Even within the walls of the World Trade Organization, the Trade-Related Aspects of Intellectual Property Rights agreement, or TRIPS, is a paradox and a freak: a temple to monopoly inside the church of free trade.
The Biden administration’s announcement on May 5 that it supports an emergency waiver of intellectual property rules by the WTO has been rightly heralded as a major event. Even if the White House statement was vague on the details, the news jolted to life a seven-month stalemate inside the WTO over how to overcome a supply crisis that has seen only three-tenths of 1 percent of vaccines go to low-income countries. The European Parliament may push the needle further in June when it votes on a resolution calling on European capitals to join Washington on the side of more than 100 countries that support lifting intellectual property restrictions from products used to treat and contain Covid-19.
One thing that hasn’t changed is the tone of ridiculous solemnity around the intellectual property regime in question. Listening to the most stalwart defenders of TRIPS, it’s possible to confuse the proposed waiver with a particle accelerator of unfathomable and experimental power. To hear the trade associations and their political allies tell it, meddling with TRIPS jeopardizes your job, your safety, and the global economy, as much as or more than SARS-CoV-2, as well as any hope of future innovation and progress. In announcing the White House decision, U.S. Trade Representative Katherine Tai gravely described the waiver as an “extraordinary measure.”
In truth, there is nothing extraordinary about suspending TRIPS to address what the WTO’s director-general calls “the moral and economic issue of our time.” There can’t be, because there is nothing extraordinary about TRIPS itself. Its backstory is almost impossibly shallow and grubby; its founding documents younger than Justin Bieber. TRIPS is not the expression of a universal post–Cold War consensus, in the way the U.N. Declaration on Human Rights gave voice to human aspirations after World War II. It was born as a brute and profoundly undemocratic expression of concentrated corporate power—the work of “less than 50 individuals,” according to a U.S. trade official present at the creation. One of that official’s reluctant Indian counterparts, Prabhat Patnaik, has described the TRIPS affair as “a parody of the wildest conspiracy theory.”
The negotiations that led to the creation of TRIPS were less held over a table than conducted on a rack. It was the only way to enforce the peculiar and nearly universally rejected concept of medical monopoly, an American innovation that cut hard against centuries of moral, economic, and legal tradition, including those of the wider West.
In 1951, Jawaharlal Nehru, the first president of the newly independent India, decided to build a penicillin factory. None of the big commercial producers, however, liked the idea of transferring the needed technology and know-how to a large developing country like India. They instead offered to export the antibiotic in bulk, then bottle it in Indian factories for local distribution and sale. Only Merck agreed to build an actual factory. Knowing it was the only company to make this offer, it attached onerous long-term royalty demands and placed limits on Indian control of the technology.
Nehru was leaning toward accepting Merck’s offer when a delegation from the young World Health Organization arrived in New Delhi. The officials presented Nehru with another option: UNICEF and the WHO would provide grants to cover the full cost of building a penicillin factory, as well as United Nations technicians to oversee tech transfer and train native staff. As part of the deal, the U.N. representatives offered to set up a research center affiliated with the factory, with the goal of developing India’s scientific and technical capacity to make other antibiotics and essential medicines.
The U.N. deal came with only two strings: India must promise to keep the factory fully in the public sector and share relevant research or discoveries with a network of similar projects the U.N. was establishing across the global south. Nehru accepted. The result was Hindustan Antibiotics, the cornerstone of India’s emergent generics industry.
It can be difficult to imagine today, but for much of the Cold War, U.S. foreign and trade policies didn’t track with the interests of the U.S. pharmaceutical industry. Truman’s State Department backed the U.N. penicillin project in India over Merck, and generally supported an internationalist agenda of building up native medicine capacity in the decolonizing countries of Africa, Asia, and Latin America. Washington understood that the drug industry’s attempts to protect its knowledge and markets abroad not only lacked legal or moral bases but also threatened to undermine America’s image and Cold War objectives by turning a potent form of soft power into a symbol of capitalist greed and inhumanity.
