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A note on disease burden and pharmaceutical R&D

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  • Vijay Mohan
  • Munirul Nabin

Abstract

We examine the relationship between research and development (R&D) expenditures and the expected impact of diseases in a simple theoretical framework that allows for intellectual property rights (IPR) protection to be strong or weak. In our theoretical model, an agent forms an expectation of the impact of a disease using a publicly available statistic on the (population level) disease burden, such as disability‐adjusted life year. We show that a profit‐maximising firm will exert relatively more R&D effort on diseases with intermediate expected impacts. We also discuss how a weak IPR regime alters the pattern of R&D investment.

Suggested Citation

  • Vijay Mohan & Munirul Nabin, 2023. "A note on disease burden and pharmaceutical R&D," Australian Economic Papers, Wiley Blackwell, vol. 62(4), pages 633-649, December.
    • Handle: RePEc:bla:ausecp:v:62:y:2023:i:4:p:633-649
    DOI: 10.1111/1467-8454.12313
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    References listed on IDEAS

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    1. Henry Grabowski & John Vernon, 2000. "The determinants of pharmaceutical research and development expenditures," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 201-215.
    2. Eliana Barrenho & Marisa Miraldo & Peter C. Smith, 2019. "Does global drug innovation correspond to burden of disease? The neglected diseases in developed and developing countries," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 123-143, January.
    3. Michael Kremer, 2002. "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 67-90, Fall.
    4. Nabin Munirul Haque & Mohan Vijay & Nicholas Aaron & Sgro Pasquale M., 2012. "Therapeutic Equivalence and the Generic Competition Paradox," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-26, November.
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