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The American People Pay the Highest Prices in the World For Lifesaving Prescription Drugs That They Helped Create Report shows, over the last 20 years, the average price of new medical treatments that NIH scientists helped invent is $111,000 – more than ten times the price that led the NIH to first introduce a reasonable pricing clause in 1989. WASHINGTON, June 12 – A new report released today by Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, found that Americans virtually always pay far more than people in other countries for prescription drug treatments created with the help of National Institutes of Health (NIH) scientists. With few exceptions, private corporations in the U.S. have the unilateral power to set the price of medicines, even when they are developed with taxpayer-funded research. The government asks for nothing in return for its investment. As a result, the average price of new treatments over the past 20 years that NIH scientists helped invent is $111,000 – more than ten times the price that led the NIH to first introduce a reasonable pricing clause in 1989. “What makes the greed of the pharmaceutical industry so reprehensible is the fact that the American people are paying twice for some of the most expensive prescription drugs on the market: First through their taxes and a second time at the pharmacy counter,” said Chairman Sanders. “It is unacceptable that half of new prescription drugs invented with the help of NIH scientists now cost more than $111,000. The price of some of these taxpayer-funded drugs is now over $1.9 million. Now is the time for the Biden Administration to take executive action to substantially lower the price of prescription drugs and to take on the unacceptable corporate greed of the pharmaceutical industry.” The HELP Committee Majority Staff Report documents the pricing for treatments invented with the help of NIH scientists – the first systematic attempt to quantify the price of federally supported medicines. The analysis traces how pharmaceutical corporations use taxpayer-funded research to develop products to sell back to those same taxpayers for exorbitant profits – a phenomenon, ubiquitous in the development, production, and commercialization of prescription drugs in the U.S., that has played a major role in Americans paying by far the highest prices in the world for lifesaving medications. The report uncovers the role of federal scientists in developing two outrageously priced treatments: Hemgenix, the world’s most expensive medicine with a $3.5 million price tag, and the cancer therapy Yescarta that costs $424,000 in the U.S., but just $212,000 in Japan. The report finds that Hemgenix is the culmination of major scientific breakthroughs led by researchers at St. Jude Children’s Research Hospital and the NIH. However, the NIH appears to have handed over taxpayer technology while obtaining very little in return. Licensing agreements reviewed by the HELP Committee Majority Staff reveal that the NIH negotiated royalties of around 1 percent on sales, without any pricing constraints. In the case of Yescarta, the report finds that NIH scientists initially developed the cancer therapy that a small biotech company worked to refine. This company told investors it was “highly dependent on [NIH] for research and development” but was purchased by Gilead Sciences for $11.9 billion, with its CEO, Arie Belldegrun, receiving a $694 million payout. The report also examines the steps the federal government can take to ensure pharmaceutical corporations set reasonable and affordable prices for new medicines when they benefit from taxpayer support. After a pharmaceutical company launched an AIDS drug developed with the help of NIH scientists at $10,000 per year, the NIH responded in 1989 by inserting a “reasonable pricing clause” into contracts when taxpayers supported new drugs, according to the report. The clause was withdrawn six years later after industry pressure. In addition, during the COVID-19 pandemic, the federal government included in some contracts a “most favored nation” obligation that required pharmaceutical companies to charge the U.S. government the lowest price among G7 countries, like Canada, the U.K., France, and Japan, for initial vaccine doses. The report concludes the federal government should reinstate and strengthen a “reasonable pricing clause” in all future research agreements to protect American taxpayers – an action that Sanders has urged the Biden Administration to take.

Pharmaceutical companies have become adept at “gaming” the patent system to extend exclusivity and monopoly power to maximize profits. Tactics like “evergreening” (making minor modifications to existing drugs to obtain additional patent protections), “patent thickets” (filing many different patents on different aspects of a single drug), and “product hopping” (introducing a new version of a drug as a patent is expiring and encouraging doctors, pharmacists, and patients to switch to the updated version) are commonly used to extend monopolies even after the key patent expires.

Celgene’s blockbuster cancer drug Revlimid is a prime example of this practice. Although a key patent expired in 2019, the drug will not see real competition in the marketplace until 2026. This is because Celgene, now a subsidiary of Bristol Myers Squibb, has been able to prolong the drug’s exclusivity by creating a patent thicket around it. The company filed for an additional 206 patents on the drug—117 of which were approved. The costs of such patent thickets can be substantial to consumers and the health care system: The price of Revlimid increased from $6,000 per month in 2002 to $24,000 per month in 2022, resulting in a total estimated cost of $45 billion for Americans.

