Bloggings by boz

As long as I mentioned drug patents in an earlier post, it is worth noting that Brazil is planning on breaking the patent for an AIDS drug.

Thomas Barnett, citing WSJ author O'Grady, lists the following five points against breaking the patent:

1) Brazil wants to become a biotech center in the global economy, and companies won't go there if they fear they'll be ripped off

2) Foreign direct investment will suffer

3) Brazil already gets breaks on the drugs that are under patent, and several of the drugs they currently use have no patent protection

4) This is part of Brazil's larger effort within the World Intellectual Property Organization (WIPO) to push a "development agenda," and such a push may put them at odds with fellow New Cores India and China, which are making big efforts to strengthen property and intellectual rights in their countries in order to keep the FDI flowing.

5) Brazil ain't exactly poor, seeing that it has a space program and big time aircraft industry.

Drug patents are a funny area where the free-market promoters shout for more regulation and intervention from international organizations (whom they normally laugh at). Meanwhile the normally pro-regulation left questions why poor countries should be regulated in this area.

If Brazil breaks the patent and O'Grady is correct, foreign investment will leave the country. Other countries may also step in a place some sort of economic punishment on Brazil if they believe Brazil's patent breaking is stifling innovation. If either investment leaves or other countries restrict trade with Brazil, then Brazil will take actions to correct their mistakes and promote tighter patent laws. A specific pharmaceutical company will lose money, but the system will self correct as Brazil works to prevent it from happening again.

If O'Grady is wrong, then Brazil will get their cheap drugs and private companies will not be too worried because it was a specific situation in which they wouldn't have made money anyway.

Brazil will weigh the probable costs and benefits in this case, make their decision and then correct for any issues that arise. If they are harshly punished by foreign investors or other countries, they will change their policies.

In the meantime, good for Brazil for being willing to push the limits of the West to try to fix a problem they have. They will lose out if they go too far, but up to this point, the West is making a lot of noise about intellectual property rights but doing very little otherwise to show that we care. If we're not willing to step up and challenge Brazil's actions or come up with innovative solutions, Brazil will continue to move forward on their own to solve their problems.

UPDATE: To give a completely different example on markets and drugs, Canada will move to restrict drug exports to the US because they can't handle the increasing exports of drugs to the US plus Canada's needs. This will be an interesting case to watch as well.