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The Market Impacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India

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  • Mark Duggan
  • Craig Garthwaite
  • Aparajita Goyal

Abstract

In 2005, as the result of a World Trade Organization mandate, India began to implement product patents for pharmaceuticals that were compliant with the 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS). We combine pharmaceutical product sales data for India with a newly gathered dataset of molecule-linked patents issued by the Indian patent office. Exploiting variation in the timing of patent decisions, we estimate that a molecule receiving a patent experienced an average price increase of just 3-6 percent with larger increases for more recently developed molecules and for those produced by just one firm when the patent system began. Our results also show little impact on quantities sold or on the number of pharmaceutical firms operating in the market.

Suggested Citation

  • Mark Duggan & Craig Garthwaite & Aparajita Goyal, 2014. "The Market Impacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India," NBER Working Papers 20548, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20548
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    References listed on IDEAS

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    1. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, vol. 95(4), pages 1214-1236, September.
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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, vol. 106(1), pages 136-164, January.
    2. Atal, Juan Pablo & Cuesta, José Ignacio & Sæthre, Morten, 2018. "Quality Regulation and Competition: Evidence from Pharmaceutical Markets," Discussion Paper Series in Economics 20/2018, Norwegian School of Economics, Department of Economics.
    3. Bhaven N. Sampat & Kenneth C. Shadlen, 2017. "Secondary Pharmaceutical Patenting: A Global Perspective," NBER Working Papers 23114, 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. 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.
    6. Simon Freyaldenhoven & Christian Hansen & Jesse M. Shapiro, 2018. "Pre-event Trends in the Panel Event-study Design," NBER Working Papers 24565, National Bureau of Economic Research, Inc.
    7. Keith E. Maskus & William Ridley, 2016. "Intellectual Property-Related Preferential Trade Agreements and the Composition of Trade," RSCAS Working Papers 2016/35, European University Institute.
    8. repec:eee:ecmode:v:70:y:2018:i:c:p:67-77 is not listed on IDEAS
    9. Heidi L. Williams, 2016. "Intellectual Property Rights and Innovation: Evidence from Health Care Markets," Innovation Policy and the Economy, University of Chicago Press, vol. 16(1), pages 53-87.
    10. Kyle, Margaret K & Ridley, David & Zhang, Su, 2017. "Strategic Interaction Among Governments in the Provision of a Global Public Good," CEPR Discussion Papers 12419, C.E.P.R. Discussion Papers.
    11. Baten, Joerg & Bianchi, Nicola & Moser, Petra, 2017. "Compulsory licensing and innovation – Historical evidence from German patents after WWI," Journal of Development Economics, Elsevier, vol. 126(C), pages 231-242.
    12. Carsten Fink & Bronwyn H. Hall & Christian Helmers, 2018. "Intellectual Property Use in Middle Income Countries: The Case of Chile," NBER Working Papers 24348, National Bureau of Economic Research, Inc.
    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. repec:eee:pubeco:v:156:y:2017:i:c:p:185-199 is not listed on IDEAS

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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