The Social Costs of Graduating from Least Developed Country Status: Analyzing the impact of increased protection on insulin prices in Bangladesh (GEGI Working Paper 038)

In 2021, the United Nations Committee on Development Policy will consider whether Bangladesh should graduate from ‘least developed country’ (LDC) status. If graduation is granted, in 2024 Bangladesh would thus have to forego its exemption to intellectual property (IP) provisions of the World Trade Organization (WTO). Bangladesh has taken advantage of the policy space it was granted under the LDC exemption to the WTO to build a generic medicines industry that not only serves Bangladesh but also other LDCs. Under the WTO, Bangladesh will have to require patent protection of certain medicines. We draw on previous work and develop a model to examine how IP provisions in the WTO will impact the prices of insulin in Bangladesh and its subsequent impacts on welfare and poverty. We find that LDC graduation will trigger a significant jump in insulin prices that could cause a up to a 50 percent decline in the welfare of households with one or more members living with diabetes in Bangladesh, increasing the poverty rate of such households up to 36 percent and of those needing insulin up to 60 percent unless policy adjustments are carried out.