Patents are often described as the ‘lifeblood’ of pharmaceutical companies.1 However, patent protection for pharmaceutical products is an economic trade-off between providing monopoly rights that incentivise development of future products and permitting higher drug prices to recoup the investment.2 Recently, the US Patent and Trademark Office (US PTO) reiterated the concern that patents have been “misused to inhibit and delay – for years and even decades – competition from generic drugs and biosimilars, denying Americans access to lower-cost drugs.”3 The US PTO indicated that while patents were created to incentivise innovation, “we must make sure our system as a whole does not unnecessarily delay getting generic, biosimilar, and more affordable versions of those drugs into the hands of Americans who need them.”3

A patent can be issued for any novel, beneficial and non-obvious invention. The patents can cover a process, a composition of matter, and equally importantly, an improvement to an existing process or composition of matter. The patent will typically expire after 20 years.4 The initial patents are usually filed during drug discovery. With an average development time of 10 years, this leaves companies only another 10 years to reimburse their research and development (R&D) costs, which can be significant, ie, $2.6 billion.5 In parallel, the attrition rate for novel new chemical entities is about 90 percent.6

Now, more than ever before, pharmacologists are contributing medical advances to confront ravaging disease. They are developing drugs to mitigate the effects of Alzheimer’s, HIV, multiple sclerosis, and various forms of cancer. To capitalize on the opportunity, brand-name pharmaceutical firms are patenting these drugs, consequently guarding formulas and, with it, profits. Patents grant brand-name firms market exclusivity, which essentially allows them to set their own prices. Even though brand-name firms are investing some of their capital to cultivate new drugs, they also are enjoying gigantic revenue streams, absurd profit margins, and seemingly unfettered control of their respective markets. Consequently, sick patients are unable to afford their medication; high prices are bankrupting consumers in the absence of reasonably-priced generic alternatives. Despite the fact that generic drugs contain identical ingredients, cure the same symptoms, and cost 70% less, brand-name drugs persistently dominate their generic counterparts. Indeed, brand-name firms are improperly preventing generic market entry. Without generic competition, no watchdog exists to curb big pharma’s prohibitive prices. Despite the Supreme Court’s fleeting fix in FTC v. Actavis, which condemned reverse payment settlements that precluded competition, brand-name firms are employing other tactics predatorily to extend their market exclusivity and charge consumers unaffordable prices. To prevent brand-name abuse and help infirm patients afford their medication, this Comment proposes that courts apply federal antitrust law to brand-name firms that attempt to monopolize a pharmaceutical market through anticompetitive means, particularly by abusing Risk Evaluation & Mitigation Strategies (REMS) and by “product hopping.” To combat exclusionary conduct, courts should mirror the “rule of reason” framework set forth in Actavis and apply an “enhanced” version specifically tailored to the pharmaceutical industry, giving stronger credence to generic challengers. In addition to finding brand-name tactics exclusionary, this Comment also proposes that courts adopt a bright-line rule prohibiting brand-name firms from exploiting the “legitimate business” defense to immunize their destructive conduct. The current framework perpetuates abuse and grants brand-name firms ostensibly indefinite monopolies. Analyzing brand-name defensive tactics under federal antitrust law would facilitate generic market entry and consequently moderate drug prices. Even after sacrificing their entire financial portfolios, patients are still unable to afford their medication. This Comment interprets Actavis as prohibiting the “legitimate business” defense and provides a remedy to deserving consumers by preventing REMS abuse and product hopping, fostering generic competition, and tempering excessive drug prices.

Innovation has always relied, to some degree, on government support. But a recent study suggests that public funding might be even more influential than it seems. “Nearly a third of US patents rely directly on US government funded research,” says Dennis A. Yao, Lawrence E. Fouraker Professor of Business Administration and co-head of the Strategy Unit at Harvard Business School. Consider that between the 1950s and 1980s, Uncle Sam’s spending on research and development (R&D) rose fivefold from less than $20 billion to more than $100 billion a year, about equal to corporate R&D spending. “IF MORE INVENTIONS ARE BUILDING ON FEDERAL GRANTS, IT SUGGESTS THAT SUPPORT IS BECOMING MORE IMPORTANT TO RESEARCH GENERALLY.” Since then, corporate spending has continued to rise, while government funding has leveled off. By 2016, businesses accounted for 69 percent of all R&D spending, while the US government provided just 22.5 percent, according to the Congressional Research Service. Higher education, nonprofits, and nonfederal government entities contributed the remaining 10 percent. “The question that naturally arises is, ‘What is the role of government in fostering innovation within this changing environment?” Yao says. Its role remains significant, according to new research by Yao and several colleagues. Despite spending relatively less, the government funds innovations that really matter to the American economy. The research, published in the journal Science in June, was spearheaded by University of California, Berkeley, engineering and business professor Lee Fleming, and also included University of Connecticut law professor Hillary Greene, Guan-Cheng Li of Berkeley, and Boston University strategy professor Matt Marx. Who’s funding patents? To get a handle on how government funding fuels innovation, the researchers took advantage of new patent data from the US Patent and Trademark Office, which recently began including patent filers’ acknowledgments in its database. Those acknowledgments usually cite funding sources, which helped researchers identify patents sponsored by government agencies, such as the National Science Foundation (NSF) or the National Institutes of Health (NIH). “Previously, it was possible to figure out what patents came directly out of government research labs,” Yao says. “Now we can see what patents came indirectly from government support as well.” That includes patents that were supported by federal grants and patents that relied on previous patents or publications that the government funded, directly or indirectly. (Yao and his colleagues’ research was itself funded by an NSF grant.) By examining a database of all patents filed since 1926, the team found that the percentage of patents that involved government support has risen steadily. While government R&D spending as a percentage of gross domestic product has declined since the mid-1980s, the percentage of patents that received any government support rose from 12 percent in 1980 to a high of 30 percent by 2011 before falling slightly to 28 percent since then. “If more inventions are building on federal grants, it suggests that support is becoming more important to research generally,” Yao says. Yao and his colleagues also examined patent citations of previous patents to find out how past inventions influenced future innovations. Among patents granted to companies in 2010, those that benefited, directly or indirectly, from federal largesse were cited 6.33 times, on average, in the next five years, compared to 4.42 citations for patents that didn’t receive government help. The results held even when researchers compared patents that involved similar technology, were filed around the same time, or had a similar number of inventors. In those cases, government-funded inventions received 3.39 more citations, on average, than those without. “This result suggests that government-funded patents are more important, reinforcing the idea of government-funded innovation as a driver for the economy,” Yao says. Who benefits from government funding? Companies, which filed the vast majority of the patents that Yao and colleagues studied, benefited most from government money, not lone inventors or academic institutions. Startups were particularly dependent on government-funded research, relying on federally supported research for some 35 percent of all patents they filed. “Startups were particularly dependent on government-funded research…” While the paper doesn’t explicitly examine why government-funded patents are so important, Yao speculates that government institutions, relative to companies, tend to fund broader scientific initiatives that are more likely to lead to more novel discoveries. Government funding is paying off Taken as a whole, the paper provides a strong rationale for the government to continue—if not increase—its level of investment in scientific research. “In the political environment, research funding is frequently a target for cuts,” says Yao, noting that voters are more likely to feel the immediate consequences of shrinking human services than the long-term benefits of research spending, whose outcomes might be years away. “Voters don’t get as angered about such cuts.” The research can’t predict what would happen if the US government slashed funding significantly. But the study shows that, at least for now, government funding, dollar for dollar, fuels innovation more effectively than non-government spending. “The data certainly suggest that the current level of government funding of research is paying off,” says Yao. “Maybe we could get even more of a benefit if we spent more.”