The day after Salk’s polio vaccine was declared a success, Dwight Eisenhower offered to share all information and know-how with every country that requested it, including the Soviet Union. A month before John F. Kennedy’s assassination, he enraged the drug companies by issuing a memorandum that restricted private monopoly claims on government science—especially federal research in “fields which directly concern the public health.” The country’s interest, wrote Kennedy, is “served by sharing of benefits of government-financed research and development with foreign countries to a degree consistent with our international programs and with the objectives of U.S. foreign policy.” Kennedy wanted to keep worldwide rights to public science under public control so it could be shared and licensed broadly, rather than claimed by a private actor hoarding and profiting from exclusive claims on intellectual property.
Intellectual property is not like other property. If you possess a cow, and someone steals it, you have lost your cow. If you discover a process that makes cow’s milk safer to drink, the possession of that knowledge by others does not reduce your store of it. In economic terms, knowledge is a “nonrivalrous” good. In Jefferson’s famous formulation, “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”
Because of this, the concept of intellectual property was resisted in Europe into the twentieth century. As late as 1912, Holland rejected patents and maintained what it called a “free trade in inventions.” This was consistent with the classical liberal doctrine established by Adam Smith and John Stuart Mill, both of whom were suspicious of patents. The nineteenth century’s most withering attacks on intellectual property were found not in left-wing journals but in the pages of The Economist, which advocated for the abolishment of the English patent system. “Before [inventors] establish a right of property in their inventions, they ought to give up all the knowledge and assistance they have derived from the knowledge and inventions of others,” suggested the magazine in 1850. “That is impossible, and the impossibility shows that their minds and their inventions are, in fact, parts of the great mental whole of society, and that they have no right of property in their inventions.”
In accord with the prevailing view in Europe, The Economist understood state-protected monopolies as vestiges of competition-squelching royal privilege. The first patent system arose in Elizabethan England not to “drive innovation” but to limit Crown-dispensed monopolies. Hatred of these monopolies played a starring role in the American Revolution, whose leaders were understandably unenthusiastic about patents. Thomas Jefferson and Ben Franklin thought them impediments to progress and mockeries of what they considered the incremental, cumulative nature of all “invention.”
The phrase intellectual property was coined in post-Revolutionary France to obscure the royal origins of monopoly and deflect attention from the true subject of intellectual property claims, which is not knowledge but markets. Since markets do not fit easily into modern theories of rights and property, “those who started using the word property in connection with inventions had a very definite purpose in mind,” wrote the Austrian economist Fritz Machlup:
They wanted to substitute a word with a respectable connotation, “property,” for a word that had an unpleasant ring, “privilege.” [They] knew that there was no hope of saving the institution of patent privileges except under an acceptable theory … and in deliberate insincerity “construed the artificial theory of the property rights of the inventor” as a part of the rights of man.
When medicines were added to this debate, there was no debate at all. Only in the early to middle decades of the twentieth century did the United States abandon an entrenched global taboo against exclusive property claims on medicines. In Europe, this taboo lasted another half-century. Switzerland, a pharmaceutical powerhouse, did not issue drug patents until 1977. As with every country before the advent of the WTO in 1995, it had little power to enforce these patents outside its own borders. Internationally, something like a Dutch-style free trade in medicines still reigned in the 1970s. But not for long.
Feeling betrayed by their own government, the drug companies watched the rise of the generics industry in India and elsewhere with alarm. With help from the U.N., developing countries during the 1950s and ’60s began to invest in native scientific and manufacturing capacity. The pacesetter remained Nehru’s India, whose alternative drug economy was perceived by U.S. drug companies as a threat, not just to its profits in developing countries but to the fledgling legitimacy of monopoly medicine, especially inside the U.S., where the real money was made.
