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Investments in Pharmaceuticals Before and After TRIPS

Author

Listed:
  • Margaret K. Kyle

    (Toulouse School of Economics, IDEI, and CEPR)

  • Anita M. McGahan

    (Rotman School of Management and Munk School of Global Affairs, University of Toronto; Institute for Strategy and Competitiveness, Harvard University)

Abstract

The TRIPS Agreement, which specifies minimum levels of intellectual property protection for countries in the WTO, has increased levels of patent protection around the world. Using variation across countries in the timing of patent laws and the severity of disease, we test the hypothesis that increased patent protection results in greater drug development effort. We find that patent protection in wealthy countries is associated with increases in R&D effort. However, the introduction of patents in developing countries has not been followed by greater R&D investment in the diseases that are most prevalent there. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Margaret K. Kyle & Anita M. McGahan, 2012. "Investments in Pharmaceuticals Before and After TRIPS," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1157-1172, November.
  • Handle: RePEc:tpr:restat:v:94:y:2012:i:4:p:1157-1172
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    References listed on IDEAS

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    Cited by:

    1. Iain M. Cockburn & Jean O. Lanjouw & Mark Schankerman, 2016. "Patents and the Global Diffusion of New Drugs," American Economic Review, American Economic Association, pages 136-164.
    2. Iain M. Cockburn & Jean O. Lanjouw & Mark Schankerman, 2016. "Patents and the Global Diffusion of New Drugs," American Economic Review, American Economic Association, pages 136-164.
    3. Roger Bate & Ginger Zhe Jin & Aparna Mathur & Amir Attaran, 2014. "Poor Quality Drugs and Global Trade: A Pilot Study," NBER Working Papers 20469, National Bureau of Economic Research, Inc.
    4. Kamal Saggi, 2016. "Trade, Intellectual Property Rights, and the World Trade Organization," Vanderbilt University Department of Economics Working Papers 16-00014, Vanderbilt University Department of Economics.
    5. Pierre Dubois & Olivier de Mouzon & Fiona Scott-Morton & Paul Seabright, 2015. "Market size and pharmaceutical innovation," RAND Journal of Economics, RAND Corporation, pages 844-871.
    6. Emmanuelle Auriol & Sara Biancini & Rodrigo Paillacar, 2013. "Universal Intellectual Property Rights: Too Much of a Good Thing?," CESifo Working Paper Series 4292, CESifo Group Munich.
    7. OKADA, Yoshimi & NAGAOKA, Sadao, 2016. "Global spread of pharmaceutical patent protections: micro evidence from the international equivalents of the drug patents in Japan," IIR Working Paper 16-07, Institute of Innovation Research, Hitotsubashi University.
    8. Chatterjee, Chirantan & Kubo, Kensuke & Pingali, Viswanath, 2015. "The consumer welfare implications of governmental policies and firm strategy in markets for medicines," Journal of Health Economics, Elsevier, vol. 44(C), pages 255-273.
    9. Gao, Wenlian & Chou, Julia, 2015. "Innovation efficiency, global diversification, and firm value," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 278-298.
    10. Heidi L. Williams, 2016. "Intellectual Property Rights and Innovation: Evidence from Health Care Markets," Innovation Policy and the Economy, University of Chicago Press, pages 53-87.
    11. Auriol, Emmanuelle & Biancini, Sara & Paillacar, Rodrigo, 2015. "Intellectual Property Rights Protection and Trade," CEPR Discussion Papers 10602, C.E.P.R. Discussion Papers.
    12. Heidi L. Williams, 2016. "Intellectual Property Rights and Innovation: Evidence from Health Care Markets," Innovation Policy and the Economy, University of Chicago Press, pages 53-87.
    13. Margaret Kyle & Yi Qian, 2014. "Intellectual Property Rights and Access to Innovation: Evidence from TRIPS," NBER Working Papers 20799, National Bureau of Economic Research, Inc.
    14. Loitongbam, Bishwanjit Singh, 2016. "Globalization and Innovation in the Indian Pharmaceutical Industry," MPRA Paper 75925, University Library of Munich, Germany, revised 27 May 2016.
    15. Shahnawaz Sheikh, 2012. "The Optimal Timing of Compulsory Licensing: A Story of Thailand's Winter of Discontent," Global Economy Journal, De Gruyter, vol. 12(4), pages 1-19, December.
    16. IIZUKA Toshiaki & UCHIDA Gyo, 2016. "Promoting Innovation in Small Markets: Evidence from the market for rare and intractable diseases," Discussion papers 16036, Research Institute of Economy, Trade and Industry (RIETI).
    17. Mark Duggan & Craig Garthwaite & Aparajita Goyal, 2016. "The Market Impacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India," American Economic Review, American Economic Association, pages 99-135.
    18. repec:eee:pubeco:v:156:y:2017:i:c:p:185-199 is not listed on IDEAS

    More about this item

    Keywords

    pharmaceuticals; TRIPS Agreement; patent protection;

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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