Table 4 Studies of patent policies

Comparative country studies

Cockburn et al. 2014 [81]

Retrospective econometric study to determine how patent and price control policies, as well as economic and demographic factors, affect the speed and scope of diffusion of new pharmaceutical products across countries.

Price regulation delays launch, while longer and more extensive patent rights accelerate it. Longer, and stronger, patent protection powerfully accelerates diffusion of new drugs. Controlling for economic and demographic factors, moving from a regime of no product patents to a long product patent term reduces launch lags by about 55%. Process patents also promote faster launch, but the impact is not as large as for product patents. Importantly, the impact of policy regimes holds equally for low- and middle-income countries as for high-income countries.

Lanjouw 2005 [82]

Retrospective econometric study to determine how legal and regulatory policies affect whether new drugs are marketed in a country, and how quickly.

Less than one-half of the new pharmaceutical molecules that are marketed worldwide are sold in any given country, and those that are sold are often available to consumers in one country only 6 or 7 years after those in another. Both price regulation and IP rights influence these outcomes. A stronger patent regime is associated with more of the drug launch in a country being done by the originator firm. Overall, two-thirds of all drug launches and three-quarters of blockbuster launches are done by the originator firm.

Watal and Dai 2019 [83]

Retrospective econometric study to investigate how the introduction of product patents in pharmaceuticals affects the likelihood of pharmaceutical firms to launch new and innovative medicines in those markets. Also looks at how much patent owners or generic pharmaceutical firms adjust their prices to local income levels.

The introduction of product patent for pharmaceuticals has a positive effect on launch likelihood, especially for innovative pharmaceuticals. However, this effect is quite limited in low-income markets. Also, innovative pharmaceuticals are launched sooner than non-innovative ones, irrespective of the patent regime in the local market. There is evidence of differential pricing for both originator and generic products. Overall, originators differentiate by about 11% and generics by about 26% between markets with different income levels. Differential pricing is larger for pharmaceuticals to treat infectious diseases, particularly for HIV/AIDS medicines, than for non-communicable diseases. However, pharmaceutical prices are far from fully adjusted to local income levels in either case. However, competition, especially that within a particular medicine market, can effectively drive down prices in both originator and generic markets.

Kyle and Qian 2014 [84]

Retrospective econometric study to examine the consequences of stronger pharmaceutical patent protection on the speed of drug launch, price, and quantity in 59 countries from 2000 to 2011.

Patents are generally associated with faster launch, higher prices, and higher sales. The importance of patents varies across country / income groups.

Borrell and Watal 2003 [85]

Retrospective econometric study to measure the impact of patents on unsubsidized sales of new ARV drugs in a sample of low and middle-income countries in the late 1990s.

On average patents increase availability of new drugs (from 28 to 33%), but patents reduce sales by 59% once the drug is available in the marketplace. The net effect of these two counterbalancing effects is that patents reduce sales by 34%. Switching all drugs from a patent regime to no-patent regime would increase the percentage of people living with HIV that are treated using new drugs by 34%. However, such an increase only shifts market coverage up from 0.88 to 1.18%.

Hellerstein 2012 [86]

Retrospective econometric study to quantify the effects of drug monopolies and low per-capita income on pharmaceutical prices in developing countries using the example of ARVs used to treat HIV.

This paper compares markups on ARVs in countries with monopolistic drug markets to those with more widespread availability of generics. The data suggest consumers in richer countries pay more for drugs. Consumers also pay more when there is a monopoly supplier. Prices are around 20% of average income in competitive supply countries but over 90% in monopoly supply countries, making them less affordable.

Jung and Kwon 2015 [87]

Retrospective econometric study to examine the effect of stronger IP rights on public health, especially on medicine use in low- and middle-income countries.

Higher level of IP rights is associated with low access to prescribed medicines. This adverse relationship between IP and access to medicines is significant even after controlling for country income level and individuals’ socioeconomic status and demographic characteristics. Adding other variables, which reflect the characteristics of each country’s healthcare system, did not change the significant effect of IP rights on access to medicines, although the magnitude of the effect slightly decreased.

Rozek and Berkowitz 2005 [88]

Retrospective econometric study to determine how prices of branded and unbranded pharmaceuticals are affected by increasing IP rights.

Prices of existing branded pharmaceutical products do not change as a result of increasing IP protection. Price data for the 14 common drugs in all four countries that increased IP protection do not exhibit any pattern of price change after the IP policy change. Countries with IP protection do not systematically have higher prices than countries without. Prices across countries are largely dependent on launch dates.

Djolov 2005 [89]

Retrospective econometric study to demonstrate the benefits of competition as supported by pricing freedom and strong property rights protection in pharmaceutical markets across the world.

