July 02, 2007

In today's Wall Street Journal, Ronald Cass takes issue with a number of Congressional Democrats who issued a letter chiding the U.S. Trade Representative for putting Thailand on a list of IP infringers.

Cass says that:

"Henry Waxman and 34 other House Democrats wrote a letter to U.S. Trade Representative Susan Schwab late last month demanding that she rescind her decision to put Thailand on the "Special 301" Priority Watch List of nations violating intellectual property rights.
Their protest demonstrates an uncanny instinct for getting things wrong -- reducing important protections for trade and intellectual property on behalf of an authoritarian government installed by military coup, meanwhile damaging American companies working to cure HIV/AIDS, coronary-artery disease and other threats to world health. If their intervention is not rebuffed, it would also undermine the rule of law."

Cass' points are well taken. The protection of intellectual property rights encourages innovation in knowledge-intensive industries like pharmaceuticals where barriers to market entry (i.e, FDA regulations) are severe and the costs of developing new products are high. Without the guarantee of a substantial period of monopoly protection (and high initial prices) for their products, companies would be unable to attract the investors and capital required to create new pharmaceuticals.

If policymakers and philanthropists are concerned about poor countries being able to afford new medicines (like AIDS drugs) the Gates Foundation and the President's Emergency Plan for AIDS Relief -or the Open Society Institute - can step in to buy drugs on their behalf.

Sabotaging intellectual property rights in middle-income countries like Thailand sends a signal to investors that the returns on their investment in new medicines will be limited by political expedience. Fewer new medicines tomorrow will hurt poor nations and rich nations alike - surely not an outcome that Congress intends to promote.

Posted by Paul Howard at July 2, 2007 05:58 PM