Transferable intellectual property rights

There are really only three possible routes (1) use the commercial market through the patent system to determine the rewards to the innovator, (2) base rewards to innovators on therapeutic benefits, and (3) do not bother measuring at all. Option (1) is the patent system, but this functions poorly for neglected diseases. Advanced Purchase Commitments use option (2) in a half-hearted way, as I describe below. A system of Transferable Intellectual Property Rights, described below, uses option (3). The key issue is that in the absence of meaningful measurement of health impacts, it is necessary to base rewards only on commercial success, and that is not consistent with a mission to improve the health of the poor. 

The Project BioShield II Act of 2005, introduced to the U.S. Senate in April 2005, contains a proposal for so-called Transferable Intellectual Property Rights, in which a firm that developed a vaccine for a disease such as AIDS would obtain a wildcard patent extension that could be applied to a drug of its choice in the United States. The proposal has received the endorsement of the International AIDS Vaccine Initiative, which sees any proposal to increase research into AIDS vaccines positively. This is therefore a proposal that deserves serious scrutiny. 

There are at least three very important flaws in the basic mechanism proposed by Project BioShield II (and Transferable Intellectual Property Rights in general). First, the way the reward for the innovator is financed through a patent extension is inefficient and inequitable. Second, the incentive mechanism is poorly defined, and does not offer a clear methodology to determine how large a reward to pay for a given innovation. Third, the mechanism discriminates against small firms. 

First, then, consider the way that financing is raised for this mechanism. Essentially, Transferable Intellectual Property Rights offer a way of providing an off-the-books financial reward to companies that develop some socially desirable innovation, such as a vaccine for HIV/AIDS. Ignoring the effect on innovation for the moment, consider how this financial reward is obtained. The innovator is rewarded with a wildcard patent extension of, say, two years... 

Thus, Transferable Intellectual Property Rights would in fact simply be a very specific tax imposed on consumers of an unrelated product. Normally, specific taxes ofthis sort are avoided unless there is some reason to discourage consumption of the product (as is the case with cigarette and alcohol taxes). Instead, governments in developed countries tend to use broad-based taxes that spread out the burden of taxation. 

In sum. Transferable Intellectual Property Rights are a type of reward system that (1) is extremely inefficient in the way it raises funds to reward innovation, (2) offers no plausible methodology according to which it could allocate rewards, and (3) discriminates against small innovative firms in favor of large ones. 

One of the criticisms raised against the Optional Reward plan is that the measurement of DALYs is imperfect. A system of Transferable Intellectual Property Rights avoids this criticism by replacing imperfect measurement with uninformed guesses as to therapeutic importance. 

Towse, A. 2004. Developing the Idea of Transferable Intellectual Property Rights (TIPP) to Incentivize R D in Drugs and Vaccines for Neglected Diseases. Office of Health Economics, London, March 2, Appendix 1, 22-24. 

U.S. multinational firms to a series of multilateral reforms of intellectual property rights regimes undertaken by 12 countries over the 1982-1999 period. They found that intellectual property rights regime changes result in increases in royalty payment flows to parent firms, and that some of the increased royalty flows represents the transfer of new technologies to the host country. 

Branstetter, Lee G., Raymond Fisman, and C. Fritz Foley. 2003. Do Stronger Intellectual Property Rights Increase International Technology Transfer Empirical Evidence from U.S. Firm-Level Panel Data. Unpublished paper, Columbia University Business School. 

As noted in Section 3, Article 16 of the CBD indicates that access to, and transfer of, technology are essential elements of the objectives of the Convention. In Article 16.5, it is recognised that patents and other intellectual property rights may have an impact on implementation of the CBD and encouraged parties to ensure that such rights are supportive of and do not run counter to its [the CBD] objectives with the caveat subject to national legislation and international law . 

By sending software to the system where data reside, as opposed to sending data to the system where software runs, this solution framework obviates the need to transfer large amount of data across the network, and consequently addresses the performance issues associated with the network latency and also improves the end-user productivity. In this solution framework data are captured once and kept at the source of collection, and consequently the system addresses issues associated with data quality, integrity, currency, security, privacy, and intellectual property rights. 

---