Using global demand calibrations to evaluate policy, the case of HIV pharmaceuticals

Full article here - available ungated.

This was a policy brief written with Michael Kremer and Chris Snyder exploring the consequences of different potential government responses to the apparent higher prices American households pay for a variety of pharmaceutical products. The policy brief is available, ungated - here. It points to underlying theoretical work done separately by Michael and Chris. Thinking about this in the case of HIV was of personal import to me.

The column starts with the observation that consumers in the US pay more for a variety of pharmaceutical products than consumers in most other countries. It argues that understanding the implications of different policy responses to that fact relies on both theoretical and empirical understanding of the demand for the pharmaceutical products in question. We show, as Michael and Chris had separately, that a calibrated global demand curve for antiretrovival therapies is Zipf-similar. This feature of the curve has important consequences for policy that we discuss briefly, focussing on price discrimination and potential subsidies.