Parallel Trade of Patented Pharmaceuticals: A Discussion from Developing Country Perspective

Abstract

Although the legitimacy of parallel trade was established in the Trade-Related Intellectual Property Rights Agreement 1994 (TRIPS Agreement) and re-affirmed in the Doha Declaration on TRIPS Agreement and Public Health 2001 (Doha Declaration) , parallel trade in patented pharmaceuticals has so far been one of the most heatedly debated topics. Multi-national pharmaceutical companies complain that parallel trade of patented pharmaceuticals denies them adequate protection of their patent rights and prevents them from recouping the costs of pharmaceutical development including research and development (R&D), regulatory approval and amortization of the cost of unsuccessful drug development. In contrast, the developing (and least developed) countries, suffering from the burdens of high disease levels and lack of resources to pay for high priced medicines, support liberalization of the parallel trade in patented pharmaceuticals to fulfil basic human needs. In addition, developing countries have a greater focus on consumer interests, social welfare and health care policy concerns. The puzzle, therefore, is how to fully understand the differences and how to harmonize the interests of the multi-national pharmaceutical companies with those of developing countries. This article, discusses the rationale of developing countries’ arguments in favour of parallel trade in pharmaceuticals in conjunction with an analysis of international and national legal frameworks of parallel trade in pharmaceuticals and its two-sided effects of on developing countries. The article also compares the counter-arguments of multi-national pharmaceutical companies as well as the applicable legal treatment of parallel trade in developed countries, particularly the United States (US) and the European Union (EU). The article ends with proposals for developing countries to utilize the parallel trade of pharmaceuticals as a useful tool for access to essential medicines in order to combat the devastation resulting from epidemic diseases, and for building up national pharmaceutical industries. In particular, the questions of how to lessen any negative effects of parallel trade in pharmaceuticals and why it should be combined with the compulsory licensing of pharmaceutical-related patents as well as technology transfer in the field of pharmaceuticals are mentioned in the set of proposals.