IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v29y2010i3p445-456.html
   My bibliography  Save this article

Should new antimalarial drugs be subsidized?

Author

Listed:
  • Laxminarayan, Ramanan
  • Parry, Ian W.H.
  • Smith, David L.
  • Klein, Eili Y.

Abstract

Malaria kills over a million people each year. The loss of chloroquine due to the spread of parasite resistance is largely responsible for the resurgence of malaria. A new class of antimalarial drugs called artemisinins are available, but are unaffordable to most people in malaria-endemic countries and may quickly face the same fate as chloroquine unless they are combined with a partner drug. Subsidies for artemisinin combination treatments may be warranted on second-best grounds as they deter use of single-ingredient drugs, for which externalities from the risk of resistance evolution are larger. Furthermore, by expanding total effective drug use, subsidies reduce infection transmission externalities among individuals. However, use of combination treatments could still lead to drug resistance and the subsidies themselves entail welfare consequences. This paper develops a conceptual and numerical framework for understanding the conditions under which subsidies for artemisinin combinations can be justified on economic efficiency grounds.

Suggested Citation

  • Laxminarayan, Ramanan & Parry, Ian W.H. & Smith, David L. & Klein, Eili Y., 2010. "Should new antimalarial drugs be subsidized?," Journal of Health Economics, Elsevier, vol. 29(3), pages 445-456, May.
    • Handle: RePEc:eee:jhecon:v:29:y:2010:i:3:p:445-456
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167-6296(10)00043-3
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Darius Lakdawalla & Tomas Philipson & Y. Richard Wang, 2006. "Intellectual Property and Marketing," NBER Working Papers 12577, National Bureau of Economic Research, Inc.
    2. Tomas Philipson & Stephane Mechoulan, 2003. "Intellectual Property & External Consumption Effects: Generalizations from Pharmaceutical Markets," NBER Working Papers 9598, National Bureau of Economic Research, Inc.
    3. Rudholm, Niklas, 2002. "Economic implications of antibiotic resistance in a global economy," Journal of Health Economics, Elsevier, vol. 21(6), pages 1071-1083, November.
    4. Laxminarayan, Ramanan, 2003. "ACT Now or Later: The Economics of Malaria Resistance," RFF Working Paper Series dp-03-51, Resources for the Future.
    5. Chima, Reginald Ikechukwu & Goodman, Catherine A. & Mills, Anne, 2003. "The economic impact of malaria in Africa: a critical review of the evidence," Health Policy, Elsevier, vol. 63(1), pages 17-36, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Srivastava, Divya & McGuire, Alistair, 2015. "Patient access to health care and medicines across low-income countries," Social Science & Medicine, Elsevier, vol. 133(C), pages 21-27.
    2. Jean-Claude Berthélemy & Josselin Thuilliez, 2014. "The economics of malaria in Africa," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01045213, HAL.
    3. Schaefer, K. Aleks, 2016. "Anti-Malarial Biotechnology, Drug Resistance, and the Dynamics of Disease Management," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235716, Agricultural and Applied Economics Association.
    4. Milusheva,Sveta, 2020. "Using Mobile Phone Data to Reduce Spread of Disease," Policy Research Working Paper Series 9198, The World Bank.
    5. Biswal, Arun Kumar & Jenamani, Mamata & Kumar, Sri Krishna, 2020. "The impact of RFID adoption on donor subsidy through for-profit and not-for-profit newsvendor: Implications for Indian Public Distribution system," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    6. Divya Srivastava & Alistair McGuire, 2016. "The determinants of access to health care and medicines in India," Applied Economics, Taylor & Francis Journals, vol. 48(17), pages 1618-1632, April.
    7. Terry A. Taylor & Wenqiang Xiao, 2014. "Subsidizing the Distribution Channel: Donor Funding to Improve the Availability of Malaria Drugs," Management Science, INFORMS, vol. 60(10), pages 2461-2477, October.
    8. Milusheva, Sveta, 2020. "Managing the spread of disease with mobile phone data," Journal of Development Economics, Elsevier, vol. 147(C).
    9. Jean-Claude Berthelemy & Josselin Thuilliez, 2014. "The economics of malaria in Africa," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01045213, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philipson Tomas J & Jena Anupam B, 2006. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," Forum for Health Economics & Policy, De Gruyter, vol. 9(2), pages 1-33, January.