Between 1959 and 1962, an Arkansas Democrat named Estes Kefauver oversaw an investigation into the postwar pharmaceutical industry. The high-profile hearings run by Kefauver, chair of the Senate subcommittee on monopoly, focused on the core of the industry’s business model: patents, cartelization, and monopoly pricing. The hearings pulled back the curtain on a post-taboo drug industry that Americans and the rest of the world now saw clearly for the first time: markups as high as 7,000 percent on patented drugs whose creation involved natural processes discovered in publicly funded labs.
Some of the most scandalous details to emerge from the hearings involved the industry’s global practices. When Kefauver revealed that many of the highest markups by Merck and Pfizer targeted the small middle class in India, the Nehru government responded with further investments in the country’s burgeoning generics industry. Of equal concern to the drug companies, New Delhi began the process of drafting a new patent law to replace the British colonial regime still on the books. The drug companies lobbied hard to stop a law they worried could serve as a beacon across the global south.
“The Western corporations aligned with conservative sections of the Indian government to bitterly oppose and obstruct the public drug sector and patent reforms,” says Prabir Purkayastha, a veteran organizer of the Indian People’s Health Movement. “Nehru’s vision represented an especially fearsome threat: A developing country with its own scientific institutions, cutting-edge capacity, no patent protection, and factory lines that could provide pharmaceuticals to its own huge internal market and other developing countries.”
India’s Patents Act of 1970 was not as radical as it might have been. Modeled on the patent laws of Western Europe, it banned medicine product patents but allowed space for exclusive claims on methods related to their manufacture.
Merck CEO John Connor announced the law “a victory for global communism.” But as he and his fellow executives feared, the patent law was only the beginning. During the 1960s and ’70s, the Indian drug industry not only presented a working model of self-sufficiency and south-south cooperation. It also demonstrated the potential of north-south tech transfer, which was increasingly seen by the global south not as charity it must beg and be grateful for but something it deserved as a matter of basic global justice. It was in response to this increasing politicization of technology that the U.S. drug industry took the lead in formulating the plan that culminated, a quarter of a century later, in the founding of the WTO.
In 1964, the world’s 134 poorest countries formed a negotiating block within the U.N. called the G77. In its politics and agenda, it overlapped with the countries of the Non-Aligned Movement, formed three years earlier to pursue an internationalist development agenda free from interference by either the Western or Eastern sides of the Cold War. The purpose of the G77 was to challenge the foundations of a world system dominated by its former colonial masters. The rejection of knowledge monopolies and patents, in particular, was a running theme in these efforts.
In the wake of India’s Patents Act, G77 countries began to adopt similar patent laws and development plans, weakening the power of foreign drug companies to enforce their will (and price lists) around the world. In May 1974, the group passed a declaration in the U.N. General Assembly calling for a “New International Economic Order” defined by a more equal and democratically governed distribution of global financial, natural, and “knowledge” resources related to human health. This vision included a rejection of intellectual property as an illegitimate tool of the strong against the weak, a neocolonial straw designed to continue siphoning wealth from south to north.
In the WHO, the G77 had the two-thirds majority needed to set policy. Its push for north-south medical technology transfer gained a powerful ally in 1973 with the appointment of Danish doctor Halfden Mahler as WHO director general. Mahler had spent a decade directing India’s tuberculosis program and supported the G77 agenda. At a WHO-sponsored conference on primary health care held in the Soviet city of Alma-Ata in September of 1978, Mahler unveiled an agency program to help poor countries reduce their drug spending by building up their domestic drug industries.* The conference was capped with the adoption of an ambitious plan, known as the “Declaration of Alma-Ata,” to provide “health for all” by the year 2000. The declaration, like the WHO’s essential medicines program, committed the agency to the affirmation of “health as a human right based on equity and social justice.”
