Files
Abstract
In the presence of market imperfections, there is no guarantee that society will benefit from technological
change. This research analyzes the impact of biotechnology designed to bypass agricultural
processes in the production of pharmaceutical products. High quality pharmaceuticals often exist
alongside less effective treatments with a common active phytochemical ingredient. In this
context, antimicrobial resistance generated by the consumption of one product also affects the
efficacy of the other product. These interdependencies fundamentally alter the effects of biotechnology
on retail markets, agricultural input markets, and antimicrobial resistance. I construct a
dynamic epidemiological-economic model of the global market for anti-malarials to analyze the potential
economic and public health costs associated with the introduction of a recently developed
semi-synthetic production technology by which to procure artemisinin for use in artemisinin-based
combination therapies (ACTs) used in the treatment of malaria. I find that in addition to decreasing
the price of ACTs, semi-synthetic production technology also lowers the price of low quality
monotherapy treatments and increases resistance to all forms of artemisinin. Despite these adverse
effects, the development of semi-synthetic artemisinin leads to a present-value gain of approximately
$2 billion in social welfare over a seven-year time horizon.