Fostering Production of Pharmaceutical Products in Developing Countries

Abstract

Today, most of the pharmaceutical products consumed in developing countries are imported. For many years, some lawmakers, scholars, and activists have argued that firms located in each developing country should produce more of those products locally. This would benefit the residents of those countries both by creating high-paying skilled jobs and by addressing more quickly and reliably the residents’ changing health needs. Skeptics have responded that local production would be less efficient and would impair quality control. Three recent developments have strengthened substantially the case for augmenting local production of pharmaceutical products: the emergence of new infectious diseases that pose unprecedented threats to developing countries; the sudden surge in health-care nationalism, which has undermined the ability of developing countries to rely on imports of drugs and vaccines; and revelation of the prevalence in those countries of falsified and substandard drugs. After reviewing the tangled history of efforts to promote local production, this paper proposes five strategies that would help future initiatives of this sort succeed: (a) a nonobvious combination of substantive and procedural reforms that would ensure that local firms have legal authority to produce the drugs at issue; (b) using the regulatory and purchasing power of the governments of developing countries to catalyze collaborations between established pharmaceutical firms and local licensees; (c) accelerating technology transfer through an international apprenticeship system; (d) ensuring that local-production initiatives employ from the outset some new, robust quality-control technologies; and (e) capitalizing on the economic and political power of regional economic communities in Africa, Latin America, and Asia.

Keywords: pharmaceutical products; developing countries; patent law

JEL Classification: F63, I1, I14