The Economics of upgrading to innovative treatment technologies in the fight against HIV/AIDS
Leoni, Dr. Patrick (2008) The Economics of upgrading to innovative treatment technologies in the fight against HIV/AIDS. .
Abstract. We argue that current funding campaigns to fight AIDS in developing countries fail to recognize significant losses associated with the introduction of innovative treatment technologies. For instance, the future albeit uncertain appearance and widespread use of a therapeutic vaccine will trigger significant and unrecoverable losses in current drugs treatment investments. Our objective is then two-fold. We first document losses associated with the transition to better treatment technologies and we show that failure to hedge against such losses leads to sub-optimal policies. Our second objective is to provide policy recommendations to alleviate this problem. We show how to transform some cutting-hedge financial products to generate full insurance coverage against such losses, and in some cases how to achieve full risk-sharing with agencies developing innovative treatments. We recommend that every funding campaign in current AIDS treatments be accompanied with the provision of such insurance against the cost of switching to future albeit uncertain innovative treatments.
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