Let`s put a stop to the sophistry and tell the truth. Freer trade amongst Canada, America and Pacific partners will improve the health for all peoples everywhere.
The Trans-Pacific Partnership (TPP) – a free trade agreement being negotiated – will benefit 800 million people and cover nearly 40% of the world’s economy including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam.
Freer trade is good. Ever since the economist David Ricardo argued, in 1821, in favour of national comparative advantage, trade barriers and non-trade barriers have been declining. It is no coincidence that just about all of the economic growth – and medical discovery – in the history of humankind has occurred since.
The TPP will be a win-win-win: jobs for workers, profits for investors to re-invest, and revenue for government programmes such as healthcare, education, research and infrastructure.
Yet, during the last few years, retailers of misinformation as well as Nobel laureate Joseph Stiglitz, who should know better, have been spreading the false notion that freer trade will drive up drug prices and ruin Americans’, and ergo Canadians’, health. This is false. There is no evidence to support such a claim
New, brand-name, life-saving, life-improving pharmaceuticals today require upwards of $1.2 billion to develop, due to the complex and expensive science involved, the cost of conducting patient trials to ensure safety and efficacy, and the cost of complying with government regulations. These drugs are priced around the world according to what the local market can bear – differential pricing.
If drug prices are forced lower by government in the US, then the price of these drugs must go up in poorer countries. Brand-name drug manufacturers must collect an overall amount of revenue to pay for the development of those drugs so that they can stay in business to produce new drugs yet to be discovered. This equilibrium approach to pricing is the same used for almost any innovative, consumer product that has universal appeal and utility.
Trade can actually reduce prices because overall volumes increase; protectionism increases prices.
The facts are straightforward: the innovative pharmaceutical industry is the most research-intensive industry in the world; it accounts for only 1% of the global economy yet it contributes over 10% of all private sector donations to international development; there is no evidence that patents pose any barrier to essential medicines being affordable and accessible throughout the world; almost all of the medicines deemed “essential” by the World Health Organization (WHO) are off-patent and genericized; the innovative pharmaceutical industry has spent $8.5 billion to provide 9.5 billion treatments to nearly 1 billion of the poorest on earth.
So, the survival of innovative pharmaceutical companies is important. Every medicine we take was developed by a research-based drug company in the private sector. Not by government. Not by generic drug manufacturers who just copy, at near-zero marginal cost, the brand-name once the latter’s patent has expired. The stronger innovative drug-makers are, the better they will be positioned to respond to the public health needs of all. Not the other way around.
The TPP nay-sayers focus on the proposed harmonization of the rules that protect intellectual property, incent and reward innovative risk-taking: patents. Patents, which give a producer market exclusivity for a period of time, are absolutely necessary for the innovative firms to cover their costs and invest in the future before generics come to market. Proposed patent term extensions, data exclusivity, and a common definition of utility will create a level playing field for all signatory nations.
Creating a level playing field amongst nations will stimulate greater innovation, lower compliance costs, and reduce the uncertainty that discriminatory regimes create.
The synergy amongst innovation, free trade, and the protection of intellectual property has been empirically recognized and acknowledged since before Ricardo. Disregard for the protection of intellectual property creates a very real threat to economic growth, jobs creation, and global public welfare.
We want drugs; we need drugs. Innovative medicines today are conquering cancers and rare diseases that were thought to be unconquerable 10 years ago. Canadians and Americans are bighearted, beneficent people who willingly subsidize drugs for the poorest of nations.
Arguing against innovation, and for the status quo, makes absolutely no sense either in economic terms or on compassionate grounds. Tell the mother of a child with a disease for which there is yet a cure to be discovered that we don’t need innovation. Tell those who barely eke out a living in Haiti that the donation of medicines could cease because of some self-centred, mischievous day-dreamers. Arguments against free trade, patent protection, and the innovation that they create are purely ideological and blind to the facts.
Stop the sanctimonious posturing and let’s get on with improving the health of all.
D. Wayne Taylor, PhD, recently retired from McMaster University, serves as the Executive Director of The Cameron Institute, a not-for-profit think tank specializing in health, economic, and social issues.