How Is The Free Trade Agreement (Fta) Between The U.S. And Colombia Going To Affect Colombian Pharmaceutical Sector?

Juan Gabriel Ruiz


How is the Free Trade Agreement (FTA) between the U.S. and Colombia going to affect Colombian pharmaceutical sector?


A Free Trade Agreement with the world´s biggest economy is not a minor event for Colombia. As any political decision, this one will have positive and negative effects in manydifferent areas. The agreement finally (after almost 8 years of negotiations) went into effect on May 15, 2012. The actual situation of this economic relation is one in which the USA is the first trade partner of Colombia, but Colombia accounts for less than 1% of the total USA trade. The products that Colombia exports to the USA are basically commodities. Crude oil accounts for almost 40% of theseexports, followed by coal, precious and semi precious stones, coffee, tea, flowers, and plants (Luxner, 2011). In fact more than 70% of the exports of Colombia to the USA are of mining and energy, and these sector, some argue does not need any FTA. On the other hand, two thirds of Colombian imports from the USA are manufactured goods. On this paper I will explore the impact that this agreementrepresents for the pharmaceutical sector in Colombia. This issue involves many different factors, in which intellectual property rights is one of major concern. Although the implications will definitely affect some individuals in a negative way, I will conclude, with a neoclassical economic approach, and taking into consideration different aspects, that the agreement could be beneficial for theColombian pharmaceutical industry in the long term.


In Colombia, unfortunately, access to drugs and medications is a luxury that few people can afford. It is the State´s duty to try and do everything it cans to make medications as accessible as possible to the entire society. Important statistic show that, for example, and despite the progress in the last years,close to 20 million people (almost half of the population of Colombia) have no access to medicaments because or they don´t make part of the health system, or the system is not good enough to get them medications (Holguín, 2004). Another example worth noticing in the case of Colombia shows the official data, in which, out of the more than 200,000 people affected by AIDS, only one tenth has access tomedication.(El Tiempo, May 31, 2002). Important studies have shown that in order to break down and reduce the price of medication and improve its access, competence is paramount (Access to Medications and Health, 2004). It has been proven, that for every competitor that runs into the market, the prices of medications lower down to at least 10% and in the international scope, studies (IMS HealthGeneric Pharmaceutical Association) show that generic medications costs almost a third less the price of the patented medication. FEDESARROLLO, a Colombian economical and social research organization, shows studies in which, as the the national production gets stronger, multinational laboratories improve their terms of sale. In the period that went from 1999 to 2002, national laboratories gave theinsurance companies discounts that made the international companies go from having an overprice of up to 6% in 1999, to have a 40% discount in 2002. It can be deduced with this that competence is beneficial for society and for the State. If this is true, the government should be very careful when trying to access to international agreements in which national medications of good quality and lowprice can be threatened.

An important question that arises here is, how much should the intellectual property rights be respected? Some argue that as much as it does not become an obstacle for the development of national technologies. Although this can be true, as in any political decision, some people will be affected and some others will get the benefits. What is...