The Social Costs of Success: The Impact of World Trade Organization Rules on Insulin Prices in Bangladesh upon Graduation from Least Developed Country Status

Abstract

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 5 years. This means that in 2026 Bangladesh would 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 build a generic medicines industry that not only serves Bangladesh but also other LDCs. We examine how IP provisions in the WTO will impact the price of insulin in Bangladesh and the subsequent impacts on welfare and poverty. We find that LDC graduation will trigger a significant jump in insulin prices that could cause about a 15% decline in the welfare of households in Bangladesh with one or more members living with diabetes, increasing the poverty rate of such households unless policy adjustments are carried out.