A healthy dose of property rights is good medicine
The Bangkok Post, Feb 18, 2005. p. 1

It is widely believed that biotechnology is the next technology growth driver in the global economy. Singapore, Thailand and Malaysia have all laid out national programmes to build strong biotech sectors. But as the week-long conference on the UN Convention on Biological Resources coming to an end today in Bangkok shows, environment officials in a number of countries are considering policies that would block the development of biotechnology.

Under consideration is a new regime to regulate access to genetic resources. The world's biggest developing countries--Brazil, India and China--along with others, want a global convention that would regulate patents on inventions developed from genetic resources. The concern is that developing countries, and their indigenous communities, are not securing the benefits when lucrative inventions are marketed. The world's biggest drug companies are the target.

Martin Khor, head of the Penang-based non-governmental organisation, the Third World Network, and a long-time campaigner for curbs on intellectual property rights, says: "Farmers and indigenous peoples are outraged that plants they have developed are being 'hijacked' by companies."

The number of blockbuster products developed from genetic resources is very small. The cost is not. Current estimates are that it costs drug companies over $800 million (30.8 billion baht) to get successful drugs to the market. But will regulating patent law stop the "hijacking"?

The key to preventing the "hijack" of genetic resources is to establish contract arrangements where payments are made for access to the resources and the right to use them. Any government can introduce such a system. The pharmaceutical company Merck has pioneered one with the government of Costa Rica. It is simple and effective. The payment for access is negotiated and each government decides how much of the payment is provided to indigenous communities.

India, Brazil and other so-called "mega-diverse" countries have proposed something much more complicated. They want an international convention that controls patents. Even after a patent has been granted for an invention using genetic material, the country from which the material was sourced would have the right to determine how products based on a patented invention from it would be used. This would certainly stop bio-prospecting because it would stop pharmaceutical industries in any country that adopted such a law.

The cost of developing new drugs is too great to handle without secure rights to use the genetic materials (provided by contract arrangements) and inventions developed from them (provided by patents). No country aspiring to develop biotech industries could succeed if it diminished intellectual property rights as proposed by the mega-diverse countries.

Mahathir Mohamad, the prime minister of Malaysia at the time, declared in 2002 the intention to make his country one of "the key biotechnology hubs in the world". Prime Minister Thaksin Shinawatra wants Thailand to be the "centre for life sciences, innovation and bio-medical research for Southeast Asia". Thailand understands the importance of effective intellectual property law. Since it enacted the Foreign Business Law in 1999, patents increased from 110 that year to 600 three years later. Investment in biotech increased commensurately.

Singapore has recognised that world class intellectual law is essential infrastructure for biotechnology. Thailand is not a member of the mega-diverse group which is backing the new convention, but Malaysia is. One wonders if environment officials appreciate the importance of modern biotechnology. Drugs which control HIV/Aids and cure river blindness, of which developing countries are the major beneficiaries, would not be available.

And do they agree with the political message which lies behind the idea of the new convention? Klaus Topfler, the head of the United Nations Environment Programme underlined it in his message to the Bangkok conference. Patents represented "private monopolies" which should be subject to community ownership. Is this an anti-private property message? Martin Khor is no fan of private property. He is a longstanding critic of business and a leading campaigner against the World Trade Organisation, a venerable free market body. One of his avowed goals is to diminish the effectiveness and authority of the WTO at large and its agreement on intellectual property.

NGOs like Martin Khor's may think that if less biotechnology is the result of constraining the development of new cures and inventions than that may be a good thing if the political goal of constraining the free market is served. Those who benefit from inventions that improve the world's health may see things a little differently. For governments, the choice is clear. Private markets which recognise and protect property rights have been much more successful in capturing growth and raising living standards.

Governments who want to foster biotechnology and encourage investment in it need to create the environment that supports that industry. Developing a convention that guts the capacity of intellectual property law to husband research and achieve innovation does not.

Alan Oxley is a delegate to the UN Conference and is chairman of the Apec Study Centre at Monash University, Australia, which has issued a report on approaches to managing access to genetic resources <www.apec.org.au>.