Overcoming market failure: The challenge of neglected diseases

There is a particular problem in incentivizing medical R&D for diseases that disproportionately affect poor people in developing countries as the market mechanisms, such as intellectual property rights (IPRs), do not work in this case. A key factor is the limited purchasing power of both governments and patients in the countries where such diseases predominate; unlike for other diseases, there is no positive spillover from drug development targeted at more affluent markets. These diseases are called neglected diseases, and this section deals with the challenges of medical innovation in this area.