Modern growth theory highlights the importance of knowledge spillovers for long-run economic growth. These spillovers mean that private firms will under-invest in the production of knowledge. Two types of policies aim to ameliorate this “market failure”: patent policy and public funding of research. While there is now a significant body of empirical research on the former, the effects of public funding, and public funding of science in particular, have received less attention. One reason for this paucity of evidence on the impacts of public research investments is that it is difficult to measure the effects of knowledge that is both non-rival and difficult to appropriate (Griliches 1992). While the idea that public science has large effects is central to U.S. policy— going back to Vannevar Bush’s 1945 assertion that basic research is “the pacemaker of technological progress”—economists emphasize that evidence in support of this claim is rather limited (Garber and Romer 1996; Cockburn and Henderson 1998). In this paper, we examine the effects of public science on private sector innovation in the life sciences, focusing on funding by the largest funder of research in the world, the National Institutes of Health. Our results show that NIH investments in a research area increase subsequent private sector patenting in that area; a $10 million increase in funding for an area leads to 2.3 additional patents or, equivalently, we expect one private-sector patent generated for every two to three NIH funded grants. This result holds across a variety of OLS and IV specifications. This positive impact, moreover, does not appear to be associated with lower private investments in other research areas. We cannot perform a formal rate of return calculation since our analysis focuses on only one aspect of the effect of NIH funding, that of sales associated with patented drugs. One rough calculation suggests that $1 dollar in NIH funding generates around $1.40 in drug sales. We find that over half of the patents that result from NIH funding flow across disease areas. This has implications for measurement: had we looked only at patents in the same disease area, we would have missed half the output. This finding speaks to a long-standing question in postwar medical research policy: the feasibility and desirability of targeting research to diseases. Claims that scientific research often flows across disease areas have been common from NIH Directors since the agency’s founding, especially during Congressional debates about whether particular diseases are over/underfunded or in response to advocates lobbying for a new Institute for “their” disease (Sampat 2012). Our results support the view that there are strong cross-disease spillovers. The organization of the agency around disease-specific Institutes, though useful for mobilizing funding, may not reflect the importance of the interplay of ideas from different disease areas and fields in shaping biomedical research progress. Throughout the text, we emphasized numerous caveats. We highlight several here. First, we are examining only one type of return to NIH funding, those that flow through patented innovations. This neglects a number of other socially important benefits of publicly-funded medical research, including applied epidemiological and clinical research that changes medical practice or health behaviors. Previous research (Cutler and Kadiyala 2003; Heidenreich and McClellan 2003) suggests this research has high value. Ignoring these outcomes could lead to large underestimates of the value of NIH funding. A second potential limitation is the assumption that patent-to-publication citations reflect real linkages between the cited grant/publications and citing patents. For the goal of measuring knowledge spillovers from public research, these citations are much more meaningful than patentto-patent citations, for reasons already discussed. However, articles are cited in patents for legal reasons, to denote “prior art” material to patentability, and decisions about how much to cite are influenced by factors including patent importance and applicant patent strategy (Sampat 2010). Not all articles cited are crucial for the development of the citing patent. Citations that are not real intellectual influences would lead to overestimates of the effects of NIH funding. (At the same time there are false negatives—not all knowledge firms “build on” must be cited—which would lead to underestimates of the effects of NIH funding.) Third, our implied drug valuations were based on publicly available estimates on the distribution of drug sales, and assumptions about how to divide a drug’s value across its many patents. There is likely considerable heterogeneity in the private and social value of drugs (Garthwaite and Duggan 2012), and individual patents (Hemphill and Sampat 2011), which our back-of-the-envelope calculations could not fully incorporate. Finally, our analysis implicitly assumes a “linear” flow from science to technology, and does not account for the complementary investments made by other actors (e.g., the NSF, or venture capital firms) in the path from laboratory to marketplace, or the feedbacks from technology to the progress of science. This “linear model” of research is well known to be an oversimplification, but even its detractors acknowledge that it is more reasonable in the life sciences than in other fields, and that alternative models would be far less empirically tractable (Balconi et al. 2010). Despite these limitations, our analysis uses novel data and a new source of identification to provide estimates on an important but understudied component of the innovation production function: spillovers from public research. In future work, this framework could be extended to examine a range of other questions of interest to economists and policymakers, including heterogeneity in types of research (whether more or less targeted research has higher impact) and how the presence or absence of intellectual property rights affects returns to public research investments.

