Scherer, F.M. "Essential Drugs." KSG Faculty Research Working Paper Series RWP07-003, February 2007.

Abstract

This short article, written for the forthcoming Princeton Encyclopedia of the World Economy, characterizes the problems low-income nations experience obtaining access to modern pharmaceutical therapies, which could alleviate disease and facilitate economic development. Lack of purchasing power is of course the key difficulty. A potential aggravation is the Uruguay Round treaty commitment under which third world nations will eventually have to offer drug product patents like those typical in rich nations. For drugs already marketed in rich nations, deficient purchasing power can be combatted in part when pharmaceutical companies practice “differential pricing” – selling as much lower prices in low-income nations than in the industrialized world. The development of new pharmaceuticals is oriented primarily toward the needs of consumers in rich nations, leaving a deficiency of drugs for so-called “tropical” diseases. Remedial proposals are analyzed.