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How property rights and patents affect antibiotic resistance

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  • John B. Horowitz
  • H. Brian Moehring

Abstract

Antibiotic resistance tends to increase when a patent on an antibiotic expires. Since other companies can now sell the antibiotic, more of the antibiotic is produced and prices fall. Because the benefits of reducing current production go to other firms, pharmaceutical companies will have little concern about future resistance. This ‘open‐access’ problem causes excessive antibiotic use and resistance problems in the future. Extending patents is one solution. However, a pharmaceutical company that has patent protection on a drug that is cross‐resistant may have little concern about future resistance. This is because when people use completely different antibiotics which cause bacteria to become resistant to the original antibiotic, then the benefits of reducing current production go to other companies. A single buyer such as national health insurance or private health insurance may also have an incentive to reduce antibiotic resistance since they bear the future cost of future resistance. However, insurance coverage reduces the price that patients pay at the margin and thus the patients are likely to use more antibiotics. National health insurance policies may even set the price of antibiotics so low that resistance problems are created even when the patent is in effect. Copyright © 2004 John Wiley & Sons, Ltd.

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  • John B. Horowitz & H. Brian Moehring, 2004. "How property rights and patents affect antibiotic resistance," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 575-583, June.
    • Handle: RePEc:wly:hlthec:v:13:y:2004:i:6:p:575-583
    DOI: 10.1002/hec.851
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    References listed on IDEAS

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    Cited by:

    1. Klaus Kaier & S. Moog, 2012. "Economic Consequences of the Demography of MRSA Patients and the Impact of Broad-Spectrum Antimicrobials," Applied Health Economics and Health Policy, Springer, vol. 10(4), pages 227-234, July.
    2. Eswaran, Mukesh & Gallini, Nancy, 2016. "Rescuing the Golden Age of Antibiotics: Can Economics Help Avert the Looming Crisis?," Economics working papers nancy_gallini-2016-9, Vancouver School of Economics, revised 04 Jul 2016.
    3. Stéphane Mechoulan, 2007. "Market structure and communicable diseases," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(2), pages 468-492, May.
    4. John B. Horowitz & H. Brian Moehring, 2014. "How Economic Development Affects Antibiotic Resistance," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, vol. 14(1), pages 58-77, Fall.
    5. Eswaran, Mukesh & Gallini, Nancy, 2017. "Can Competition Extend the Golden Age of Antibiotics?," Microeconomics.ca working papers -2017-9, Vancouver School of Economics, revised 19 Oct 2017.
    6. Herrmann, Markus, 2010. "Monopoly pricing of an antibiotic subject to bacterial resistance," Journal of Health Economics, Elsevier, vol. 29(1), pages 137-150, January.
    7. Nancy Gallini, 2017. "Do patents work? Thickets, trolls and antibiotic resistance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(4), pages 893-926, November.
    8. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    9. Delmond, Anthony R. & Ahmed, Haseeb, 2021. "Optimal Antimicrobial Use under Countervailing Externalities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(3), September.
    10. Farasat A.S. Bokhari & Franco Mariuzzo & Weijie Yan, 2019. "Antibacterial resistance and the cost of affecting demand: the case of UK antibiotics," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2019-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..

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