The federal government, principally through the National Institutes of Health (NIH), funds scientific research related to biology and human health that sets the stage for applied research and development (R&D) activity by industry, ultimately leading to the commercialization of new medicines and treatments. New drugs not only improve the quality and length of lives but reduce the costs to society from illness. In order to accelerate biomedical innovation, Congress doubled NIH founding around the turn of the millennium. The results are paying off with basic and translational research, including discoveries of the genetic basis of disease and development of related diagnostics and therapies. For example, cancer therapies are being tailored not just to a patient’s genome but to the genome of that patient’s tumors. Other discoveries include sickle cell genomic therapy,1 immunotherapy for breast cancer,2 a universal flu vaccine, the TAILORx genetic screening breast cancer trial,3 and discoveries for the treatment of Alzheimer’s.4 NIH funding overall plays an important role, not only in biomedical innovation, but in enabling a competitive U.S. life sciences industry, and the millions of good paying jobs associated with it. In fact, while overall manufacturing jobs have declined in the last two decades, the number of biopharmaceutical industry jobs has grown. As such, increasing NIH funding is important not only to improving the health of Americans, but in reducing health care costs and spurring global life sciences competitiveness.

Boosting NIH funding has long been a nonpartisan issue. For example, at a 2015 forum, former Republican House Speaker Newt Gingrich and Senator Elizabeth Warren (D-MA) both called for significant increases in NIH funding.5 And there is currently strong bipartisan support in Congress, with senators Roy Blunt (R-MO) and Patty Murray (D-WA) and representatives Rosa DeLauro (D-CT) and Tom Cole (R-OK) leading the charge for increases in NIH funding. Moreover, Americans are extremely optimistic and interested in biomedical breakthroughs. A recent survey conducted on behalf of the USA Today Network and the Charles C. Koch Institute asked Americans to name three areas of technological change they were most excited about for the future. Medical innovation, including pharmaceutical breakthroughs, ranked number 1, by an equal proportion (61 percent) of Democrats and Republicans, and an even higher share (66 percent) of rural Americans.6

