The exclusive rights conferred by IPRs enable the charging of prices above marginal costs. This creates a difficult dilemma for policy makers180: how to reconcile the aims of intellectual property, which provides incentives by restricting the use of the protected products or processes, thereby guaranteeing extraordinary gains, with society’s interest in allowing the maximum use of knowledge through low prices, in ensuring diffusion and in facilitating continuous improvement of innovations. As noted by David (1992),
“Intellectual property inherently entails restricting the extent of useful application of the new knowledge by permitting the imposition of license and royalty charges upon the users. The more secure is the patent monopolist (even though it has been publicly disclosed), the higher the charges that can be levied. This reduces the benefits that would have accrued to society at large, and to consumers in particular, had the information been made available for competitors to exploit in the form of new products or production processes” (p. 16).
180 See, e.g. OECD, 1992, p. 50.
This dilemma is particularly serious in the area of public health, as increased prices mean reduced access to medicines which in some cases determines life or death. Proposals to protect TRM often overlook this crucial aspect: protection may benefit the few who may be able to commercialize TRM, but may hurt all those who need access to the protected products.
A basic question is, therefore, the extent to which IPRs should be granted over TRM, in view of the costs to society that the exercise of such rights may entail. Though this issue needs to be more systematically examined, some considerations can be made here.
Patents (and to some extent, other IPRs) are justified, according to the prevailing economic theory181, to stimulate investments for research and development. Since much TRM already exists or is continually improved as a result of traditional practices, IPRs protection is unlikely to play a significant role, if any, in stimulating the development of such knowledge.
181 See, e.g. Penrose, 1951; Gutterman, 1997, p. 36-70.
In many cases, herbs are sold as dietary supplements and, therefore, they fall outside the regulations on medicines, which are generally stricter than those related to such supplements (Balasubramanian, 1997,p.iii). In other cases, commercialization is subject to compliance with marketing approval, and investments are necessary to scientifically validate medicines. However, the tests required to validate any particular traditional medicine are, as indicated above, more limited than for non-TRM medicines, and often supported by public funding.
Despite that in the last twenty years the emphasis of the IPRs paradigm has shifted in some countries from the protection of invention to the protection of investment as such (Correa, 2002), IPRs are essentially granted to reward inventive or creative contributions rather than just any investment related to the generation of information. As also mentioned above182, governments may stimulate investment in validation of medicines used in TRM systems by non-IPRs means, for instance, by public funding and the granting of exclusive marketing rights for a limited period.
182 See section IV.h.
The recognition or establishment of new types of IPRs on TRM may reduce, rather than enhance, access to medicines and health treatment, particularly by the poor183. In dealing with TRM, developing countries should very carefully balance the expected benefits to be derived from IPRs protection, with the costs likely to arise from the limitations on access to TRM treatment that the exercise of such rights would entail. The basic question is to decide whether priority should be given to protect or rather to promote the use of TRM.
183 The likely negative impact on access to health care of the strengthening of IPRs in developing countries, has been stressed in recent analyses, including some studies by the World Health Organization. See, e.g, Velásquez and Boulet, 1999.
The promotion of the use of TRM calls for an integrated policy comprising, inter alia, the assessment of known herbal medicines184, the exploration of potential medicinal plants, the training, certification and registration, where appropriate, of traditional healers and practitioners (Balasubramanian, 1997, p. iii), as well as standarization and improvement of the of TRM products that are industrially produced (Pranoto, 2001, p. 1). An example of this promotional approach is provided by Act No. 8423 (1997) of the Philippines, which aims “to accelerate the development of traditional and alternative health care” by improving the manufacture, quality control and marketing of traditional health care materials (Section 3.d). Policies for the promotion of TRM should also include educational and community extension programs, as well as the development of greater interaction with modern medicine. Particular attention should also be paid to R&D needed to establish the safety and efficacy of TRM, including to test TRM used to treat common diseases such as malaria.
184 WHO has developed Guidelines for this purpose (see WHO, 1996).
Finally, it should be noted that the promotion and commercial success of TRM may have positive effects, but also some deleterious consequences. The increase in the demand for medicinal plants may raise their cost for the local population, for whom TRM is often the only affordable medical treatment. Moreover, many medicinal plants face extinction or severe genetic loss. Hence, governments should control trade in medicinal plants in the framework of broader policies for the conservation and sustainable use of such plants, with an understanding that the loss of biodiversity may also have implications for public health185.
185 Peru, for instance, passed a law in July 1999 which bans the non value-added export of some botanical species with known healing properties, which had become the target of massive extraction by foreign laboratories. The law covers the two best-known medicinal plants in Peru’s indigenous pharmacopoeia: ‘cat’s claw’ and ‘maca’.