Working Paper: NBER ID: w20548
Authors: 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.
Keywords: pharmaceuticals; patents; India; market structure
JEL Codes: I11; L1; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| timing of patent grants (O38) | pharmaceutical prices (P22) |
| timing of patent grants (O38) | quantity sold (C69) |
| molecule receiving a patent (L65) | average price increase (E30) |
| molecule receiving a patent (L65) | price increase for single firm products (L11) |
| presence of substitute goods (D10) | pricing power of firms (L11) |
| regulatory flexibilities (L51) | pricing power of firms (L11) |
| patent implementation (O34) | sales concentration (L14) |