Working Paper Series
No 552:
Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal
Mattias Ganslandt ()
, Keith E. Maskus and Eina V. Wong
Abstract: The poorest nations of the world suffer from extreme
disease burdens, which go largely untreated because weak incomes and the
prevailing system of intellectual property rights fail to provide
sufficient incentives to develop new treatments and distribute them at low
cost. Recent price reductions for HIV/AIDS drugs are encouraging but offer
only a limited solution. We discuss the economic tradeoffs involved in
supporting drug and vaccine research through exclusive rights and
distributing the fruits of that research to poor countries. We offer a
proposal to overcome these incentive problems. Our DEFEND ("Developing
Economies' Fund for Essential New Drugs") proposal would work within the
existing international legal structure but significantly would raise the
returns to R&D in critical medicines and expand distribution programs. A
public international organization would purchase the license rights for
designated areas and distribute the drugs at low cost with a required
co-payment from local governments. Furthermore, governments would restrict
parallel trade to support desirable price discrimination. Costs would be
funded largely by increased foreign assistance from the developed nations,
but these costs would be low in relation to current aid budgets. We believe
a strong program could be mounted for $8 billion to $12 billion per year
and would be an extremely effective use of foreign aid.
Keywords: Drug pricing; Essential medicines; Parallel imports; Developing countries; Patents; (follow links to similar papers)
JEL-Codes: F13; H51; H73; I12; I18; (follow links to similar papers)
26 pages, May 2, 2001
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- This paper is published as:
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Ganslandt, Mattias, Keith E. Maskus and Eina V. Wong, (2001), 'Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal', The World Economy, Vol. 24, No. 6, pages 779-795
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