Financing pharmaceutical innovation: How much should poor countries contribute?

  • Jack W
  • Lanjouw J
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A public economics framework is used to consider how pharmaceuticals
should be priced when at least some of the research and development
incentive comes from sales revenues. Familiar techniques of public
finance are used to relax some of the restrictions implied in the
standard use of Ramsey pricing. Under the more general model, 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. This framework is then used to examine
ongoing debates regarding the international patent system as embodied in
the World Trade Organization's Agreement on Trade-Related Aspects of
Intellectual Property Rights.

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  • William Jack

  • Jean O. Lanjouw

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