Compulsory licensing of pharmaceuticals by the developing south

Rafael Pinho Senra de Morais

Economics Letters, 2017, vol. 161, issue C, 74-77

Abstract: Compulsory licensing (CL) of medicines by a developing South unambiguously improves access to treatments by its population. Its impact on profits and thus innovation rates and welfare is a more controversial issue in the literature. This paper proposes a North–South model dealing with parallel trade, price controls and compulsory license (if the South is not served). Our results challenge the literature claiming that parallel trade leads to higher innovation and welfare. Moreover, conditions apply for CL to be used; in particular, it should never be used for neglected diseases, as malaria and tuberculosis. When the South issues CLs, it is compensated for the welfare losses caused by the North allowing parallel trade, and innovation and northern welfare do not decrease. The best outcome, however, is market segmentation, i.e. no parallel trade in the first place.

Keywords: Compulsory licensing; Pharmaceuticals; TRIPs; Drug price regulation (search for similar items in EconPapers)
JEL-codes: F13 I18 O34 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176517303786
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:161:y:2017:i:c:p:74-77

DOI: 10.1016/j.econlet.2017.09.011

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().