Paging Dr. Ricardo

Roger Bate | 04 Feb 2008
American Enterprise Institute
Summary: Efforts to increase the poor's access to medicines are nothing new. Buying products from quality manufacturers and urging these manufacturers to lower prices for the poorest markets have worked best; other policies have largely failed or are still on the drawing board. But the latest strategy--to encourage local pharmaceutical production--could also be entirely counterproductive. It could lower drug quality and increase incentives for protectionism, ultimately reducing access. Production of drugs in poorer countries can make sense, but it must be driven by entrepreneurs responsive to market incentives. Unsuccessful local businesses must be allowed to fail, not be propped up by aid groups that support local production without considering its long-term economic consequences. This would encourage better, more profitable businesses, which will be the engines of growth for poor nations. Coming years will test whether the international community encourages quality production or indirect protectionism.

The full article is available here: http://www.aei.org/publications/filter.all,pubID.27447/pub_detail.asp