The Implications of the WTO TRIPS Agreement for the Pharmaceutical Industry in South Africa: From A National Innovation System Perspective

Abstract

Keywords: WTO, TRIPS Agreement, Intellectual Property Rights, South Africa, National Innovation Systems, Pharmaceutical Industry, Public Health This thesis analyzes the implications of the WTO TRIPS Agreement for the pharmaceutical industry and public health sector in South Africa from a National Innovations System (NIS) Perspective. The notion of ‘national innovations systems’ is an important one because it specifically addresses intangible investment in technological activities that involve a number of institutions, namely - business firms, relevant government departments, banks, universities, public research institutes and other training centers - the links between them and the associated incentive structures and competencies. Furthermore much of the contentious debate about TRIPS has focused on its impacts on access to health-related treatments for the poor, rather than on its likely impacts on innovation and industry. My main arguments are that: (i) there is no robust method of determining the appropriate balance between innovation and technological diffusion, subjecting Intellectual Property Rights (IPRs) policy to political influence rather than economic analysis; and (ii) to fully appreciate the enormity of the new global IPRs regime and its impact on the pharmaceutical industry in South Africa, it is important to examine the relevant aspects of the country’s national innovation system. The strength of the pharmaceutical industry aspects of the NIS determines the extent to which firms are able to innovate and take advantage of TRIPS. The inseparable link between industrial development and public health is an aspect of the debate on access to medicines that has not received much attention. In the current environment, a continued laissez innover strategy coupled with stronger IPRs is likely to stifle and reverse the early gains that have been made in allowing foreign technologies to be mastered and improved. This in turn places limits on the industry’s and the country’s long term development and the improvement of living standards and especially public health.