Analysis on the drug approval-patent linkage system and implications on the multilateral trading system

Abstract

Intellectual property rights (IPR) are exclusive property rights given to human over their creations for a certain period of time. IPR protection is designed to provide people with rewards and incentives by limiting competition and granting exclusive rights for their use. However, IPR differ from general property rights in that the objective of protecting intellectual property rights is to protect both private and public rights, whereas general property rights only protect individual rights of property owners. IPR protection is a regulation for distribution of information and knowledge, which may substantially affect economic and technological development. Thus, it is important to balance both private and public rights in protecting and regulating intellectual property rights.

Pharmaceutical industry has been facing this issue of balancing both private and public interests. Pharmaceuticals are commodities that are essential to human survival but they simultaneously require strong protection of patent due to significant investments in research and development and clinical testing. The issue extends to international distribution of pharmaceuticals, which reveals the imbalance of pharmaceutical accessibility in developed and developing countries. The World Trade Organization (WTO) has introduced the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which includes regulations on pharmaceutical patents to balance interests of both developing and developed countries. However, the United States, which traditionally supports strong protection on intellectual property rights, started to implement stronger protection of pharmaceutical patents through bilateral free trade agreements (FTAs).

This paper mainly analyzes the Drug Patent-Approval Linkage System (the Linkage system), one of the provisions that aims for stronger pharmaceutical patent protection that United States have insisted to include in their FTA provisions. This paper first analyzes the background and outset of the Linkage system in the United States and its amendment process. Then, it studies development trend of the Linkage System in the US FTA provisions along with the impact of implementing stronger intellectual property rights on bilateral or plurilateral FTA (Canada, Australia, Korea, TPP) partner countries. Finally, it provides implications of US-led stronger protection of intellectual property on global trading system. The unilateral movement of the U.S. would result in creating two-tier trading blocs, influencing other mega-FTAs, and ultimately, threatening the multilateral trading system.