Back in 1982, when I first began my career as a family practitioner in a small town of Boston, I was confident that the care I’d provide would be as effective as the care patients receive anywhere in the world. At the time, the death rate for Americans was lower than that of comparable countries, resulting in 128,000 fewer deaths annually. Although healthcare was expensive—costing 2.3% more of our GDP than of 11 other wealthy countries—the rapid growth of HMOs and managed care plans promised to make our healthcare even more effective and efficient. Over the ensuing four decades, however, the opposite has occurred. The same age-adjusted mortality rate has improved so much more in comparable countries that, by 2017, an excess 478,000 Americans were . This translates into an extra 1,300 deaths daily, equivalent to three jumbo jets crashing every day. The everyday poor health of Americans and the inability of our healthcare system to mitigate preventable deaths amounts to a crisis that dwarfs even the COVID-19 pandemic. And our excess spending has risen to 6.8 percent of GDP, or $1.5 trillion per year. This raises a key question: Why have so many smart, well-trained doctors stood by as American healthcare descended into a state of profound dysfunction? The answer lies in the gradual, nearly invisible commercial takeover of the medical “knowledge” that doctors are trained to trust. This transition started in the 1970s, when the acceptance rate of grant applications for funding from the National Institutes of Health shrank—from roughly half of medical research applications to one-third. Then, in 1981, President Ronald Reagan slashed government support of university-based medical research, further pushing academic researchers into the waiting arms of industry, especially ph 2armaceutical companies. Following the 1980 passage of the University and Small Business Patent Procedures Act, nonprofit institutions and their researchers were allowed to benefit financially from the discoveries made while conducting federally funded research. Former president of Harvard University Derek Bok about the growth of commercial activities within academia: “Making money in the world of commerce often comes with a Faustian bargain in which universities have to compromise their basic values—and thereby risk their very souls…” The biggest shift was, however, still to come. Over the past few decades, the drug companies have taken over most of our clinical research. In 1991, academic medical centers (AMCs)—hospitals that train doctors and conduct medical research—received 80 percent of the money that industry was spending to fund clinical trials. The drug companies relied on academic researchers for their expertise in designing studies, enrolling patients, and analyzing the data. This arrangement allowed academics to receive the funding they needed while still preserving much of their independence. But by 2004, the percentage of commercially funded clinical trials conducted by AMCs had fallen from 80 to just 26 percent. A look at the research contracts between corporations (mostly Big Pharma companies) and academic medical centers shows that 80% allowed the commercial funder to own, and thus control, the data from jointly conducted research. Furthermore, fully half of the research contracts between drug companies and academic institutions—the partnerships with the highest likelihood of upholding rigorous research standards—allowed industry insiders to ghostwrite clinical trial reports for publication in scientific journals, relegating the named authors to the position of “suggesting” revisions. Nonetheless thorough peer review ensures that these reports are accurate, right? Wrong. Unbeknownst to almost all doctors, peer reviewers are not granted access to the underlying data that serves as the basis for the reported findings. The drug companies own that data and keep it confidential as “corporate property.” Reviewers must rely on brief data summaries included in the submitted manuscripts. Peer reviewers at even the most prestigious medical journals cannot possibly attest to the accuracy and completeness of the articles they review. This sham was exposed in 2005 when the editors of an article published in the New England Journal of Medicine admitted they had not seen relevant data from a clinical trial . Five years earlier, the article had extolled the drug’s safety even though neither the editors nor the peer reviewers had been granted access to underlying data, which showed three heart attacks that had occurred in patients treated with Vioxx were not reported. Had this data had been properly disclosed and analyzed when the manuscript was first submitted, the article would have shown that Vioxx significantly increased the risk of heart attack five-fold when compared to over-the-counter naproxen (Aleve). And many of the estimated 30,000 Americans who died as a result of taking Vioxx after the incomplete article was published would not have been exposed to the drug. To this day, Big Pharma companies remain unwilling to disclose their underlying clinical trial data. The most recent example involved Pfizer’s . In September 2021, one month after the vaccine had been granted full approval by the U.S. Food and Drug Administration (FDA), a group of medical researchers and scientists sued the agency for the release of 451,000 pages of scientific documents it had evaluated prior to granting the vaccine full approval. Even though the agency required only 108 days to sufficiently evaluate these documents before granting the vaccine formal approval, the FDA (with Pfizer wanting to join the lawsuit), argued that the fastest they could release the data was five hundred pages per month, meaning that it would take seventy-five years before the documents were released in . On January 6, 2022, U.S. District Judge Mark Pittman ruled that the FDA must release 55,000 (not 500) pages of the documents each month until complete. I want to be clear that I’m a strong advocate of getting vaccinated and boosted (especially for people age 65 and older), the CDC’s analysis of real-world data shows that last December unvaccinated adults had 41 times the risk of dying of COVID-19 compared to fully vaccinated and . But I believe just as strongly that doctors and the public must have access to the underlying clinical trial data that the FDA approval is based upon now—not in seventy-five years. The lack of transparency of clinical trial data in peer review is similar around the world. But the effect is far greater in the U.S. because of our unique pharmaceutical policy. We have no formal assessment that compares the medical benefit and economic value of new drugs to older therapies, so health-care professionals do not have access to this critically important information. Federally funded clinical practice guidelines are not allowed to include the relative cost of therapies in their recommendations, which means there is no consideration given to the chance that a drug may unnecessarily bankrupt patients or inflate the cost of health insurance. Further, the price of brand-name drugs is unregulated in this country, which is why they cost 3.5 times more in the U.S. than in other OECD countries. And unregulated prices increase the reward-to-risk ratio for overly aggressive marketing practices in the U.S. The industry’s control over what doctors believe about optimal therapeutics explains why new, expensive drugs are used more liberally in the U.S. than other countries. Without access to the actual clinical trial data, medical journals are publishing unvetted articles that doctors then rely on to treat their patients. Although prescription drugs “only” account for 17% of U.S. health-care expenditures, this has become a “tail wags dog” situation: The drug companies control the “knowledge” that informs doctors’ clinical decisions. This leads to soaring pharmaceutical profits and crippling healthcare costs, while doctors have no way of knowing which therapies are more effective—or more efficient. Americans deserve better.

Legislation giving Medicare the ability to negotiate drug prices in the United States would make their life-saving potential immediately available to millions of Americans who cannot now afford them, thus extending lives and alleviating suffering. The pharmaceutical industry, however, has done a masterful job of arguing that these Americans must suffer in the short term since lower prices would gut long-term innovation in drug development.

This is a false choice. We need not trade the certainty of saved lives now for the possibility of saved lives in the future.

