The Pharma Sector and Intellectual Property Rights: Pros and Cons

The Case for Patents

The Pharma sector is often caught in the fight over whether the enforcement of IPR or Intellectual Property Rights should be followed or whether the sector exists for alleviating the health concerns of the poor and the needy thereby ensuring affordable drugs to the masses.

Before we launch into the discussion of the pros and cons of this debate, we must first examine the issues at hand. It is indeed the case that the Pharma sector spends huge amounts of money in research and development of new drugs which are then priced at rates that let them recoup the investment as well as make profits.

Further, the current sociopolitical and legal thinking in the United States and the West is that since the Pharma sector spends a lot on R&D, they must be allowed to patent the drugs that they develop and ensure that competitors cannot copy or produce the same drugs. This is the basic legal position in most parts of the world where the idea is to incentivize and encourage the Pharma companies to come out with better drugs by patenting those inventions and pricing them accordingly.

The Case against Patents

However, this line of thinking has not been followed in the Third World where the governments insist that the Pharma companies can only patent the processes by which they manufacture the drugs and not the underlying product. This means that any competitor can make the same formulaic drugs using a different process thereby ensuring price fairness due to market competition.

The rationale for this thinking is that most of the Third World steeped in poverty cannot afford the high prices for drugs especially when the majority of their citizens who are often poor and needy are in desperate need of lifesaving drugs at affordable prices. This is the other side of the issue which the Western Pharma majors have objected to since they lose the monopoly over their drugs that are patented and in whom they have invested substantial amounts of money.

Indeed, with globalization and the opening up of many developing countries to Western companies in the 1990s, the various agreements under the WTO (World Trade Organization) such as GATT (General Agreement on Tariffs and Trade) required the signatory countries to dismantle protectionist regimes as well as to let the drugs be patented not only for the processes but also the products.

Debating the Issue

If we examine these two sides of the debate, it is indeed clear that both positions are strong and have valid points.

For instance, the case for patents and their protection is strong since the Pharma majors invest in R&D and drug trials and the time to market is indeed long. However, on the other hand, the developing world also needs their concerns to be take care of since they have not reached a stage where their people can afford medication that is prohibitively expensive.

The fact that the rampant spread of HIV (Human Immune Virus) among the Third World countries is the strongest argument for leaving out the drugs to treat them from patenting and thereby ensuring cheaper access to the people for such drugs.

Therefore, what we have is that a situation has been created wherein there is a heated debate between the proponents of patents and its opponents with neither side willing to back down from their positions. This calls for some serious dialogue between them as well as for the governments of the world to come out with steps wherein both the Pharma companies and their citizens win in the bargain.

Some Possible Solutions

For this to happen, both parties must be willing to concede ground and back down from brinkmanship. This can take the form of the Pharma companies cross subsidizing the expensive drugs especially those that treat life threatening conditions.

Further, they can also agree to a patent protection regime of five or ten years instead of the sometimes lifetime and sometimes decades long protection which they have at the moment.

Apart from this, there can be better cooperation between the various Pharma companies so that they undertake Pro Bono selling by differential pricing in their home countries and in the Third World. The latter in turn can encourage their domestic companies to invest more in R&D and not just copy the drugs made in the West which is the case in many of the Third World countries. Moreover, they can offset some of the losses of the Western Pharma majors by absorbing some of the costs and letting the poor and the needy benefit in the process. Both these strategies are currently being followed in India where the government subsidizes the HIV drugs in addition to many drugs that cater to life threatening conditions.


Perhaps the most optimal solution would be from the Pharma sector itself which again using the example of India wherein many Indian Pharma majors often price their drugs in such a manner as to benefit the poor.

Of course, the flipside is that unless the governments of the Third World countries make healthcare a right and ensure that their commitment is not only in speeches and instead, they walk the talk by improving the conditions in the hospitals and making generics as well as patented drugs affordable, the fight between the stakeholders would not be resolved.

In conclusion, the Pharma sector is too critical to be left alone to the whims of the market and therefore, there is an urgent need for all stakeholders to actualize strategies that would benefit the poor and the needy.

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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.