UC Davis Agricultural and Resource Economics

K. Aleks Schaefer, University of California, Davis

Anti-Malarial Biotechnology, Drug Resistance, and the Dynamics of Disease Management

Date and Location

Thursday, January 12, 2017, 4:10 PM - 5:30 PM
ARE Library, 4101 Social Sciences and Humanities


Anti-malarial drug use generates both positive externalities by reducing disease transmission and negative externalities by increasing antimicrobial resistance. In any given country, the size of these externalities depends on a number of factors, including drug coverage and the prevalence of disease. In this paper, I analyze the economic impact of a new, semi-synthetic production technology by which to derive artemisinin for use in artemisinin-based combination therapies (ACTs). I show that the introduction of this technology will reduce the absolute price of all anti-malarials, and thereby increase the positive externality related to disease transmission. However, the technology will also reduce the relative price of monotherapy drugs, which generate a greater negative externality associated with drug resistance. To quantify the overall effect of semi-synthetic artemisininon global welfare, I integrate a microbiological-epidemiological model of malaria transmission and drug resistance into a partial equilibrium model depicting the supply and demand for anti-malarials across 93 malaria-endemic countries. This specification allows me to account for differences in treatment policy, the rate of transmission, and resistance patterns across countries. I find that the net externality generated by the introduction of semi-synthetic artemisinin is overwhelmingly positive. The technology will ease donor financing costs and economic losses associated with mortality and morbidity by between $945 million and $2.1 billion over the next 15 years.

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