On average, 98% of the population of countries with ‘strong’ pharmaceutical patent protection have access to essential drugs, with the corresponding figure for countries with weak patent protection being 76%. If countries with weak patent protection shift their protection to the levels of the countries with strong patent protection, 743 million additional people worldwide may be gain access to essential drugs. On average, countries with strong patent protection allocate 0.55% of their GDP to pharmaceuticals, relative to 0.70% for countries with weak patent protection.

Single country studies

Dutta 2011- India [90]

Prospective modelling to determine the changes in consumer surplus, profits, market prices, and market quantities that would result from pharmaceutical product patents and price deregulation for 43 drugs for which foreign firms were present in India.

For the 43 drugs considered, the total loss in consumer welfare from product patents and price deregulation is estimated to be $US 378.5 million, which amounts to an average loss of $9 million per drug and an overall decrease in consumer surplus of 48% from the free entry scenario. Product patents and price deregulation are together estimated to result in a total loss of almost 8.5 million patients, representing a decrease of over 50% from the free entry scenario. In contrast, the average annual gain to the foreign patent holder from this policy simulation exercise is estimated to be $US1.4 million per drug.

Chaudhuri et l 2006- India [91]

Prospective modelling to determine the welfare effects (ie net impact on society) of pharmaceutical product patents.

The cost to consumers of product patents (US$255 m) is multiples more than the benefit to foreign patent-owning producers (US$53 m without price regulation and US$20 m with price regulation). It would be far cheaper to subsidise pharmaceutical company profits directly than to allow pharmaceutical product patents.

Duggan et al. 2016- India [92]

Prospective modelling to determine the effects of the 2005 implementation of product patents in India on pharmaceutical prices, quantities sold, and market structure.

A molecule receiving a patent experienced an average price increase of 3–6%, with larger increases for more recently developed molecules and for those produced by just one firm. Results show little impact on quantities sold or on the number of pharmaceutical firms operating in the market.

Watal 2000– India [93]

Prospective econometric modelling to estimate how much pharmaceutical prices would increase and welfare decrease following the introduction of product patents in India.

Overall maximum weighted price increase for the entire patentable pharmaceutical segment would be a mean of 26% with linear demand, and 242% with constant elasticity of demand. Additional welfare loses in moving from the current largely oligopolistic markets to patent monopoly would be $US50 million with linear demand and $US141 million with constant-elasticity-type demand function. These amount to about 3 and 8% of the total pharmaceutical market respectively. Consumers would lose, in terms of consumers’ surplus, anything between 11 and 67 million at the maximum, depending on the type of demand function assumed. Price increases are the highest for the product where price elasticity is the least.

Berndt and Cockburn 2014- India [94]

Retrospective econometric study to examines the impact of patent policy in India on the availability of new drugs (by measuring the launch lag in comparison with other countries).

There is an estimated launch lag of 4.5-5 years in India, compared with 1 year in German and 2 months in the US. Significant numbers of drugs took much longer than mean/medium time to launch. Ten years after the first worldwide approval, almost a quarter of the sample drugs were not available in India.

Challu 1995- Italy [95]

Comparative statistical analysis of the impact of pharmaceutical product patents on i) pharmaceutical prices; ii) pharmaceutical inventions; iii) balance of pharmaceutical trade.

Compares prices for drugs available in Italy before and after pharmaceutical product patents were introduced. For drugs marketed before the introduction of product patents, average Italian prices were 54% lower than current prices in the USA. For drugs introduced in Italy after product patents, prices are 67% higher than in the USA.

Yamabhai and Smith 2015 – Thailand [96]

Retrospective econometric study to assess the relative impact of patent status as a component of pharmaceutical prices, while controlling other market and medicine characteristics.

Data are for retail prices of oncology medicines in Thailand. Patented status is associated with a price of approximately 144-206% more than that of an equivalent generic. Larger sales volumes, a more competitive market and a longer product life are also associated with prices around 3-30% higher.

Grootendorst et al. 2018- Canada [97]

Retrospective econometric study to investigate whether Canada’s several IP changes had an effect on the market exclusivity duration of brand products on the Ontario Drug Benefit formulary.

There were 595 drugs launched between 1974 and 2012 that were available for analysis. Exclusivity gradually declined from the late 1970s to 1990. Drugs approved in 2004 received 7.6 years of exclusivity, and drugs approved in 2005 received 5 years of exclusivity. Over the time period analysed, market exclusivity time of brand drugs experienced marked changes, but no systematic effects of Canada’s stronger pharmaceutical IP laws on the market exclusivity were detected.

Arcidiacono et al. 2013- USA [80]

Retrospective econometric study to estimate consumer welfare effects of generics and “me-too” drugs, taking into account the intervening role of insurance.

Generics and “me-too” drugs each increased consumer welfare more than $US100 million in 2010, holding insurance premiums constant. Insurance payments in 2010 fell by nearly $US1 billion due to generics and rose by over $US7 billion due to me-too antiulcer drugs.