On Conflicts between Pharmaceutical Patent Protection and the Right to Life and Health Based on a Stackelberg Game.

Chunming Xu, Debao Zhu

International journal of environmental research and public health 2021 Jan 27

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To solve the conflict between pharmaceutical patent protection and the right to life, health and increased patient satisfaction, drug prices can be regulated by levying an excess profit tax. An optimal tax strategy was formulated that not only could lower drug prices and improve public health and welfare, but also considers companies' earnings. The strategy was based on the Stackelberg game theory as a bi-level mathematical model. In the model, the government is the leader, with patient satisfaction as the main goal, and pharmaceutical companies are the followers, with maximum drug revenue as the goal. The results show that under the premise of ensuring sufficient incentives for patent holders, the optimized tax on excess profit can effectively compensate for the shortcomings of pharmaceutical patent protection, alleviate the failure of market regulation of drug prices, improve patient satisfaction, and increase total social welfare.

Citation

Chunming Xu, Debao Zhu. On Conflicts between Pharmaceutical Patent Protection and the Right to Life and Health Based on a Stackelberg Game. International journal of environmental research and public health. 2021 Jan 27;18(3)