Lack of competition is central to the problem of access to medicines. Competition regulation is required to curb the unchecked exercise of market power which, in the context of patents, may be defined as attempts to extend exploitation of a patent beyond the boundaries provided by intellectual property rights.56 Such patent abuses include monopoly pricing which limits access, especially among the poor; non-price predation, whereby intellectual property rights are used to bring bad-faith litigation and opposition proceedings in order to exclude and harass competitors; the acquisition and strategic use of patent portfolios to prevent competition by similar but non-infringing products; and the continued blurring of the lines between invention and discovery.57,58
56 Lahouel and Maskus (1999), p. 23.
57 Lahouel and Maskus (1999), p. 25.
58 Vivas-Eugui (2003), p. 21.
Despite the continued increase in patent protection in developing countries, and while article 40 of TRIPS permits countries to use competition measures subject to permitting opportunities for administrative review and bilateral consultations to deal with abusive behaviour, very few developing and least developed countries have adequate competition. Moreover, the prohibitive costs of patent litigation and of administering a patent and competition system present a substantial barrier to obtaining timely and just resolutions of disputes over patent validity or abuses of patent rights. The lack of adequate competition policies and enforcement mechanisms has the effect of undermining the potential for the use of TRIPS flexibilities. This means that developing countries will not be able to use the flexibilities in TRIPS that allow them to use competition law to prevent abuse of patent rights and thereby improve access to essential medicines.
An additional problem closely related to anti-competitive practices and abuse of patent and related rights is that of information asymmetries. While local companies in developing countries with a pharmaceutical manufacturing base can manufacture unpatented products without having to resort to compulsory licensing, there is no ready or easily accessible information on what drugs are patented in which country. This lack of information discourages local companies from manufacturing drugs for fear of lawsuits from patent holders who are generally overzealous in litigating even invalid patents. One illustration of the problems posed by lack of information is the blockage of generic production in Thailand of ddI, a drug for HIV/AIDS. Bristol-Myers Squibb (BMS) was able to obtain patents for formulation claims in Thailand when the same had been rejected by the United States Patent and Trademark Office (USPTO).
It may also be noted that in small national markets, no substantial financial incentives exist for generic drug companies to challenge bad patents, unlike in the United States, Japan and European markets. It is thus predictable that a considerable number of patents in developing countries will be bad, because the countries or competitors will not have the capacity or economic incentives to evaluate and litigate overreaching patent claims. Lack of information on patent status and pricing information also adversely affects the decisions and effectiveness of procurement agencies.