American Journal of Law & Medicine

Think globally, prescribe locally: how rational pharmaceutical policy in the U.S. can improve global access to essential medicines.


Improving access to essential medicines in low- and middle-income countries (LMICs) has become a critical health policy issue. Millions more people die each year in poorer countries from diseases that are treated by pharmaceutical agents currently available in higher income nations. (1) Recent medical innovation has tended to focus on problems affecting populations in developed countries and avoid those found exclusively or predominantly in LMICs. The etiology of these disparities is multifactorial, and can include high costs of products, (2) inadequate cooperation between governments and aid agencies, (3) rigid protection of intellectual property rights, (4) and poor local health leadership regarding dissemination of products. (5)

Over the past two decades, there have been growing efforts to reduce global disparities in availability of essential medicines. At the forefront of these efforts have been international agencies such as the World Health Organization, (6) or groups like Medicins Sans Frontieres (7) and Partners in Health, (8) which have helped set international health priorities and sought to improve local health care delivery systems. Other non-profit organizations have also emerged, such as the Institute for OneWorld Health, a pharmaceutical company that produces drugs for neglected diseases in LMICs. (9) Some commentators have also suggested changing the incentive system for pharmaceutical research and development by creating prizes for research into so-called "neglected diseases" (10) or establishing Advance Market Commitments to promote demand for development of certain products. (11)

Most such efforts are based in LMIC environments or focus on the operation of LMIC markets. However, recent developments have begun to alter the global pharmaceutical market. The past few years have been dominated by the growth of multinational pharmaceutical companies and international efforts to coordinate intellectual property and other laws affecting health care costs and pharmaceutical research and development. Pharmaceutical manufacturers based in LMICs such as India, Brazil, and South Korea have witnessed substantial growth, including unprecedented penetration into pharmaceutical markets in wealthier countries like the U.S. (12) In addition, the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement), began a process of international standardization of intellectual property laws related to pharmaceutical products. (13) Patent laws and other aspects of intellectual property and government pharmaceutical regulatory policy play an integral role in the cost and availability of pharmaceutical products. (14) There is now a high level of connection between pharmaceutical-related patent laws and regulations, as well as pharmaceutical markets, in LMICs and wealthier nations.

Manufacturers participating in the global pharmaceutical market, and the laws regulating these markets, are becoming characterized by less rigid dichotomization between wealthier nations and LMICs. This presents a new opportunity for policies aimed at promoting international equality of access to essential medicines. In this paper, I will address how pharmaceutical policy in wealthier nations will more directly affect access to essential medicines in LMICs because of the increased interdependence of pharmaceutical markets. The U.S. serves as the paradigmatic example of the new "Think Globally, Prescribe Locally" perspective, because the consumer prescription drug market provides pharmaceutical manufacturers with the most substantial portion of their revenues. However, lessons from the U.S. experience can apply to other wealthier nations struggling with the same issues surrounding improving appropriate availability and use of generic drugs.


In the U.S. and other wealthier countries, patents have long been used to provide market exclusivity for novel pharmaceutical products developed by innovative manufacturers. Patents are government-issued monopolies on inventions that allow their owners to prevent others from making or using the inventions for a set period of time, currently twenty years from the date the inventor officially submits its patent application. (15) After a drug product meets the approval of the national drug regulatory authority, the manufacturer can market its patent-protected brand-name product without competition from other manufacturers. During this period of market exclusivity, drug prices are typically established at levels far above marginal cost of producing the drug. This is done to help recoup the manufacturer's investment in research and development and to earn profits. (16)

Other manufacturers can produce versions of brand-name drugs--"generic" drugs--once the patent on the active ingredient expires. In the U.S., availability of generic drugs was initially limited because the Food and Drug Administration (FDA) required costly clinical trials for each individual drug product. (17) In 1984, however, the Drug Price Competition and Patent Term Restoration Act (the Hatch-Waxman Act) changed the regulatory landscape, and allowed manufacturers to receive marketing approval for generic versions that demonstrate "bioequivalence," or similar pharmacological activity and potency, to a brand-name drug product. (18) As a result of the Hatch-Waxman Act, generic drugs could be made available quickly after expiration of a brand-name drug's patent. In addition, the Hatch-Waxman Act set up a challenge system allowing a manufacturer to produce a generic drug earlier if it could show that its bioequivalent version did not infringe the brand-name product's patent. (19) As part of the same package, the Hatch-Waxman Act provided brand-name products with additional patent life to account for market exclusivity time taken up during the regulatory evaluation process. (20)

Generic drugs are traditionally much less expensive because the manufacturers do not have as high development costs and because more producers in the market help drive down prices. (21) In addition, bioequivalent products have nearly always been shown to have identical therapeutic effects. (22) Generic drugs accounted for just 19% of all prescription drugs sold in the U.S. in 1984, but in large part due to the Hatch-Waxman Act, their market share had increased to 43% by 1996, (23) and up to 63% of all prescriptions in 2006. (24)

Despite these gains, however, evidence suggests that in many contexts generic drugs remain underutilized, leading to substantial excess costs. (25) In the U.S., an analysis of drug utilization patterns within Medicaid, the state-run health insurance program for the poor, showed that physicians were slow to adopt generic equivalents when they became available after patent expiration. For example, in the case of omeprazole (Prilosee), a proton-pump inhibitor that treats gastritis, the highest level of generic prescribing observed in the study was only 67%. (26) In one large state-funded program, the inappropriate use of patent-protected second-line agents for the management of hypertension in the elderly, rather than cheaper generic products whose use was recommended by most clinical guidelines, alone added over $1 billion to the national expenditure for this condition. (27)

There are a number of reasons why generic medications may be underutilized. …

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