The Information Revolution Reaches Pharmaceuticals: Balancing Innovation Incentives, Cost, and Access in the Post-Genomics Era

48 Pages Posted: 14 Feb 2001

See all articles by Arti K. Rai

Arti K. Rai

Duke University School of Law; Duke Innovation & Entrepreneurship Initiative

Abstract

In the context of prescription drugs, the inevitable tension between stimulating innovation and preserving access creates serious equity concerns that are simply not present in other contexts. This paper identifies some promising mechanisms for relieving this tension. One such mechanism, often ignored by intellectual property scholars, is the simple, and emphatically low-technology, remedy of insurance. Because of the manner in which the health care industry is structured, providing access to insurance is a low-cost mechanism for reducing deadweight loss. At the other end of technology spectrum, there is the growing science of genomics. Although genomics should increase the importance of prescription drugs in health care, and thus might threaten to exacerbate equity concerns, it may also provide ways to produce these drugs more efficiently than before. To the extent that the biotechnology and pharmaceutical industries can internalize fully the efficiency benefits of digital technology, reforms that align the structure of intellectual property protection for pharmaceuticals more closely with that of other innovation might be considered. Equally important will be regulation that imposes cost-effectiveness requirements on pharmaceutical innovation. If innovations in genomics can be channeled in a cost-effective direction, we may yet see a time where Moore's law provides not simply faster and cheaper computers but also a more equitable health care system.

Keywords: cost-effectiveness, genomics, patents, pharmaceuticals

JEL Classification: D4, I1, K3

Suggested Citation

Rai, Arti Kaur, The Information Revolution Reaches Pharmaceuticals: Balancing Innovation Incentives, Cost, and Access in the Post-Genomics Era. Available at SSRN: https://ssrn.com/abstract=254788 or http://dx.doi.org/10.2139/ssrn.254788

Arti Kaur Rai (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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