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77 Temp. L. Rev. 401 (2004)
Intellectual Property and Pharmaceutical Markets: A Nodal Governance Approach

handle is hein.journals/temple77 and id is 411 raw text is: INTELLECTUAL PROPERTY AND
PHARMACEUTICAL MARKETS: A NODAL
GOVERNANCE APPROACH
Peter Drahos
I. INTRODUCTION
The regulated markets in pharmaceutical products are failing the world's
poor people. This is a majority of the world's population. The basic problem is
well known.1     Governments regulate pharmaceutical information markets
through the creation of patent systems and the establishment of regulatory
agencies (patent offices) to administer those systems. The purpose behind this
regulation  is to  correct for market failure.       Without such     regulation,
pharmaceutical companies would not invest in the production of information.
The regulated pharmaceutical markets work on the basis of consumer
preferences. Consumers express those preferences by their willingness to pay for
pharmaceutical information that is embodied in products. The world's poor
consumers also have preferences for medicines, of course, but they do not have
the ability to pay the prices that are commanded in regulated markets. As a
result, they turn to unregulated markets in traditional medicines.2 The upshot of
all this is that regulated markets either fail to deliver medicines for diseases that
afflict poor people (the demand as measured by preferences is not there), or the
medicines that regulated markets produce for the wealthy, and which are also
important for poor people's health, remain beyond poor people's reach.
As a matter of moral theory, it is not hard to find arguments that lead to the
conclusion that regulated pharmaceutical markets are producing the wrong
* Research Fellow, Regulatory Institutions Network, The Australian National University.
1. See Jean 0. Lanjouw, A New Global Patent Regime For Diseases: U.S. and International Legal
Issues, 16 HARV. J.L. & TECH. 85, 88-89 (2002) (noting how the developing world's lack of patent
rights for drugs reduces incentive to invest in research of diseases); Hannah E. Kettler, Using
Intellectual Property Regimes to Meet Global Health R&D Needs, 5 J. WORLD INTELL. PROP. 655, 656-
59 (2002) (discussing how research and development of poverty diseases is under-developed because
of poor returns for potential investors without patent rights); MtDECINS SANS FRONTItRES & DRUGS
FOR NEGLECTED DISEASES WORKING GROUP, FATAL IMBALANCE: THE CRISIS IN RESEARCH AND
DEVELOPMENT FOR DRUGS FOR NEGLECTED DISEASES 16-18 (2001) (noting that company allocation
of research and development funding stems not from a global health need, but from a variety of
incentives, including the patent system  and potential investment returns), available at
http://www.msf.org/source/accessl2001/fatal/fatalshort.pdf (last visited Sept. 7, 2004).
2. CARLOS M. CORREA, PROTECTION AND PROMOTION OF TRADITIONAL MEDICINE:
IMPLICATIONS FOR PUBLIC HEALTH IN DEVELOPING COUNTRIES 6-7 (2002), available at
http://www.southcentre.org/publications/ traditionalmedicine/traditionalmedicine.pdf (last visited Sept.
7,2004).

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