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Patent Races, “Me-Too” Drugs, and Generics: A Developing-World Perspective

  • Alka Chadha

    ()

    (Department of Economics, National University of Singapore)

  • Åke Blomqvist

    (Department of Economics, National University of Singapore)

We build a model of pharmaceutical markets in the light of a patent race among competing firms. The incentive for R&D is the patent on either the breakthrough or the me-too drug. A feature of our model that has not been analyzed before is the prevalence of insurance in developed countries as opposed to developing countries, such that the true burden of financing R&D falls to a greater extent on the former than the latter. We suggest that generics drugs be allowed in low-income countries, particularly since most of them do not have a well-established and functioning pharmaceutical industry.

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Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0513.

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Date of creation: 2005
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Handle: RePEc:nus:nusewp:wp0513
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