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Economic Sustainability Of An Alternative Form Of Incentivizing Pharmaceutical Innovation: Thomas Pogge‘S Proposal

Author

Listed:
  • Alberto Cassone

    (University of Piemonte Orientale ‘A. Avogadro‘ Italia)

  • Franco Amisano

    (University of Piemonte Orientale ‘A. Avogadro‘ Italia)

Abstract

The research and development of new drugs and vaccines is costly. Current economicincentives for pharmaceutical research come from intellectual property policies that grant innovatorsthe exclusive monopoly for marketing their discoveries. The existing patent system does notencourage the development of drugs whose sale would not generate high returns. As a result, little isinvested in researching and developing medicines that could cure or prevent rampant disease anddeath among the poorest segments of the global population, particularly in developing countries.Philosopher Thomas Pogge has recently addressed this problem from an ethical point of view,proposing an alternative reward scheme based on the therapeutic effectiveness of new products.This paper provides an analytical review of Pogge‘s reform proposal from an economics perspective.The main question is whether the alternative incentive system is effective enough to promote thediscovery of new medicines for neglected diseases. Theoretical models are defined to assess therequired reward of pharmaceutical innovation within the framework of Pogge‘s proposal. Themathematical approach taken is mainly based on the investment under uncertainty concept. Resultsfrom the simulations performed indicate that Pogge‘s scheme may be effective mainly for widespreaddiseases like malaria and HIV.

Suggested Citation

  • Alberto Cassone & Franco Amisano, 2014. "Economic Sustainability Of An Alternative Form Of Incentivizing Pharmaceutical Innovation: Thomas Pogge‘S Proposal," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(16), pages 1-6.
  • Handle: RePEc:alu:journl:v:1:y:2014:i:16:p:6
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    Keywords

    pharmaceutical innovation; therapeutic efficiency;

    JEL classification:

    • H8 - Public Economics - - Miscellaneous Issues
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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