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Access to critical medicines: When are compulsory licenses effective in price negotiations?

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  • Ramani, Shyama V.
  • Urias, Eduardo

Abstract

Governments of developing countries can be in a vulnerable position with respect to patent protected drugs supplied by foreign firms, if the technology cannot be licensed or independently developed by local firms. In such instances, one possible solution is to negotiate for a price-drop with the patent holder in lieu of issuing a compulsory license. The present paper develops a game theoretic model of such bargaining and shows that while compulsory licenses do not occur under complete information, they can be issued under incomplete information. The model is tested against real episodes of compulsory licenses to derive policy insight.

Suggested Citation

  • Ramani, Shyama V. & Urias, Eduardo, 2015. "Access to critical medicines: When are compulsory licenses effective in price negotiations?," Social Science & Medicine, Elsevier, vol. 135(C), pages 75-83.
    • Handle: RePEc:eee:socmed:v:135:y:2015:i:c:p:75-83
    DOI: 10.1016/j.socscimed.2015.04.023
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    References listed on IDEAS

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    1. Cohen-Kohler, Jillian Clare & Forman, Lisa & Lipkus, Nathaniel, 2008. "Addressing legal and political barriers to global pharmaceutical access: Options for remedying the impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the impo," Health Economics, Policy and Law, Cambridge University Press, vol. 3(3), pages 229-256, July.
    2. Reed Beall & Randall Kuhn, 2012. "Trends in Compulsory Licensing of Pharmaceuticals Since the Doha Declaration: A Database Analysis," PLOS Medicine, Public Library of Science, vol. 9(1), pages 1-9, January.
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    Cited by:

    1. Ramani, Shyama V. & Urias, Eduardo, 2018. "When access to drugs meets catch-up: Insights from the use of CL threats to improve access to ARV drugs in Brazil," Research Policy, Elsevier, vol. 47(8), pages 1538-1552.
    2. Sarmah, Archita & De Giovanni, Domenico & De Giovanni, Pietro, 2020. "Compulsory licenses in the pharmaceutical industry: Pricing and R&D strategies," European Journal of Operational Research, Elsevier, vol. 282(3), pages 1053-1069.
    3. Roy Lothan & Noa Gutman & Dan Yamin, 2022. "Country versus pharmaceutical company interests for hepatitis C treatment," Health Care Management Science, Springer, vol. 25(4), pages 725-749, December.
    4. Volman, Lucas, 2018. "The TRIPS Article 31 Tug of War Developing Country Compulsory Licensing of Pharmaceutical Patents and Developed Country Retaliation," LawArXiv 6cxaj, Center for Open Science.
    5. Grepperud, Sverre & Pedersen, Pål Andreas, 2020. "Positioning and negotiations: The case of pharmaceutical pricing," European Journal of Political Economy, Elsevier, vol. 62(C).
    6. Eduardo Urias & Shyama V. Ramani, 2020. "Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence," Journal of International Business Policy, Palgrave Macmillan, vol. 3(4), pages 367-384, December.

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