Trade in medicines

Trade in medicines

in Trade and Health: Towards building a National Strategy 117-40 (eds. R. Smith et al.), World Health Organization (2015)

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Annual worldwide spending on medicines is anticipated to exceed $1.2 trillion by 2016. Developing countries, and particularly so-called emerging markets, will account for a substantial portion of the growth in spending on medicines. A good part of global market demand will be satisfied by medicines that, in whole or in part, are developed and manufactured in countries other than where they are ultimately used by patient. Governments and patient populations are affected by trading rules affecting medicines development, production and trade, in terms of access to treatments and affordability. This chapter addresses those rules.

A government has two primary interests with respect to trade in medicines. The first is the interest in protecting and promoting public health, which involves (among other things) providing citizens with the range of products necessary to prevent, diagnose and treat disease. The second is the interest in promoting economic welfare, including development and employment. These two interests are often complementary, although they may, in some circumstances, conflict. One of the most difficult tasks for policy-makers and regulators in the field of public health is to find the right balance between public health and commercial interests.
There is no generally accepted model for creating an optimal balance between commercial interests and public health interests, or between the health of current and future populations. All countries, at whatever stage of development and with whatever population characteristics, struggle to provide the best possible health care for their citizens. Some have developed more effective programs than others. But, because countries differ widely in the availability of financial resources and in patterns of disease (based, among other things, on nutrition, working conditions, climate and geography), there is no single model that will create the best solution for every country. However, there are trade and regulatory tools that governments can use to promote particular policies that should be well suited to conditions within the country. The objective here is to identify those tools and how they may be effectively used.

Production, distribution and trade in pharmaceuticals and related supplies are subject to government regulatory control at a number of levels. Countries maintain substantially different regulatory standards to assure the safety and efficacy of the pharmaceutical supply chain. There can be good reasons why governments adopt different standards, such as to take account of differences in local environment likely to affect the condition of medicines as they are stored, distributed and used. However, in some cases differential regulation may unnecessarily hinder the cross-border movement of pharmaceuticals, particularly among regions that share public health interests and trade policy objectives.

Attention to assuring affordable access to existing medicines and related supplies should not disguise the fact that innovation is fundamentally important in making progress against disease burdens via the creation of new medicines. It is therefore critical to encourage the research and development of future products while ensuring access to those that already exist. There is considerable debate about how best to encourage research and development, however, and using a patent system is not the only option.

While the ultimate objective of government policy with respect to trade in medicines and related supplies is to promote and protect public health, the pharmaceutical industry may be an important part of the national economy, providing employment and affecting the balance of trade. Governments may choose to promote the development and maintenance of a strong local pharmaceutical industry as a part of national economic development policy. It is important to keep in focus the link between industrial policy and public health objectives as a strong local pharmaceutical industry does not automatically assure that local public health needs are properly addressed.

The past fifteen years have witnessed a proliferation of bilateral and regional trade agreements generally intended to reduce or eliminate barriers to the free movement of goods and services. A significant number of these agreements include chapters covering intellectual property rights and regulatory data with respect to pharmaceuticals, as well as chapters devoted to investment protection. Commitments with respect to patents and regulatory data, as well as commitments with respect to enforcement and investment protection, have raised concerns among public health authorities, development-related multilateral institutions and nongovernmental organizations. These concerns focus on the possibility that a broader scope of patent and regulatory data protection will adversely affect prices and access to newer medicines, particularly among more vulnerable parts of developing country populations.