Licensing Life-Saving Drugs for Developing Countries: Evidence from the Medicines Patent Pool
We study the effects of an institution that pools patents across geographical markets on the licensing and adoption of life-saving drugs in low- and middle-income countries. Using data on licensing and sales for HIV, hepatitis C and tuberculosis drugs, we show that there is an immediate and large increase in licensing by generic firms when a patent is included in the Medicines Patent Pool (MPP). The effect is heterogeneous across countries. The findings are robust to identification strategies to deal with endogeneity of MPP patents and countries. The impact on actual entry and sales, however, is much smaller than on licensing, which is due to geographic bundling of licenses by the MPP. More broadly, the paper highlights the potential of pools in promoting technology diffusion in developing countries.
We thank Esteban Burrone and Amina Maillard for providing access to licensing data and for helpful discussions about the Medicine Patent Pool. We are grateful to Saul Lach, William Matcham, Tim Simcoe and seminar participants at the University of Toronto for helpful comments. Harveen Sidhu provided excellent research assistance. We are grateful for financial support from the Social Sciences and Humanities Research Council of Canada. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.