[Ip-health] Royalty rates and trade pressures.

[James Love]

My view regarding royalty rates and trade pressures is that royalty
payments that are too low will be considered unreasonable, and will not
be politically sustainable.   As a matter of some recent history, I did
not want to defend a .5 percent royalty rate, applied to generic prices,
and I don't think it helped the countries that choose that rate.  Even
if people don't understand much about this topic, .5 percent sounded
pretty low.

The more recent higher royalty rates in Thailand have I believe made it
easier to Thailand to keep the new compulsory license.  Even more
important, of course, have been the actions of the Thai activists, who
have done the really important work in pushing the Thailand government
to protect consumer interests.

In the longer run, we think that governments in developing countries
should simply set aside an appropriate fraction of health or drug
purchase budgets, to reward drug developments, and de-monopolize all
drug purchases.   Some people in the Thai government have suggested
doing this, and there is a discussion about whether or not this is a
better business model for the Global Fund and other donor funded drug
purchases.   Agree on how much money goes to innovators, and then buy
everything at marginal cost, increasing access and improving outcomes.

Once the negotiation turns to the fraction of the drug budget that goes
to innovators, and marginal cost pricing of products is accepted, you
can begin to have a rational policy discussion.

  Jamie

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_____________________________
James Love, Knowledge Ecology International (KEI)
http://www.keionline.org, mailto:james.love@keionline.org
voice +1.202.332.2670, fax +1.202.332.2673, US mobile +1.202.361.3040,
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