A Cost-Benefit Analysis of the Medicines Patent Pool

Abstract

Understanding the cost and benefit of global public health institutions is important but challenging. This study provides a cost-benefit analysis of the first public health-oriented patent pooling and licensing institution, the Medicines Patent Pool (MPP), which is devoted to improving generic drug licensing and supply in low- and middle-income countries. A simple structural model of demand and supply is estimated on a dataset that covers 103 LMIC and 29 HIV drugs with data on sales, MPP licenses, patents, country-year level diseases and demographics, and institutional factors during 2007-2017. Counterfactuals are simulated in the absence of the MPP or with further expansions. The estimated benefits to consumers and firms far exceed the operating costs.

Keywords: cost-benefit analysis, structural model, Medicines Patent Pool, drug access, low and middle-income countries

JEL Classification: O3, K2, I1