    2. Anderson, Soren T. & Laxminarayan, Ramanan & Salant, Stephen W., 2012. "Diversify or focus? Spending to combat infectious diseases when budgets are tight," Journal of Health Economics, Elsevier, vol. 31(4), pages 658-675.
    3. Belay, Dagim G. & Jensen, Jørgen D., 2020. "‘The scarlet letters’: Information disclosure and self-regulation: Evidence from antibiotic use in Denmark," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    4. Lakdawalla, Darius & Sood, Neeraj, 2013. "Health insurance as a two-part pricing contract," Journal of Public Economics, Elsevier, vol. 102(C), pages 1-12.
    5. Dillon, Andrew & Friedman, Jed & Serneels, Pieter, 2014. "Health Information, Treatment, and Worker Productivity: Experimental Evidence from Malaria Testing and Treatment among Nigerian Sugarcane Cutters," IZA Discussion Papers 8074, Institute of Labor Economics (IZA).
    6. Marsh, Sally P. & Llewellyn, Rick S. & Powles, Stephen B., 2006. "Social costs of herbicide resistance: the case of resistance to glyphosate," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139881, Australian Agricultural and Resource Economics Society.
    7. Adesina, Adedoyin & Akogun, Oladele & Dillon, Andrew & Friedman, Jed & Njobdi, Sani & Serneels, Pieter, 2017. "Robustness and External Validity: What do we Learn from Repeated Study Designs over Time?," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266292, Agricultural and Applied Economics Association.
    8. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2011. "Externalities in a life cycle model with endogenous survival," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 627-641.
    9. Farasat A.S. Bokhari & Franco Mariuzzo & Weijie Yan, 2019. "Antibacterial resistance and the cost of affecting demand: the case of UK antibiotics," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2019-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    10. Karen Eggleston & Ruifang Zhang & Richard J. Zeckhauser, 2010. "The Global Challenge of Antimicrobial Resistance: Insights from Economic Analysis," IJERPH, MDPI, vol. 7(8), pages 1-9, August.
    11. Ahmed, Syud Amer & Barış, Enis & Go, Delfin S. & Lofgren, Hans & Osorio-Rodarte, Israel & Thierfelder, Karen, 2018. "Assessing the global poverty effects of antimicrobial resistance," World Development, Elsevier, vol. 111(C), pages 148-160.
    12. Masha F. Somi & James R. G. Butler & Farshid Vahid & Joseph D. Njau & Salim Abdulla, 2009. "Household responses to health risks and shocks: A study from rural Tanzania raises some methodological issues," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(2), pages 200-211.
    13. David E. Bloom & Michael Kuhn & Klaus Prettner, 2022. "Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses," Journal of Economic Literature, American Economic Association, vol. 60(1), pages 85-131, March.
    14. Duflos, Gautier & Lichtenberg, Frank R., 2012. "Does competition stimulate drug utilization? The impact of changes in market structure on US drug prices, marketing and utilization," International Review of Law and Economics, Elsevier, vol. 32(1), pages 95-109.
    15. Jean-Claude Berthélemy & Josselin Thuilliez, 2014. "The economics of malaria in Africa," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01045213, HAL.
    16. Su, Tin Tin & Sanon, Mamadou & Flessa, Steffen, 2007. "Assessment of indirect cost-of-illness in a subsistence farming society by using different valuation methods," Health Policy, Elsevier, vol. 83(2-3), pages 353-362, October.
    17. Masako Ikefuji & Jan Magnus & Hiroaki Sakamoto, 2014. "The effect of health benefits on climate change mitigation policies," Climatic Change, Springer, vol. 126(1), pages 229-243, September.
    18. Katharina Elisabeth Fischer & Tom Stargardt, 2016. "The diffusion of generics after patent expiry in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(8), pages 1027-1040, November.
    19. Laxminarayan, Ramanan, 2003. "ACT Now or Later: The Economics of Malaria Resistance," Discussion Papers 10699, Resources for the Future.
    20. Raouf Boucekkine & Rodolphe Desbordes & Hélène Latzer, 2009. "How do epidemics induce behavioral changes?," Journal of Economic Growth, Springer, vol. 14(3), pages 233-264, September.

    More about this item

    Keywords

    Antimalarial drugs Resistance externality Transmission externality Subsidies Welfare effects;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:29:y:2010:i:3:p:445-456. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.