The Problem of the Bargaining Rich: Compulsory Licensing in Developing Markets
14 Pages Posted: 2 Feb 2016
Date Written: February 1, 2016
This article looks at why pharmaceutical companies do not practice price differentiation in the developing markets and identifies as a reason, apart from the issues of parallel import and reference pricing, the problem of the bargaining rich — the free rider who will not offer the full price of the drug if the drug is differentially priced. The author argues that the grant of compulsory license could potentially address these issues by segregating the market, both domestically and internationally.
Keywords: bargaining rich, compulsory licensing, developing markets, Nexavar licence, India's patent regime, Sorafenib Tosylate, differential pricing, free rider problem, market failure
JEL Classification: O31, 034
Suggested Citation: Suggested Citation