- The Washington Times - Sunday, June 26, 2005

Recently, Brazil’s legislature passed a law to violate patents for many medicines developed by American-based companies. The law allows anyone to copy drugs for HIV and re-sell them anywhere at a lower price. Brazil is by far the worst abuser of intellectual property rights in the Americas. According to the U.S. trade representative, piracy losses to American businesses add up to nearly $1 billion annually.

While Brazil claims it must violate patents to make medicinesaffordable, Brazil’s AIDS infection rate of 0.6 percent is about that of the United States, at 0.5 percent. For comparison, the AIDS infection rate in Swaziland is 38.6 percent, according to the impoverished African nation’s health ministry. And at the same time Brazil is breaking our patents, it is relentlessly protecting those of its faster-growing and most profitable industries: pharmaceuticals, agricultural biotechnology, communications and aerospace. Indeed, Brazil’s president told the press during a trip to Africa this spring that he planned to seize U.S. pharmaceutical patents to jumpstart his country’s entry into the generic drug business.

It would be reasonable to presumethatCongress would respond to Brazil’s theft of intellectual property. And it has. But instead of standing up for America’s interest, Congress, led by Rep. Anne Northup, Kentucky Republican, has decided to aid and abet patent piracy. It passed an amendment introduced by Mrs. Northup that prohibits trade agreements with provisions that require enforcement of patent protections for medications. Mrs. Northup and those who voted for the amendment say that U.S. patent laws, which are maintained in trade agreements, protect U.S. patents.

But what she and others are clueless about is the need to strengthen the enforcement mechanisms available to America. In many cases, government policies force the price of drugs down for their own markets and limit their use, regardless of value, to ration health care and protect domestic drug makers from American competition.

In the worst case, some countries in alliance with some generic drug makers and capitalism-hating activist groups have claimed the right to seize patents in the name of public health — though such actions were clearly confined to poorer nations with dire health crises. Indeed, in limiting the so-called compulsory licensing of drugs to generic manufacturers for such purposes, countries also agreed to limit the re-importation of these goods to developed nations.

Brazil wants no part of such responsible limits. UnlikeIndia,whichhas strengthened patent protection to encourage future investment, Brazil is ripping off American drug and biotech patents as part of a larger effort to expand its economy and bolster its drug industry without having to spend the billions required to bring new medicines to market. Now it has willing accomplices in Mrs. Northup and others in Congress who apparently believe that it is good public policy to encourage and embolden nations to sell the stolen knowledge of our scientists for a song.

Mrs. Northup and other so-called free traders (who have no problem supporting protectionist tariffs and quotas to defend local industries) maintain that a patent is simply the exclusive right to make a product but that a firm has no right to determine how it should be sold. As Milton Friedman has pointed out, a patent not only protects knowledge from being used without permission to make the exact same product, but it also gives companies the exclusive privilege to sell their products in a way that protects that investment.

Mr. Friedman asks: Suppose somebody in Canada or Brazil simply makes a generic version of a patented drug. Does free trade require that the United States accept importation of that drug? The answer is, if you’re going to enforce the patent, you have to keep out knockoffs.

Similarly, drugs that are purchased in the United States under a contract to be sold only in Canada at a particular price provided that they are not sold elsewhere are instead shipped to the United States. That is also violating patent law. The same applies for software, compact discs, telecommunication equipment and financial services.

The question is, should the U.S. government enforce one aspect of the patent and not another? Mrs. Northup thinks not and her view is widely shared by many Republicans who confuse importation with free trade. Stripping the power of our government to enforce contracts in other countries makes patent protection worthless.

It sends a signal that if Congress does not take patents seriously, neither should anyone else. She would make it easier for Brazil and other patent pirates to expand their thievery to other industries, undermining American competitiveness and job creation as they go.

Robert Goldberg is director of the Manhattan Institute’s Center for Medical Progress.

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