“The G77 was claiming the right to the kind of institutional capacity that would make it self-sufficient in a pandemic,” says David Legge, an Australian co-founder of the International People’s Health Movement, a global activist and academic network. “The calls for a New International Economic Order were about scaling the model of the U.N. penicillin projects.”
The potential of the Alma-Ata conference, however, would remain unfulfilled, thanks in part to the obsessive revenge drive of the man named CEO of Pfizer in 1972, the year India’s Patents Act entered into force.
As secretary of the Army in the Kennedy administration, Edmund T. Pratt Jr. brought a strategic view to the U.S.-Soviet military standoff. As CEO of Pfizer, he took a similar approach to the rise of a south-based generics industry and growing assertiveness by the G77. These developments threatened Pfizer’s ambitious plans for dominating global markets for drugs and agricultural products, especially in Asia. In the wake of the Alma-Ata conference, Pratt gathered a group of drug industry executives to discuss a plan.
Pfizer was the natural candidate to lead an industry counterattack against the G77. Its bulldog patent lawyers were legendary for launching kamikaze infringement suits around the world. In 1961, the company sued the British government after the National Health Service purchased an Italian generic version of a Pfizer-patented antibiotic, tetracycline. Throughout Europe, where medicine patents were still widely banned, the suit served as a sobering introduction to the modern “postethical” U.S. drug industry. Editorials reminded readers that Pfizer owed its power to wartime contracts to produce penicillin, which had been discovered and developed at Oxford and left in the public domain. Pfizer lost the 1961 suit, then lost again when it sued the NHS over another alleged infringement four years later.
Pratt’s first idea was to try and shift the conversation from the G77’s own turf. At the time, the only forum designed to handle the legal issues around intellectual property was the U.N.’s World Intellectual Property Organization, or WIPO, the agency that oversaw the 1883 Paris Convention for the Protection of Industrial Property. The 1883 Treaty only required countries to grant foreign companies the same rights they granted their own within national borders, but it was the closest thing to a binding agreement on intellectual property. When the G77 rebuffed the drug industry proposal, Pratt turned to a strategy the historian Graham Dutfield calls “forum-management.”
If the U.N. was too democratic, a less democratic arena would have to be found. Pratt and his group settled on an unlikely target: the next round of negotiations for the General Agreement on Tariffs and Trade, scheduled to start in Uruguay in 1986. Beginning in 1947, the decadal talks established the legal framework for postwar global trade. GATT amendments were sweeping, legally binding, all-or-nothing deals, with a format that favored the richest countries. Pratt’s strategy was to insert intellectual property inside GATT, then discipline the uppity south without mercy. “The experience with WIPO was the last straw in our attempt to operate by persuasion,” Pfizer’s general counsel Lou Clemente would later tell the Australian researchers Peter Drahos and John Braithwaite, authors of the definitive account of the episode, Information Feudalism.
In the late 1970s, there was no precedent for intellectual property as a subject of global trade. When the company Levi Strauss lobbied to pass an anti-counterfeiting code during the Tokyo round of GATT in the early 1970s, it was quickly shot down. If Washington couldn’t protect the country’s iconic blue jeans, how could anyone expect to enforce patents on lifesaving medicines, a concept barely recognized by America’s closest allies?
Pratt found his opening in another detail from the Tokyo Round. The negotiations in Japan had introduced a novel trade concept: “linkage.” By arguing that an issue was a “link” to legitimate trading issues such as tariffs and quotas, negotiators could get it on the agenda. This was the strategy used to pass amendments related to customs procedures and invisible export subsidies. The drug company CEOs just needed to convince the U.S. trade representative to “link” intellectual property to the global trading system in advance of Uruguay. This is why the TRIPS acronym—“Trade-Related Aspects of Intellectual Property Rights”—sounds so forced and clumsy. It was born in a shoehorn.
Even if it worked, the group would still face a much more daunting hurdle. GATT was premised on advancing free trade, and patent monopolies are embodiments of restraints on trade—state protectionism in its purest form.
