Appropriate Health R&D and IPR Reform in Developing Countries

The welfare implications of imposing intellectual property rights (IPR) protection on health goods in developing countries is analyzed using a North-South model. Consumption of health goods counteracts the adverse effects of region-specific diseases on labor supply. Health needs differ between consumers in innovating and imitating countries, weakening the benefits of Southern IPR enforcement for the North and strengthening the benefits for the South. Southern regions with unique health needs are more likely to benefit from IPR enforcement, while the poorest countries with inadequate health care infrastructure are less likely to benefit. Southern welfare increases with the imposition of IPR protection when the Southern market is large enough (in terms of purchasing power and efficient health care delivery systems) to stimulate sufficient innovation. There is income convergence between the North and the South when health needs in the South are unique and market demand in the South is large