Carnegie Institution of Washington How to frame a global trade agreement that promotes R&D, and which is consistent with our notions of efficiency and fairness. James Love The Trans Atlantic Consumer Dialogue (TACD) Committee on Intellectual Property meeting on the Impact of Intellectual Property Rules on Consumers of Health Care Services October 31 and November 1, 2002 Carnegie Institution of Washington Washington, DC.

Why is TRIPS inadequate as a trade framework for R&D? TRIPS does not address the problem of free riding for the creation of global public goods, such as research that enters the public domain. Strong IPR protections can lead to access problems, and barriers to research. There are insufficient private incentives to invest in many important R&D projects. Exclusive rights on R&D may not be the most efficient mechanism to finance R&D.

What are the models for R&D treaties? The Treaty of Europe R&D as a development tool Landmine treaty Humanitarian demining technologies Koyto Climate Treaty Energy efficient technologies G8 Negotiations over funding vaccines and drugs for neglected diseases Human Genome Project Clinton/Blair Agreement

Components of an R&D treaty Agreement on appropriate levels of funding R&D Based upon ability of contribute Rules for transparency of investment follows Permit a variety of mechanisms Strong IPR and high prices Public sector funding Research mandates Allow countries to consider marginal cost pricing of products, contingent upon sufficient lump sum or public sector payments for research.

Possible approaches Requirements for minimum contribution to vaccine and DND research and other global public goods. Technology transfer and capacity building as objective of treaty. Demonstration of a minimum share of GNP devoted to R&D allows waiver of TRIPS provisions.

Aventis Radical IPR Scenario #1 No IPR protection RND treaty requires minimum national contribution to R&D In US, savings from elimination of R&D is given to intermediaries, who make investments in R&D, and compete against each other for new allocations, based upon success

Or more incremental approach On research for DND ? On transparency? On funding of public goods?

Parallel trade and pricing issues TRIPS rules on exhaustion of patent rights need to be changed to allow selective exhaustion based upon country income or level of development Pricing as an R&D issue Reference pricing World Health Organization or other non-WTO body for treaty or resolution on restrictions on the use of reference pricing. US/Korea agreement on pricing Korea must use average of G7 Prices

WTO type issues for R&D treaty Subsidies National Treatment Performance Requirements Market Access Investment

Strategies to move the debate forward Get R&D Treaty on agenda of NGO and Academic meetings on IPR, access to medicine or drugs for neglected diseases. Organize meetings that exclusively deal with the structure of an R&D treaty. Find an official fora of have discussions about an R&D Treaty