How was that going to work?
Fortunately for the drug industry, it wasn’t alone in fretting over the rest of the world’s rejection of intellectual property.* The south’s competing vision—shared by some developed countries—posed a threat to powerful interests driving the emergent high-tech information economy. A number of industries—entertainment, software, biotech, agriculture, semiconductors—began to see the world through pharmaceutical industry eyes. In Washington lobbying calls and Manhattan club lunches, leaders of industry began speaking of the need to establish a protective regime around U.S. technologies, from medicine to software.
In 1981, Pratt and IBM executive John Opel were appointed co-chairs of the Reagan administration’s Advisory Committee for Trade Policy and Negotiation. Created by Congress in 1974, the outside advisory group collected blue-chip senior executives to advise the U.S. trade representative on policy and strategy. Upon taking the reins, Pratt and Opel established an intellectual property task force and stacked it with experienced people from patent-based manufacturing associations, especially drugs and chemicals. In the five-year run-up to Uruguay, this task force served as a war room for a two-track policy aimed at toughening up Washington’s allies, while softening and dividing the expected opposition.
After locking down administration and industry support, Pratt’s group took its project public. It was helped by growing anxiety over U.S. economic decline, and deftly worked the propaganda knobs and dials of the public mood accordingly. Pratt saw the post-Vietnam, post–oil shock slowdown as a chance to reboot what industry insiders called “the drug story.” With the economy suffering a quadruple whammy—ballooning trade deficits, skyrocketing foreign debt, manufacturing flight, and stiffening competition from Europe and Japan—the companies rebranded the patent as a beleaguered symbol of American ingenuity and “competitiveness.” Nations that refused to recognize the authority of the U.S. Patent Office were rogue nations, pirate states, whose intellectual larceny threatened both factory jobs in Detroit and rising high-tech industries in Silicon Valley.
This was the button pushed by Barry MacTaggart, chairman of Pfizer International, in an op-ed that appeared in The New York Times on July 9, 1982, under the title, “Stealing From the Mind.” The piece unveiled the argument that industry and the U.S. negotiating team would pound home for the next four years until the start of talks in Uruguay. MacTaggart informed readers that a “tense worldwide struggle for technological supremacy” was underway. The inventions of America’s high-technology research-based industries, wrote MacTaggart, “have been ‘legally’ taken in country after country by governments’ violation of intellectual-property rights, especially patents.” He exhorted all freedom-loving nations to get in line behind the “proper enforcement and honorable treatment” of intellectual property, singling out “computers, pharmaceuticals [and] telecommunications” as areas of knowledge being “stolen by the denial of patent rights.”
Inside the U.N., he warned, the G77 was “trying to grab high-technology inventions for underdeveloped countries”—an attack on “the principle underlying the international economic system.”
The fact that there was no such principle did not stop the Pfizer-led group from devising the outlines of a regime to enforce it. It was adopted by the Reagan administration as its own, and the world was put on notice that intellectual property was on the menu in Uruguay. The G77 nations, many reeling under the impacts of a debt crisis, announced they had no intention of going along. Two of the loudest rejections came from India and Brazil, the twin capitals of the south-based generic drug industry.
For the next four years, the U.S. took a number of anti-TRIPS states behind closed doors. The purpose of these meetings was coercion to sign on to TRIPS. The primary tool involved was a piece of U.S. trade law known as Section 301, established by the 1974 Trade Act. Section 301 created a mechanism for sanctioning U.S. trade partners for policies deemed discriminatory or burdensome. In 1984, the act was amended to make lax patent and copyright enforcement a tripwire for Section 301 investigation and retaliation, a process known as Special 301. The poorest countries had the most to lose in such retaliations, since many had only recently been granted duty-free access to the U.S. market under a program established in 1976 called the Generalized System of Preferences.
