The consumer welfare implications of governmental policies and firm strategy in markets for medicines

Chatterjee, Chirantan; Kubo, Kensuke; Pingali, Viswanath

doi:10.1016/j.jhealeco.2015.09.001

Cited by 29 publications

(23 citation statements)

References 37 publications

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“…[ 117 ] Therefore, this practice has become illegal in most countries, but not in the US or New Zealand. [ 1 ; 117 – 199 ] This situation makes it harder for drug companies to create demand for their products in most countries, and reduces turnover in the early phase of developing a new drug.…”

Section: Life Cycles and Market Dynamicsmentioning

confidence: 99%

“…Unfortunately, this approach is also administratively cumbersome, since in general, it applies to one drug at a time,[ 56 ] and could result in other innovators withdrawing their drug from the market. [ 199 ] However, compulsory licensing can be used successfully as part of a strategy to reduce prices offered by the originator[ 56 ; 79 ; 81 ; 199 ].…”

Section: Drug Innovation Regulation and Pricing Interventionsmentioning

confidence: 99%

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Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

2017

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ContextRecent public outcry has highlighted the rising cost of prescription drugs worldwide, which in several disease areas outpaces other health care expenditures and results in a suboptimal global availability of essential medicines.MethodA systematic review of Pubmed, the Financial Times, the New York Times, the Wall Street Journal and the Guardian was performed to identify articles related to the pricing of medicines.FindingsChanges in drug life cycles have dramatically affected patent medicine markets, which have long been considered a self-evident and self-sustainable source of income for highly profitable drug companies. Market failure in combination with high merger and acquisition activity in the sector have allowed price increases for even off-patent drugs. With market interventions and the introduction of QALY measures in health care, governments have tried to influence drug prices, but often encounter unintended consequences. Patent reform legislation, reference pricing, outcome-based pricing and incentivizing physicians and pharmacists to prescribe low-cost drugs are among the most promising short-term policy options. Due to the lack of systematic research on the effectiveness of policy measures, an increasing number of ad hoc decisions have been made with counterproductive effects on the availability of essential drugs. Future challenges demand new policies, for which recommendations are offered.ConclusionA fertile ground for high-priced drugs has been created by changes in drug life-cycle dynamics, the unintended effects of patent legislation, government policy measures and orphan drug programs. There is an urgent need for regulatory reform to curtail prices and safeguard equitable access to innovative medicines.

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Section: Life Cycles and Market Dynamicsmentioning

confidence: 99%

Section: Drug Innovation Regulation and Pricing Interventionsmentioning

confidence: 99%

Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

2017

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“…More recently, Cleanthous () and Dunn () find large welfare gains from drug innovation in antidepressants and anticholesterol drugs, respectively. Bokhari and Fournier () report welfare gains due to first‐time generic entry, and Dutta () and Chatterjee, Kubo, and Pingali () analyze the welfare impact of stronger intellectual property (IP) protection and differential pricing for pharmaceuticals in India. Other complementary work has focused on the enhancements to social welfare through reductions in mortality, morbidity, and total medical expenditures, Lichtenberg (, , , 2003, ).…”

Section: Related Literaturementioning

confidence: 99%

Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry

Branstetter

Chatterjee

Higgins

2016

The RAND J of Economics

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This article estimates welfare effects of accelerated generic entry via Paragraph IV challenges. Using data from 2000–2008 for hypertension drugs in the United States, we estimate demand using a random‐coefficients logit model. We find consumers gain $42 billion whereas producers lose $32.5 billion from entry. This modest $9.5 billion gain in social welfare is consistent with our observation that overall consumption does not increase after entry—generic sales displace branded sales, shifting surplus downstream from producers to consumers, insurance companies, and retailers. We demonstrate significant cross‐molecular substitution and discuss challenges in determining what fraction of downstream surplus actually goes to consumers.

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“…Moreover, such delays also harm future innovations. A study by Chatterjee et al (2015) also highlights that in a strong patent regime consumer welfare can be also increased by differential pricing and voluntary licensing strategies. Under differential pricing strategy, firms charge a lower price in the markets of developing countries in comparison to markets of developed countries.…”

Section: Trips and The Indian Pharmaceutical Industrymentioning

confidence: 99%

Technological Innovations and Market Power: A Study of Indian Pharmaceutical Industry

Dhanora¹,

Sharma

Park

2020

Millennial Asia

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Technological innovations are positively associated with firms’ market performance. This study aims to examine the impact of product and process innovation on the market power of 168 Indian pharmaceutical firms during 2000–2013. We generate product and process patent stock to capture firm-level innovation activities. Findings of this study suggest that both product and process innovation positively influence firms’ market power. Results also reveal that MNEs enjoy more market power in the Indian pharmaceutical industry. Further, this study also highlights that there is a differential impact of firms’ product group on market power. This study concludes that patenting is a positive source of firm performance in the Indian pharmaceutical industry.

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The consumer welfare implications of governmental policies and firm strategy in markets for medicines

Cited by 29 publications

References 37 publications

Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry

Technological Innovations and Market Power: A Study of Indian Pharmaceutical Industry

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