Trips, Pharmaceuticals, Developing Countries, and the Doha 'Solution'

The WTO ministerial meeting in Doha produced a declaration that will encourage developing nations to use compulsory licensing and parallel importation to reduce the prices of patented pharmaceuticals in their markets. This paper questions the soundness of such policies. Developing nations have long had little intellectual property protection for pharmaceuticals, which may have resulted at least in part from an acute collective action problem -- developing nations reap the full benefits from lower prices when they do not create pharmaceutical patents, yet the costs in terms of diminished research incentives are largely externalized to the rest of the developing world. The magnitude of the effect may be modest for many lines of drug research, but acute for diseases of particular importance to developing nations such as malaria and drug-resistant tuberculosis. The WTO TRIPs agreement held out some promise of overcoming part of this problem, but just as the obligations of developing nations under TRIPs were beginning to take hold, the Doha ministerial declaration casts great doubt on the future credibility of patent rights for pharmaceuticals in the developing nations.