On Conflicts between Pharmaceutical Patent Protection and the Right to Life and Health Based on a Stackelberg Game

Chunming Xu and Debao Zhu
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Chunming Xu: Shanghai International College of Intellectual Property, Tongji University, Shanghai 200092, China
Debao Zhu: School of Management, Shanghai University, Shanghai 200444, China

IJERPH, 2021, vol. 18, issue 3, 1-13

Abstract: To solve the conflict between pharmaceutical patent protection and the right to life, health and increased patient satisfaction, drug prices can be regulated by levying an excess profit tax. An optimal tax strategy was formulated that not only could lower drug prices and improve public health and welfare, but also considers companies’ earnings. The strategy was based on the Stackelberg game theory as a bi-level mathematical model. In the model, the government is the leader, with patient satisfaction as the main goal, and pharmaceutical companies are the followers, with maximum drug revenue as the goal. The results show that under the premise of ensuring sufficient incentives for patent holders, the optimized tax on excess profit can effectively compensate for the shortcomings of pharmaceutical patent protection, alleviate the failure of market regulation of drug prices, improve patient satisfaction, and increase total social welfare.

Keywords: pharmaceutical patent; public health; excess profit tax; Stackelberg game (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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