Please use this identifier to cite or link to this item: https://repository.iimb.ac.in/handle/2074/11368
Title: The consumer welfare implications of governmental policies and firm strategy in markets for medicines
Authors: Chatterjee, Chirantan 
Kubo, Kensuke 
Pingali, Viswanath 
Keywords: Compulsory Licensing;Differential Pricing;Indian Pharmaceutical Market;Intellectual Property;Pharmaceutical Demand Estimation
Issue Date: 2015
Publisher: Elsevier
Abstract: This paper empirically examines the consumer welfare implications of changes in government policies related to patent protection and compulsory licensing in the Indian market for oral anti-diabetic (OAD) medicines. In contrast to previous studies on the impact of pharmaceutical patents in India, we observe, and estimate the welfare effects accruing from differential pricing and voluntary licensing strategies of patent-holding innovator firms. Three novel molecules belonging to the dipeptidyl peptidase-4 (DPP-4) inhibitor class of OADs have been launched in India by the patent holders, at lower prices than those prevailing in the developed countries. Using aggregate market transaction data, we structurally estimate demand and supply and use the parameter estimates in our model to simulate consumer welfare under various counterfactual scenarios. Our results suggest that the introduction of DPP-4 inhibitors generated a consumer surplus gain of around 7.6 cents per day for a typical DPP-4 inhibitor user under the existing differential pricing and voluntary licensing strategies. If the innovators decide to price at developed-country levels, this surplus is eliminated almost entirely. The issuance of compulsory licensing does not always improve consumer welfare because if innovators defer or delay the introduction of new drugs in response, the loss in consumer welfare could be substantial.
URI: https://repository.iimb.ac.in/handle/2074/11368
ISSN: 0167-6296
DOI: 10.1016/J.JHEALECO.2015.09.001
Appears in Collections:2010-2019

Show full item record

Google ScholarTM

Check

Altmetric


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.