There continues to be widespread criticism of the extension of patent rights on pharmaceuticals in the developing world as required by World Trade Organization membership. This paper examines arguments in favor and against this strengthening of worldwide patent protection. It emphasizes that these new pharmaceutical patents promise benefits and costs that differ with the characteristics of diseases. Some diseases primarily affect poor countries. For these diseases, patents will not be sufficient to attract substantial private investment because purchasing power is low. However, globally available and well-defined patent rights could increase the benefits derived from greater public financing of research on pharmaceutical products for the developing world. For major global diseases the justification for extending patents in poorer countries is less clear. Thus the optimal global framework for pharmaceutical patents might require differentiating the protection given to products in accordance with their extremely different global markets. The paper considers standard intellectual property and regulatory mechanisms that could be used to differentiate protection. All have serious drawbacks. It then describes a new mechanism that would make differentiating protection a more feasible policy option.
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