Institutional choice: How the United States research pharmaceutical industry snatched international victory from the jaws of domestic defeat

A new body of literature has developed to explain the emergence of intellectual property as a major international trade issue. For many authors, the inclusion of trade related intellectual property (TRIPS) into the Uruguay round of the General Agreement on Tariffs and Trade (GATT) negotiations marks an important demonstration of the political influence of U.S. knowledge-intensive industries. In particular, the U.S. pharmaceutical industry is credited with pushing the U.S. Trade Representative's Office to insist that minimum standards for intellectual property be added to the GATT agenda. When the GATT negotiations ended with the inclusion of mandatory twenty-year patent terms for pharmaceuticals it was heralded as a triumph for this powerful U.S. business interest.; However, the extant literature has failed to adequately address the domestic political situation facing the U.S. research pharmaceutical industry. A more thorough specification of the domestic political environment reveals that the research pharmaceutical industry was incapable of achieving its domestic policy objectives at the same time that it is credited with immense international political power. The apparent anomaly between the international and domestic political strength of the U.S. research pharmaceutical industry is the focus of this dissertation.; This dissertation reconciles the incongruity by providing a theory of institutional choice. We explain the strategic choices of the research pharmaceutical industry as a function of the transaction costs associated with pursuing its policy objectives within a variety of institutional alternatives. We conclude that the internationalization of intellectual property rights was a result of the changing domestic political environment in which the research pharmaceutical industry found itself the loser in a series of domestic economic policy battles.