Why hasn’t the United States stepped up to the plate? According to scholars and policymakers, one major reason is the fear of treaties infringing on national sovereignty. The United States shuns treaties that appear to subordinate its governing authority to that of an international body like the United Nations. The United States consistently prioritizes its perceived national interests over international cooperation, opting not to ratify to protect the rights of U.S. businesses or safeguard the government’s freedom to act on national security. Politics also poses a significant barrier to ratification. While presidents can sign treaties, ratification requires the approval of two-thirds of the Senate. Oftentimes, the power of special interest groups and the desire of politicians to maintain party power, on top of existing concerns of sovereignty, almost assures U.S. opposition to treaty ratification.

If President Joe Biden wants to prove that “America is back,” he should attempt to make progress on signing or ratifying several of these major international treaties. Unfortunately, any attempts of ratification will be a tall order in the Senate. Several Republican Senators even resist approving routine political appointments. Furthermore, petty political disputes and foreign policy aims, on top of the Republican priority of defending natural sovereignty and protecting the U.S. Constitution, signal potential political opposition to ratification. After the Trump administration, sovereignty has become almost inextricably linked to the Republican party platform. If the United States wants to maintain its position as a global leader and further important global and regional policy goals, it must move away from its self-defeating sovereignty obsessions and overcome political barriers, despite the odds.

While many U.S. trading partners have strengthened IPR laws and enforcement, some aspects of their regimes continue to pose trade and investment barriers for U.S. firms. The Office of the U.S. Trade Representative (USTR) has cited as key concerns some trading partners’ lax border and criminal enforcement against counterfeits, including in the digital environment; high levels of digital piracy; and gaps in trade secret protection and enforcement. For instance, China’s technology transfer and other industrial policies may disadvantage U.S. IP holders in these markets. Among developed economies, the EU approach to GIs, for example, may limit market access for U.S. exporters of products that are common food names, and EU approaches to regulation of the digital economy and artificial intelligence affect U.S. IP (e.g., addressing illegal sharing of copyrighted content, transparency obligations for online platforms with respect to content moderation).

Most of the recent intellectual property literature concerns the "enclosure of the public domain"' or the "one-way ratchet" of intellectual property protection.2 While these concerns are significant and rightly placed, a different, and perhaps more important, enclosure movement is currently taking place at the international level. Instead of the public domain, this concurrent movement encloses the policy space of individual countries and requires them to adopt one-size-fits-all legal standards that ignore their local needs, national interests, technological capabilities, institutional capacities, and public health conditions. Unlike the movement to enclose the public domain, which "fenc[es] off common land and turn[s] it into private property, 3 the international enclosure movement fences off areas that provide attractive policy options for less developed countries. 4 By virtue of this enclosure, these countries are forced to adopt inappropriate intellectual property systems, and they as a result have also lost their ability to respond to domestic crises within their borders.

Following are UN Deputy Secretary-General Amina Mohammed’s remarks to the special high-level event of the General Assembly and the Economic and Social Council titled “Doha Programme of Action as an Accelerator of the implementation of the 2030 Agenda”, in New York today: I am pleased to join this special high-level event on the Doha Programme of Action. As we approach the second part of the Fifth United Nations Conference on the Least Developed Countries conference, we are confronting a uniquely challenging international environment. The world’s least developed countries are facing a cascade of crises: soaring food and energy prices, escalating climate catastrophes, widening inequalities, increasing hunger, worsening poverty, rising interest rates and looming recession. Least developed countries are being pushed off track in their pursuit of the Sustainable Development Goals and the Paris Agreement. The progress they achieved through years of dedicated efforts is evaporating as we speak. Today, more than half of least developed countries are either in debt distress or at a high risk of debt default. This is eroding their ability to invest in recovery, resilience, and long-term sustainability.

As demonstrated in the Article, one of the main reasons why the effectiveness of patents as an incentive mechanism in the environmental domain is limited is the reliance of patent incentives on market demand in directing innovation.7 To start with, a market-based platform clearly cannot be relied upon to incentivize production of nonmarket goods.8 In the environmental context, this inherent limitation of the patent system comes into effect, for instance, with respect to basic scientific research regarding various fundamental questions related to climate change.9 Yet, even outside the realm of pure basic research, the more upstream a research and development (R&D) project is—i.e., the more removed it is from commercial applications—the higher the uncertainty regarding the market value of such project is likely to be, and the less probable it is that the patent system would provide ample incentives to pursue it.10 Thus, for instance, R&D endeavors designed to explore methods of employing various alternative energy sources in lieu of fossil fuels—which may later serve as the foundation for a wide array of downstream innovative efforts—are not likely to be adequately incentivized by patents.11

Unfortunately, in the context of environmental innovation, the concern that the patent system fails to provide adequate incentives to innovate applies to downstream innovation as well, since market demand tends to underrepresent the social value of green technologies. A cleaner environment constitutes a public good; hence, positive externalities play a significant role in undercutting demand for green products and processes. In deciding whether to purchase and install a pollution-reducing scrubber, for instance, a profit-maximizing firm is likely to focus on its direct costs and benefits, while not ascribing much weight to the substantial beneficial impact on numerous third parties that such a step may yield. If businesses are not willing to pay for climate change technologies a sufficient amount of money that reflects their social value, then the patent system—in its reliance on market demand—is not likely to incentivize development of such technologies at a socially optimal level.12

