Working Paper

A note on global walfare in pharmaceutical patenting

Abstract: This paper revisits the question of whether global welfare is higher under a uniform world-wide system of pharmaceutical product patents or with international rules allowing low-income nations to free-ride on the discoveries of firms in rich nations. Key variables include the extent to which free-riding reduces the discovery of new drugs, the rent potential of rich as compared to poor nations, the ratio of the marginal utility of income in poor as compared to rich nations, and the competitive environment within which R&D decisions are made. Global welfare is found to be higher with free-riding over plausible discovery impairment and income utility combinations, especially when rent-seeking behavior leads to an expansion of R&D outlays exhausting appropriable rents.

Keywords: Pharmaceutical industry; Patents;

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2003

Number: 03-11

Pages: 19 pages