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close this bookBiodiversity Prospecting - A World Resources Institute Book (WRI, 1993, 352 pages)
close this folderI. A New Lease on Life
View the document(introduction...)
View the documentGrowing Demand for Genetic and Biochemical Resources
View the documentWhat is at Stake?
Open this folder and view contentsThe Evolution of Biodiversity Prospecting Institutions
Open this folder and view contentsBiodiversity Prospecting Guidelines
View the documentNotes
View the documentBibliography

Notes

1. That is, the private returns of conserving the resource are less than social returns.

2. These five include Taxol, the most promising drug of the decade for treating breast, ovarian, and lung cancer. Since the success rate for cancer screening is based on technologies used in the 1960s, current technologies are likely to yield higher rates of "hits."

3. This estimate is based on his 1979 calculation (Barton and Christensen, 1988) of the U.S. markup of seed sales derived from proprietary protection, extrapolated to the 1990s and to the global market (totalling $1.5 to $2 billion). With a 5-percent royalty returning to the suppliers of the genetic material, this would amount to $75 million to $100 million.

4. If p is the probability of a single chemical yielding a useful lead, q is the probability that a lead will result in a commercial product, and n is the number of chemicals screened, then the probability of producing one commercial product (C) is C = 1 - (1 - (p × q))n. In this example, p =.0001, q =.25, n = 1000, and C =.0247. If R = the present value of the royalties from a single commercial product, then the present value of the agreement is calculated as C × R.

5. Even this figure may be conservative. At a January 1986 workshop involving representatives of American and Swiss pharmaceutical companies involved in plant-based drug development, a consensus was reached that the probability of any plant yielding a marketable pharmaceutical (not simply a "lead") ranged from 1 in 1000 to 1 in 10,000 (Principe, pers. comm., 1993).

6. Clearly, a local crop variety bred by farmers is an "improved" variety even though it has not been commercialized. Similarly, the investment that a nation makes in conserving wild species or in inventorying and identifying its species arguably results in an "improvement" in that species analogous to that made by commercial breeders.

7. The costs and benefits of intellectual property regimes have been debated at length. By using the creation of a monopoly right to correct for a market failure, governments create new economic inefficiencies in the hopes of removing more serious ones. In one notable case of abuse of this right, a British subsidiary of Hoffman-La Roche was found to be claiming costs of $925 and $2,305 per kilo for materials available in Italy (where no patent protection was available for pharmaceuticals) at $22.50 and $50 per kilo, respectively, to justify artificially high drug prices (Boone and Mathieson, 1990). Since the costs and benefits of IPR protection differ among countries and among industries within countries, most analysts agree that intellectual property rights regimes must be tailored to countries' specific development needs. (Siebeck, 1990; WRI et al., 1992; Khalil et al., 1992) One generalization can be made about the forces influencing the evolution of IPR systems: industry will always seek to strengthen IPR protection, even if the strength of the protection exceeds socially optimal levels. From industry's standpoint, stronger IPR protection allocates ever more of the economic rent produced by a new innovation to the industry and less to the consumer. No market mechanism determines the optimal balance of this rent capture - by establishing IPR regimes, governments assume the responsibility of making this determination.

8. Plant Breeders Rights grant an individual exclusive right to sell a specific variety but traditionally do not prevent farmers from saving and replanting the seed of the variety (farmer plant-back), or breeders from using that variety in a breeding program (breeders' exemption). Many in the plant breeding industry have argued that this level of protection provides an insufficient incentive for research investment and have advocated closing "loopholes" related to both farmer plantback and the breeder exemption. (In response, the March 1991 revision of UPOV allowed countries to restrict farmer plantback and alters the breeders' exemption so that "essentially derived" varieties - that is, new varieties based largely on the genetic makeup of a protected variety - must obtain a license from the owner of the protected variety.)

9. All UPOV members were West European until 1978. Since that time, other countries including Australia, Czechoslovakia, Canada, Hungary, Israel, Poland, South Africa, and the U.S. have joined and some developing countries are considering joining.

10. Typically, drugs developed from natural products are altered from their natural forms during the drug development process and these derivatives are also patentable. The trail of patents filed during drug development can help in determining whether wholly or partially synthesized drugs originated from natural precursors.

11. A number of companies now recognize the need for conservation in their policies, but generally support for conservation is contributed through philanthropic foundations associated with the company. However, these foundations cannot legally donate money to institutions involved in a commercial arrangement with the parent company. (See Chapter IV.)

12. Several professional societies are developing ethical guidelines seeking to ensure that the rights of holders of traditional knowledge are respected and that just compensation is provided to local communities for access to such information.

13. This difference in treatment might raise red flags under international trade agreements. On the other hand, many countries already have two-tiered user fees for access to national parks, with foreign nationals paying higher fees than local residents.