(A version of this Health Alert was published by Forbes.)
A new report should help President Trump find his way out of the confusion suggested by his very mixed signals on the role of medical innovation to American prosperity and patients. Last month, he said research-based drug-makers’ practices were “disastrous,” the industry was “getting away with murder,” and suggested the federal government should dictate prices of medicines.
A couple of weeks later, he told pharmaceutical executives: “You folks have done a terrific job over the years … The U.S. drug companies have produced extraordinary results…” To cap it off, he promised to end “global freeloading.” “Foreign price controls reduce the resources of American drug companies to finance drug R&D and innovation.”
One difficulty with the President’s recent statement is that policies which allow American research-based drug-makers to succeed apply equally to foreign drug-makers which operate here. Any innovative drug-maker which wants to supply its therapies to American patients can apply for patents which assure its intellectual property will not be taken by copy-cats. While patents are issued by national governments, international agreements are necessary to ensure global benefits.
President Trump traduces international trade agreements, which have included protections for intellectual property since the United States and other countries signed the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994.
However, President Trump should be in a good position to understand how important global protection of intellectual property is. After all, he is a beneficiary. The Apprentice, which launched in the United States in 2004, has been licensed in many other countries. Effective copyright protection is necessary to ensure President Trump and his business associates’ innovative model of reality entertainment can be enjoyed by global audiences. (The tiff between Mr. Trump and his American successor, Arnold Schwarzenegger, pales beside his 2012 Twitter battle with his British counterpart, Alan Sugar. When asked by Piers Morgan why he did not fire Lord Sugar, Mr. Trump replied “I easily could but as long as Sugar is making me money (it’s my show) I won’t.”)
Research just published by the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) measures the welfare benefits of protecting all types if intellectual property, from medical innovation to reality TV.
The Roots of Innovation is the fifth edition of the Chamber’s annual effort to rank countries by a number of indicators of strength of IP protection. The current edition ranks 45 countries representing about 90 percent of the world’s Gross Domestic Product. Countries are scored by 35 indicators within six categories of IP protection: Patents, copyrights, trademarks, trade secrets and market access, enforcement, and ratification of international treaties. The indicators measure both law and enforcement: Countries which do not enforce IP rights, despite the letter lf the law, are marked down. Most of the indicators are straight forward: Longer patent, copyright, or trademark terms are better; strong enforcement mechanisms are better; and treaty obligations protecting intellectual property invented in other countries is better.
The report does not attempt to determine causality between strong IP protection and social or economic outcomes. Indeed, 45 indicators is likely far too many to use for such an analysis. Nevertheless, it does determine a number of positive correlations between strong IP protection and other beneficial indicators. For example, the correlation between countries’ scores and
- access to venture capital is 0.77, and countries scoring above the median are 45 percent more likely to attract venture capital and private investment than those scoring below the median;
- Research & development spending is 0.70, and countries scoring above the median are over 40 percent likely to attract private investment in R&D.
- human capital is 0.82, and countries scoring above the median have six times more workers in R&D;
- Development of biological therapies is 0.70, and countries scoring above the median host nearly 15 times more clinical trials on innovative biologic medicines;
- Cutting edge clinical research is 0.73, and countries scoring above the median attract more than 20 times the number of early-phase clinical trials;
- Creative outputs is 0.86, and countries scoring above the median are 75 percent more likely to have larger and more dynamic content and media sectors;
- Access to licensed music outlets is 0.78, and countries scoring above the median have greater access to new, licensed music content with a wider array of choice over secure platforms;
- Greater consumption of new audiovisual content is 0.73, and countries scoring above the median are likely to see at least 3.5 times more theater screenings of feature films, and generate more tax revenue from ticket sales; and
- Wider and more convenient access to video content is 0.61, and countries scoring above the median have more than double the level of advanced and easy-access home entertainment.
Protecting intellectual property in medical innovation and entertainment go hand in hand. The Roots of Innovation shows there are no innovative and prosperous countries today that do not have strong IP protections across the board. As he develops policies that will determine whether patients will benefit from future medical innovation, let’s hope President Trump recognizes this in his own experience as a successful creator of intellectual property.