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Intellectual Property Rights and Access to Innovation: Evidence from TRIPS

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  • Margaret Kyle
  • Yi Qian

Abstract

We examine the effect of pharmaceutical patent protection on the speed of drug launch, price, and quantity in 60 countries from 2000-2013. The World Trade Organization required its member countries to implement a minimum level of patent protection within a specified time period as part of the TRIPS Agreement. However, members retained the right to impose price controls and to issue compulsory licenses under certain conditions. These countervailing policies were intended to reduce the potential static losses that result from reduced competition during the patent term. We take advantage of the fact that at the product level, selection into TRIPS "treatment" is exogenously determined by compliance deadlines that vary across countries. We find that patents have important consequences for access to new drugs: in the absence of a patent, launch is unlikely. That is, even when no patent barrier exists, generic entry may not occur. Conditional on launch, patented drugs have higher prices but higher sales as well. The price premium associated with patents is smaller in poorer countries. Price discrimination across countries has increased for drugs patented post-TRIPS and prices are negatively related to the burden of disease, suggesting that countervailing policies to offset expected price increases may have had the intended effects.

Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberwo:20799
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    References listed on IDEAS

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    1. 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, vol. 106(1), pages 99-135, January.
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    9. 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.
    10. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
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    Cited by:

    1. 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, vol. 106(1), pages 99-135, January.
    2. Dubois, Pierre & Lefouili, Yassine & Straub, Stéphane, 2021. "Pooled procurement of drugs in low and middle income countries," European Economic Review, Elsevier, vol. 132(C).
    3. 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.
    4. Margaret K. Kyle, 2019. "The Alignment of Innovation Policy and Social Welfare: Evidence from Pharmaceuticals," NBER Chapters, in: Innovation Policy and the Economy, Volume 20, pages 95-123, National Bureau of Economic Research, Inc.
    5. 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.
    6. Simona Gamba & Paolo Pertile & Sabine Vogler, 2020. "The impact of managed entry agreements on pharmaceutical prices," Health Economics, John Wiley & Sons, Ltd., vol. 29(S1), pages 47-62, October.
    7. Trachtenberg Danielle & Kaplan Warren A. & Wirtz Veronika J. & Gallagher Kevin P., 2019. "The Effects of Trade Agreements on Imports of Biologics: Evidence from Chile," Journal of Globalization and Development, De Gruyter, vol. 10(2), pages 1-21, December.
    8. Nancy Gallini, 2017. "Do patents work? Thickets, trolls and antibiotic resistance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(4), pages 893-926, November.
    9. 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.
    10. Bond, Eric W. & Saggi, Kamal, 2020. "Patent protection in developing countries and global welfare: WTO obligations versus flexibilities," Journal of International Economics, Elsevier, vol. 122(C).
    11. Paolo Pertile & Simona Gamba & Martin Forster, 2018. "Free-Riding in Pharmaceutical Price Regulation: Theory and Evidence," Discussion Papers 18/04, Department of Economics, University of York.
    12. Evangelia Chalioti & Kyriakos Drivas & Sarantis Kalyvitis & Margarita Katsimi, 2020. "Innovation, patents and trade: A firm‐level analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 949-981, August.

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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • 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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