A Note on Global Welfare in Pharmaceutical Patenting

FRB of Philadelphia Working Paper No. 03-11

19 Pages Posted: 1 Aug 2004

See all articles by Frederic M. Scherer

Frederic M. Scherer

Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2002

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 patenting, Global welfare

Suggested Citation

Scherer, Frederic M., A Note on Global Welfare in Pharmaceutical Patenting (November 2002). FRB of Philadelphia Working Paper No. 03-11. Available at SSRN: https://ssrn.com/abstract=570565 or http://dx.doi.org/10.2139/ssrn.570565

Frederic M. Scherer (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1154 (Phone)
617-496-0063 (Fax)

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