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Financing Pharmaceutical Innovation: When Should Poor Countries Contribute?

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Abstract

We use a public economics framework to consider how pharmaceuticals should be priced when at least some of the R&D incentive comes from sales revenues. We employ familiar techniques of public finance to adjust standard pricing prescriptions in the context of global diseases, in which distributional inequities are extreme. With these adjustments, poor countries should not necessarily cover even their own marginal costs, and the pricing structure is not related to that which would be chosen by a monopolist in a simple way. We use this framework to examine on-going debates regarding the international patent system as embodied in the WTO's TRIPS agreement.

Suggested Citation

  • Billy Jack & Jenny Lanjouw, 2003. "Financing Pharmaceutical Innovation: When Should Poor Countries Contribute?," Working Papers gueconwpa~03-03-15, Georgetown University, Department of Economics.
    • Handle: RePEc:geo:guwopa:gueconwpa~03-03-15
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    Citations

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    Cited by:

    1. Pedro Pita Barros & Xavier Martínez-Giralt, 2006. "On insurance and the cost-sharing of pharmaceutical R&D," Working Papers 293, Barcelona School of Economics.
    2. Fimpel, Julia & Stolpe, Michael, 2006. "The welfare costs of HIV/AIDS in Eastern Europe: An empirical assessment using the economic value-of-life approach," Kiel Working Papers 1297, Kiel Institute for the World Economy (IfW Kiel).
    3. Michael Stolpe, 2003. "Weltweiter Patentschutz für pharmazeutische Innovationen: Gibt es sozialverträgliche Alternativen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(4), pages 437-448, November.
    4. Pedro Barros & Xavier Martinez-Giralt, 2008. "On international cost-sharing of pharmaceutical R&D," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 301-312, December.
    5. 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.

    More about this item

    Keywords

    Pharmaceutical pricing; Ramsey pricing; TRIPS;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I1 - Health, Education, and Welfare - - Health
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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