Intellectual property systems in developed countries are helping to keep poorer countries trapped in poverty, says a report out this week. Laws on patents and intellectual property need to be relaxed and adapted to help developing countries fight poverty and gain access to technology, medicines, and research. Developing countries should set their own agenda and develop laws that give them easier access to cut-price drugs and generic versions of drugs that are still patented. They should also aim to ensure that diagnostic and surgical methods are excluded from patents, says the report from the Commission on Intellectual Property Rights. The commission, which was set up by the British government in May 2001 to see how poor people could benefit from national rules on intellectual property, also suggests that companies that share their technology with poorer countries should be rewarded in some way, perhaps with tax breaks. “Intellectual property systems may, if not used carefully, introduce distortions that are detrimental to the interests of developing countries. Developed countries should pay more attention to reconciling their commercial self-interest with the need to reduce poverty in developing countries, which is in everyone's interest,” says the report. In a foreword to the report, Hugh Laddie, UK High Court Patents Judge, says that TRIPS (trade related aspects of intellectual property)—which allows members of the World Trade Organization to have easier access to cheaper medicines—“has not resulted in a shrinking of the gap that divides those two sides [the developed world and the developing world], rather it has helped to reinforce the views already held.” There are those, mainly in the developed world, who believe that intellectual property rights are good and must be strengthened, whereas developing countries believe they benefit just the developed world and seriously damage industry and technology everywhere else. The principles laid out in TRIPS need to be made more flexible, and the deadline to adopt the treaty should be extended to 2016 for some countries, says the report. “Developed countries often proceed on the assumption that what is good for them is likely to be good for developing countries,” said Professor John Barton, chairman of the commission, and professor of law, Stanford University. “But, in the case of developing countries, more and stronger protection is not necessarily better. Developing countries should not be encouraged or coerced into adopting stronger IP [intellectual property] rights without regard to the impact this has on their development and poor people. They should be allowed to adopt appropriate rights regimes, not necessarily the most protective ones.”

CORVALLIS, Ore. - A new study by an Oregon State University business professor has found that developing countries that adopt major international economic treaties do not necessarily gain more foreign direct investment. In fact, in some cases adopting these treaties can hurt, not help a developing country, contrary to what agencies such as the World Trade Organization (WTO) espouse. The study, published in the online version of the Journal of World Business, has major implications for Latin American and Caribbean intellectual policy reform. , an assistant professor in OSU's College of Business, spent more than 12 years in private industry managing intellectual property and research and development strategies at various firms. He is the inventor of 43 issued United States patents and more than 70 international patents in areas related to micro/nanotechnology and semiconductor manufacturing. Khoury wanted to know when developing countries in Latin America adopt intellectual property treaties such as the if their inbound investment from foreign countries increases. Mike Peng from the University of Texas at Dallas contributed to the research. "Basically, I wanted to know when developing countries take on the rules of the wealthy, developed nations, do good things happen to them?" Khoury said. "And in many cases, the answer is no." Khoury looked specifically at the Paris Convention treaty, which was renewed in 1967. He found that countries that did not have a significant invention and scientific research base did not financially benefit from adopting the treaty, and in some cases found their economic situations worsen. The OSU professor pointed out that developed countries such as the United States encourage others to adopt the treaties because they want to be able to file their patents in countries where there may be a market for their product, or perhaps where there may be a manufacturing workforce to make the product. As the inventor of more than 100 domestic and international patents, Khoury saw this issue come up frequently when he was filing for patents in other countries. Companies file international patents to protect their invention and make sure competitors in other countries do not copy the product; and they want to ensure that they can sell, market or manufacture the product overseas. Looking at the data over a 14-year period in 18 Latin American and Caribbean countries, Khoury found that countries that adopted the Paris Convention early - such as Colombia, Ecuador and Uruguay - had an inflow of foreign direct investment if they increased innovation, which he measured by the number of scholarly journals published and number of patents filed from that country. So in some cases, adoption of international intellectual property rights treaties may have helped a developing nation. But in countries with the lowest innovation base - including El Salvador, Honduras and Paraguay - early adoption did not increase investment in those countries. "Countries that do not adopt are threatened with sanctions and other types of coercion," Khoury said. "This explains why so many developing nations adopt treaties that are, quite frankly, not beneficial to them and in some cases only helps larger, multinational corporations within more industrialized countries." Khoury explained that developing countries often struggle to stay in harmony with international treaties that are designed as "one-size-fits-all." In many cases, he added, developing nations may see much larger economic benefits from delaying participating with economic treaties such as the Paris Convention and waiting until they have increased their domestic innovation base.

