Trading Up: How Much Should Poor Countries Pay to Support Pharmaceutical Innovation

Jean O. Lanjouw
William Jack
July 18, 2005
The most contentious issue in the pharmaceutical sector is not about whether, or how much, to support private research. Most people recognize the major contributions to global health that have come from private research efforts, and the fact that price-cost margins supported by the patent system have been pivotal in supporting that research. The conflicts arise over how the financing of R&D incentives should be shared among consumers.This brief outlines how a global structure of pharmaceutical prices may be determined to balance both the efficiency and the social equity concerns that arise in dealing with countries with widely disparate needs and incomes.

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