The Social Costs of Graduating from Least Developed Country Status: Analyzing the Impact of Increased Protection on Insulin Prices in Bangladesh

In 2021, the United Nations Committee on Development Policy adopted a resolution that Bangladesh would graduate from least developed country (LDC) status after a period of five years. As a result, Bangladesh will have to forego its exemption to intellectual property (IP) provisions of the World Trade Organization (WTO) by 2026. As an LDC, Bangladesh took advantage of the policy space it was granted to build a generic medicines industry that not only serves Bangladesh, but also other LDCs. However, upon graduation from LDC status, Bangladesh will have to navigate a new IP landscape, with potential impacts to the accessibility of medicines domestically.

In a new working paper, Md. Deen Islam, Warren A. Kaplan, Veronika J. Wirtz and Kevin P. Gallagher examine how IP provisions in the WTO will impact the price of insulin, a lifesaving medicine for individuals with diabetes, in Bangladesh and subsequent impacts on welfare and poverty.

The authors find that LDC graduation will trigger a significant jump in insulin prices that could cause about a 15 percent decline in the welfare of households in Bangladesh with one or more members living with diabetes. The price jump could subsequently increase the poverty rate of these households by 54 to 58 percent, unless policy adjustments are carried out. Critically, the authors highlight that better data collection will be necessary to better understanding these issues not only in Bangladesh, but in economics more broadly.

This study is part of the Working Group on Trade Treaties and Access to Medicines, which conducts empirical research exploring the relationship between treaties and pharmaceutical prices, political economy analyses of the challenges to domestic institutions in securing access to medicines and legal research on the prevalence of treaty terms increasing the global levels of intellectual property protection.

This working paper was published as a journal article in Asian Development Review in May 2022.