NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 5, 2015

Recent evidence points to the value of treating everyone with HIV, regardless of disease stage. In the developing world, however, where the burden of HIV is greatest, access to treatment is limited by reliance on support from donor countries. The level of donations by these countries falls far short of what is needed to effectively address HIV, despite the fact that individuals in donor countries themselves seemingly place high value on those in need receiving care.

This is because altruistic provision of health care, like all “public goods,” is under-provided relative to its value. Rather than policies aimed at reducing prices for treatments, which place all the financing burden on innovators and reduce the incentive for innovation, policies should aim to subsidize HIV treatment in the developing world. If we desire poor countries to receive new treatments, shareholders of innovative companies should not be asked to foot the entire bill of our altruistic desires.