Washington’s punishment-reward approach to softening up the anti-TRIPS alliance made halting progress. In 1985, the U.S. rattled the anti-TRIPS coalition by brandishing the threat of Special 301 action against South Korea and Brazil. Clayton Yeutter, the U.S. trade representative at the time, informed both countries that Special 301 was the “H-bomb of trade policy.” (His successor would praise it as a “crowbar.”) Between 1984 and the conclusion of the Uruguay Round in 1994, the U.S. invoked Special 301 in a dozen confrontations with G77 leaders, including one with India and three with Brazil, resulting in tariffs and reduced access to the U.S. market.
And yet, a core bloc of 10 countries, led by India and Brazil, fought on. When the Uruguay Round commenced in the coastal resort city of Punta del Este, in September 1986, TRIPS remained a battleground. The Group of Ten were still holding the line in 1989 when two developments finally broke the India-Brazil axis and ended the last line of resistance to the globalization of Western medical monopolies.
The collapse of communism in Eastern Europe in 1989, and the imminent dissolution of the Soviet Union it foretold, altered the global political order. The U.S. entered a historically unique period of dominance, and Moscow vanished as a source of material and ideological support for countries in the anti-TRIPS opposition. (Soviet science and tech transfer had helped lay the foundation for generic drug industries across the global south.)
With the crumbling of the Berlin Wall, the industry agenda, championed by the U.S. trade representative, was liberated from the last remnants of Cold War restraint. Within the GATT process, nations were hauled into side rooms and bullied by what the anti-TRIPS negotiators called “Black Room” consultations, according to interviews conducted by Drahos and Braithwaite. That year is when the U.S. trade representative began applying Special 301 with full force, opening investigations into five of the 10 “hard-liners” opposing TRIPS. India and Brazil, the leaders of the group, got the worst of it. Brazil broke first, after the U.S. imposed crippling tariffs on its imports. India held out a little longer, but by 1990 had also broken. Under the terms of TRIPS, the country had 10 years to dismantle and revise the 1970 Patents Act. When the news hit India, street protests against the government of Rajiv Gandhi broke out across the country.
With the countries in line, it was left to the newly arrived Clinton administration to oversee the final details. Clinton was a strange figure for the role. He had campaigned against the “unconscionable” greed of health and drug industries that he had described as pursuing “profits at the expense of our children.” He identified the high price of drugs as “one example of why the health care system doesn’t work.” None of those concerns remained when he toasted the globalization of drug patents that the vast majority of countries still considered unconscionable and unlawful.
Clinton seemed genuinely happy at the ceremony in the Moroccan city of Marrakesh on April 15, 1994, when 124 states signed the Final Act of the Uruguay Round, bringing the WTO into existence. According to the text of the treaty, the WTO heralded “a new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples.” In return for enforcing Western patents on medicines and other technologies, G77 nations were promised access to northern rich markets, and a conditional “freedom from fear” of finding themselves on the wrong end of a 301 Special.
At the time of the signing ceremony, this trade-off was widely reported as fair and consensual. It was neither, but the consensual part seemed to stick. A dozen years later, as sophisticated a critic of TRIPS as Joseph Stiglitz would write, “as they signed TRIPS, the trade ministers were so pleased they had finally reached an agreement that they didn’t notice they were signing a death warrant for thousands of people in the poorest countries in the world.”
Except they did know. It’s the reason they fought as long and as fiercely as they did. It’s why Group of Ten negotiators called each other in tears when Brazil cracked, and why so many WTO ministerial meetings have been shrouded in tear gas. A lot of people understood perfectly well in 1994 that TRIPS was a mass death sentence. Now everybody else does, too.
* But it was the largest industry to do so. In 1980, half of the world’s 20 biggest drug multinationals were headquartered in the U.S. In response to industry opposition to the WHO Essential Medicines program, Ronald Reagan cut U.S. support for the agency in 1985.
* A previous version of this article misstated the year of the WHO-sponsored conference.