Sound the Alarm

Commentary, Environment, Regulation, Rolf Penner (historic), Uncategorized

Sound the alarms. International policymakers gathered in Switzerland during the first two weeks of June, 2005, to debate the issue of property rights surrounding the discovery and development of genetic resources that create new drugs. Few countries have more at stake than Canada, a world leader in pharmaceuticals. The choice—between the current contract-based system of sharing resource benefits and a highly regulated international bureaucracy—is stark.

At risk is the future of genetic discovery and the manner of regulating the expensive and already dying art of bio-prospecting. A small cadre of international delegates is lobbying for a new global regime that will cost billions in investment and subsequently even more in lost medical treatments. The stifling, inequitable regime that could emerge would impose huge losses on an important industry.

A new study by the Pacific Research Institute (PRI) makes this concern concrete. The report finds that worldwide capital losses, if the views of a handful of delegates eager to regulate should prevail, would total US$144 billion between now and 2025. That stunning figure, unadjusted for inflation, cloaks the true losses, which are even more astronomical. More important for Canadians is the study’s estimation of our own losses, with our share of the investment crash pegged at nearly $4 billion in 2004 dollars.

Unfortunately, monetary consequences represent only part of the potential harm. We should also expect a stifling effect on healthcare advances at home and abroad. Profits generated by intellectual property patents actually help the poorest of nations in the form of medicines and assistance to treat a range of illnesses, including parasitic blindness, malaria and even AIDS. The PRI study found that reduced investments from pharmaceutical companies as a result of the proposed regime would entail the loss of 150 to 200 new medicines that might otherwise have provided treatment for any number of ailments.

But the disadvantages extend even further. Also at risk are the environments of many developing countries. Under today’s system, national governments negotiate one-on-one contracts with investors and bio-prospectors. For example, Costa Rica signed an agreement in the 1990s with the drug giant, Merck. Under the deal, the country generates income by selling Merck the right to bio-prospect in their conservation areas. The money is then used to fund Costa Rica’s management of its wild lands. The Costa Rican government applies 10% of the up-front fee and 50% of any royalties to the national park fund to support conservation efforts.

Under the new, restrictive regime debated in Geneva, such a mutually beneficial agreement could never materialize. It’s difficult to ascertain which impact—economic, health or environmental—would be most devastating. The weighty titles of the forums in Geneva pale when compared to the importance of the matters at hand. The acronyms include WIPO-ICG, which stands for World Intellectual Property Organization Intergovernmental Committee on Genetic Resources and WTO-TRIPs, the World Trade Organizations meeting on Trade-Related aspects of Intellectual Property Rights.

Instead of a highly regulated international bureaucracy, we should encourage the implementation of local contract-based laws that ensure strong economies by protecting intellectual property. This policy model promotes and rewards the development of cures for diseases that afflict the developing world and supports long-term stewardship of the environment in developing countries. The proposed circumvention of intellectual property rights would lead to the opposite.

Fortunately the outcome is not a foregone conclusion. Canada has time to lead this process and to protect our interests. Regulation hardly ever results in outcomes superior to market-based agreements defined by mutual advantage.

Let the alarm sound, and may common sense prevail.