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Journal of International Economic Law 2002 5(4):883-912; doi:10.1093/jiel/5.4.883
© 2002 by Oxford University Press
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Differential Pricing of Essential AIDS Drugs: Markets, Politics and Public Health

Peter J. Hammer1

1 University of Michigan Law School

Differential pricing of essential drugs is an intuitively obvious component of any comprehensive response to the AIDS crisis. Constructing an effective regime of price discrimination between first and third world pharmaceutical markets, however, raises complicated economic, legal and political challenges. Low-priced drugs in developing countries could trigger forms of physical and informational arbitrage that could undermine prices and profits in lucrative first world markets. Furthermore, the pricing of AIDS drugs highlights legal tensions between public health concerns and private intellectual property rights under the WTO TRIPS agreement. This essay explores these issues and examines how classic economic models of price discrimination can afford a political framework to mediate first- and third-world tensions over essential drugs, providing a template that can maintain the integrity of intellectual property rights while respecting humanitarian concerns over access to life-saving drugs.


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