Although the Doha Round began as a development round and has subsequently led to greater accommodation of needs, interests, and conditions in less-developed countries, developed countries have actively pushed for heightened intellectual property protection and enforcement in the WTO. For example, during the TRIPS Council meeting in June 2006, the European Union called for an "in-depth discussion" of enforcement issues. 84 Together with two earlier proposals,85 the EU effort to push for greater discussion of intellectual property enforcement in the TRIPS Council represented the first attempts by a WTO member to revive such discussion since 1997.86 That effort also reflected the directions of the new EU IPR Enforcement Strategy,87 which the European Commission adopted in November 2004.88

In response to the EU efforts, leading developing countries such as Argentina, Brazil, China, and India registered their strong opposition, citing distractions from WTO trade talks, which they claimed were "supposed to focus on development" in the Doha Round.89 As noted by a Chinese official, the TRIPS Council is "not the right time or right place" to discuss intellectual property enforcement. 90 In China's view, those issues should be handled by the DSB instead.9'

CORVALLIS, Ore. - A new study by an Oregon State University business professor has found that developing countries that adopt major international economic treaties do not necessarily gain more foreign direct investment. In fact, in some cases adopting these treaties can hurt, not help a developing country, contrary to what agencies such as the World Trade Organization (WTO) espouse. The study, published in the online version of the Journal of World Business, has major implications for Latin American and Caribbean intellectual policy reform. , an assistant professor in OSU's College of Business, spent more than 12 years in private industry managing intellectual property and research and development strategies at various firms. He is the inventor of 43 issued United States patents and more than 70 international patents in areas related to micro/nanotechnology and semiconductor manufacturing. Khoury wanted to know when developing countries in Latin America adopt intellectual property treaties such as the if their inbound investment from foreign countries increases. Mike Peng from the University of Texas at Dallas contributed to the research. "Basically, I wanted to know when developing countries take on the rules of the wealthy, developed nations, do good things happen to them?" Khoury said. "And in many cases, the answer is no." Khoury looked specifically at the Paris Convention treaty, which was renewed in 1967. He found that countries that did not have a significant invention and scientific research base did not financially benefit from adopting the treaty, and in some cases found their economic situations worsen. The OSU professor pointed out that developed countries such as the United States encourage others to adopt the treaties because they want to be able to file their patents in countries where there may be a market for their product, or perhaps where there may be a manufacturing workforce to make the product. As the inventor of more than 100 domestic and international patents, Khoury saw this issue come up frequently when he was filing for patents in other countries. Companies file international patents to protect their invention and make sure competitors in other countries do not copy the product; and they want to ensure that they can sell, market or manufacture the product overseas. Looking at the data over a 14-year period in 18 Latin American and Caribbean countries, Khoury found that countries that adopted the Paris Convention early - such as Colombia, Ecuador and Uruguay - had an inflow of foreign direct investment if they increased innovation, which he measured by the number of scholarly journals published and number of patents filed from that country. So in some cases, adoption of international intellectual property rights treaties may have helped a developing nation. But in countries with the lowest innovation base - including El Salvador, Honduras and Paraguay - early adoption did not increase investment in those countries. "Countries that do not adopt are threatened with sanctions and other types of coercion," Khoury said. "This explains why so many developing nations adopt treaties that are, quite frankly, not beneficial to them and in some cases only helps larger, multinational corporations within more industrialized countries." Khoury explained that developing countries often struggle to stay in harmony with international treaties that are designed as "one-size-fits-all." In many cases, he added, developing nations may see much larger economic benefits from delaying participating with economic treaties such as the Paris Convention and waiting until they have increased their domestic innovation base.

Historically, IP law is designed to address the needs of a country within its territorial boundaries, and thus, IPRs are domestic in nature. The territoriality principle requires laws to be created and applied within the national borders of a country. The underlying rationale of the principle is based on the premise that intellectual property is an expression of sovereign will that is based on a “country’s economy and social fabric … . the rights and obligations are matters of social policy to be determined by the proper legislative and executive processes”.Footnote13 The territoriality principle subscribed to international IP agreements results in a significant difference in national IP law among countries,Footnote14 resulting in a “universal, systemic self-limitation of substantial [national] IP law”.Footnote15 Therefore, the territoriality principle is embedded in the international IP framework to preserve sovereign authority and allow states to enact laws that match their own policy prerogatives.Footnote16 In the words of Vivant “IP must be thought of as a global tool where the principle of territoriality remains dominant”,Footnote17 and the territorial basis for IP rights is exclusive.Footnote18 Therefore, “copying or adapting” other countries’ IP laws into a national regime may not always be as productive as it would be in those countries. Generally, countries formulate domestic IP laws based on their socio-economic status. For instance, African and Asian countries are rich in traditional knowledge and biodiversity. To protect their traditional cultural expressions from unauthorised use by third parties who might want to copy or exploit these, they adopt measures through existing forms of IPRs or enact “sui generis” laws. For example, Kyrgyzstan and Azerbaijan have sui generis protections for traditional knowledge and folklore.Footnote19 However, the United States does not protect its traditional knowledge through “sui generis laws”,Footnote20 perhaps because it contributes less to the national economy. Similarly, the US and European Union have employed sui generis protections for biotechnology, since biotechnology-related inventions would not have been developed without such protections.Footnote21 These protections may not exist in other countries, mainly because they may not have felt the need. Thus, the choices that a country makes to enact IP laws are based on social, political, cultural and market values.