FTA have yet to be met, the Colombian government has acknowledged the critical role IP protections play in driving trade and attracting foreign investment.
Special exceptions for government intervention on pharmaceutical distribution are necessary in some cases, such as a public health crisis. But by using this approach to bypass international patents and control pharmaceutical pricing, Colombia is opening a Pandora’s Box.
With a bright future for the U.S. and Colombia’s economic relationship in mind, Colombian officials, particularly the Minister of Health, should stop their current trajectory and work with Novartis and others to find a reasonable solution to this dispute without the use forceful price exceptions. This will ensure that Colombian patients will have access to Glivec and future treatments, while strengthening Colombia’s economy and investment climate.