Abstract
In November 2006, Thailand’s Government Pharmaceutical Organization (GPO) announced the compulsory licensing of the HIV drug efavirenz, which enabled the Thai government to import generic versions of it from India without the patent holder’s (Merck’s) consent. The GPO was able to do this because Merck held a patent in Thailand, but not India. This case raises ethical issues concerning intellectual property rights (IPRs) and their protection (or lack thereof) internationally. Ethical challenges in this case involve observing the conflicting rights of various stakeholders, including government, pharmaceutical companies, shareholders, and HIV patients worldwide. Discussing how pharmaceutical companies like Merck balance such stakeholder claims with their legitimate business objectives may be useful for anyone planning to participate in the global marketplace.
“If you protect intellectual property, all stakeholders will receive their due share.” (Stephan Rothlin, Eighteen Rules for Becoming a Top Notch Player, 2004)
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Notes
- 1.
Although R&D for new drugs is extremely expensive, the marginal cost of producing the drug is relatively low.
- 2.
The three tiers are based on measures of gross national income (GNI) per person in a given country. The breakdown is as follows: low income, $1,005 or less; middle income, $1,006–$12,275; and high income, $12,276 or more (World Bank 2012).
- 3.
Khun Chantawipa Apisu, founder of EMPOWER, a forum that provides community and education to Thailand’s sex workers, comments on the economics of the sex industry: “Much of the tourist industry is dependent on sex workers and it makes up around 7 % of the GDP – more than rice exports” (Short 2010).
- 4.
In 2006, Thailand’s GDP per capita was $9,100, the second highest in Southeast Asia (Bate 2007). On that basis, Thailand was entitled to purchase pharmaceutical drugs at a mid-tier range. As a middle-income country, Thailand paid substantially less than the USA and European countries, but more than countries in Africa that lack Thailand’s economic resources.
- 5.
Explaining this difference may also require a critical comparison of the role of the state, understood as a construct emerging from a Lockean social contract, contrasting with the traditional Chinese view of the state as ultimately the natural expression and embodiment of the Chinese family. Analogous to the family, the Chinese state’s first priority is preserving social harmony so that all family members may flourish. The Lockean social contract assumes no such analogy, since the contractors are individuals who agree to forego the liberty they exercise in the state of nature in order to secure protections that cannot be obtained in the state of nature. The first of these protections concerns their rights to life, liberty, and property. Individual property rights therefore are central to the role of the state in a Lockean social contract, in ways that they simply cannot be in Chinese social philosophy.
- 6.
Yu cites an example from China that concerns a dispute between joint venture partners over “design fees” that mirrors issues we explored in the Pepsi Sichuan case study in chapter four: “A case in point is a U.S.-China joint venture whose Chinese partner was unwilling to allocate a portion of the joint venture profits to the foreign partner for design fees. The reaction of the Chinese partner was natural and understandable; it understood neither intellectual property protection nor the intentions behind the foreign partner’s action. However, once the foreign partner explained to the Chinese manufacturer that it could charge separately for its design work and helped the manufacturer determine the cost of its own design processes, the Chinese partner became receptive to the idea of allocating profits for intellectual property. It even actively lobbied local regulators for the right to design fees” (Yu 2003: 13). While Yu’s example has an ending far happier than what Pepsi and its Sichuan partner were able to achieve, it represents a promising alternative, provided that the joint venture partners can still trust each other.
- 7.
This last point is illustrated by the motion picture industry’s successful effort in China to market VCD copies of commercial films, either dubbed in Putonghua or imprinted with Chinese subtitles, that are sold for somewhere between 10 and 25 % of the price of an imported DVD copy. As one music recording company observed, “We think the best way to stop piracy is to make music so cheap it isn’t worth copying” (Yu 2003: 14).
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Rothlin, S., McCann, D. (2016). Competitors: Intellectual Property Rights. In: International Business Ethics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-47434-1_13
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