The Jekyll and Hyde Story of International Trade: The Supreme Court in Phrma V. Walsh and the Trips Agreement

Posted: 15 May 2004

See all articles by Srividhya Ragavan

Srividhya Ragavan

Texas A&M University School of Law


The paper analyses the international impact of the approval by the United States Supreme Court to use indirect price control mechanisms to tackle public health and Medicaid issues. It traces similarities in policies implemented by the United States and those it opposed within developing nations. For example, the recent use by the developed nations of compulsory licensing and price control mechanisms, which they opposed as violating TRIPS when used by developing nations, underlines a poverty penalty suffered by developing nation signatories of TRIPS. In effect, TRIPS exempts developed nations from fulfilling obligations developing nations were forced to fulfill and thus punishes poor nations for being poor. The poverty penalty, resulting from developing nations being forced to undermine their sovereign national responsibilities, has highlighted the inability of TRIPS to seek equivalent behavior from all parties.

The poverty penalty is quantified as the economic value developing nations lost due to national issues becoming international emergencies. Developing nations owe the sufferance from poverty penalty to their dependency on trade with the developed countries. The sufferance of the poverty penalty by developing nations was meant to further global trade by benefiting the pharmaceutical industry. This paper establishes that the poverty penalty has in fact resulted in an opportunity cost to the pharmaceutical industry. Further, the economic loss to global trade and the pharmaceutical industry from developing nations being deprived of medication will far exceed the benefits from interpreting TRIPS inflexibly. Hence, the interests of IP harmonization and the pharmaceutical industry will best be served by eliminating the poverty penalty by taking cognizance of the sovereign national responsibilities of developing nations.

Keywords: TRIPS, price control, patent, compulsory licensing, developing nations, pharmaceutical, Medicaid cases

JEL Classification: O34

Suggested Citation

Ragavan, Srividhya, The Jekyll and Hyde Story of International Trade: The Supreme Court in Phrma V. Walsh and the Trips Agreement. Available at SSRN:

Srividhya Ragavan (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce Street
Fort Worth, TX 76102
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