Parallel Imports And Price Controls

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Parallel Imports And Price Controls

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Author : Gene M. Grossman
language : en
Publisher:
Release Date : 2006

Parallel Imports And Price Controls written by Gene M. Grossman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Economic policy categories.

Price controls create opportunities for international arbitrage. Many have argued that such arbitrage, if tolerated, will undermine intellectual property rights and dull the incentives for investment in research-intensive industries such as pharmaceuticals. We challenge this orthodox view and show, to the contrary, that the pace of innovation often is faster in a world with international exhaustion of intellectual property rights than in one with national exhaustion. The key to our conclusion is to recognize that governments will make different choices of price controls when parallel imports are allowed by their trade partners than they will when they are not.

Vertical Price Control And Parallel Imports

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Author : Keith Eugene Maskus
language : en
Publisher: World Bank Publications
Release Date : 2000

Vertical Price Control And Parallel Imports written by Keith Eugene Maskus and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with Foreign trade regulation categories.

Parallel imports are genuine products brought into a country without the authorization of the copyright, patent, or trademark owner. Countries vary considerably in their legal treatment of parallel imports, as determined by their choice of exhaustion doctrine. A new model analyzes parallel imports a a response to vertical pricing arrangements between a rights holder ("manufacturer") and a foreign distributor.

Vertical Price Control And Parallel Imports

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Author : Keith E. Maskus
language : en
Publisher:
Release Date : 2004

Vertical Price Control And Parallel Imports written by Keith E. Maskus and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.

The paper analyzes parallel imports, or goods traded without the authorization of a trademark owner. Parallel imports have multiple causes, including vertical price control, which the authors model. A manufacturer selling its product through an independent agent sets the wholesale price sufficiently low to induce a desired retail price abroad. This permits the agent to sell the product profitably in the originating market. Combined social surplus decreases and then increases in the cost of parallel trade. Restricting parallel imports benefits the manufacturer, but could raise or reduce global surplus. The econometric analysis indicates that the vertical-control explanation of parallel imports is important.

Parallel Imports Price Controls And Innovation

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Author : Markus Reisinger
language : en
Publisher:
Release Date : 2019

Parallel Imports Price Controls And Innovation written by Markus Reisinger and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.

The impact of parallel trade on innovation in R&D-intensive industries, such as pharmaceuticals, is a hotly debated question in antitrust and IP policy. The well known argument that parallel trade dampens innovation by undermining firms' ability to price discriminate has been challenged by recent literature. The argument is that with endogenous price controls, parallel trade increases innovation by reducing governments' incentives to set particularly low price caps. In this paper, we show that this result crucially depends on the degree of homogeneity of the trading countries. The result only holds if consumers in poorer countries have a relatively similar demand for medication as consumers in richer countries. Instead, when countries are relatively heterogeneous, parallel trade dampens innovation and lowers welfare by exporting price cap regulation from poorer to richer countries. These findings are in line with recent case evidence. We also show that when patent length is endogenous, richer countries will tend to choose longer patent protection with parallel trade,whereas equilibrium price caps tend to be tighter in that case.

A Model Of Parallel Imports Of Pharmaceuticals With Endogenous Price Controls

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Author :
language : en
Publisher:
Release Date : 2005

A Model Of Parallel Imports Of Pharmaceuticals With Endogenous Price Controls written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.

Parallel Imports Drag Price Control And Pharmaceutical Innovation

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Author : Ken Tabata
language : en
Publisher:
Release Date : 2005

Parallel Imports Drag Price Control And Pharmaceutical Innovation written by Ken Tabata and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.

Intellectual Property Rights Parallel Imports And Strategic Behavior

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Author : Mattias Ganslandt
language : en
Publisher:
Release Date : 2014

Intellectual Property Rights Parallel Imports And Strategic Behavior written by Mattias Ganslandt and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.

The existence of parallel imports (PI) raises a number of interesting policy and strategic questions, which are the subject of this survey article. For example, parallel trade is essentially arbitrage within policy-integrated markets of IPR-protected goods, which may have different prices across countries. Thus, we analyze fully two types of price differences that give rise to such arbitrage. First is simple retail-level trade in horizontal markets because consumer prices may differ. Second is the deeper, and more strategic, issue of vertical pricing within the common distribution organization of an original manufacturer selling its goods through wholesale distributors in different markets. This vertical price control problem presents the IPR-holding firm a menu of strategic choices regarding how to compete with PI. Another strategic question is how the existence of PI might affect incentives of IPR holders to invest in research and development (R&D). The global research-based pharmaceutical firms, for example, strongly oppose any relaxation of restrictions against PI of drugs into the United States, arguing that the potential reduction in profits would diminish their ability to innovate. There is a close linkage here with price controls for medicines, which are a key component of national health policies but can give rise to arbitrage through PI. We also discuss the complex economic relationships between PI and other forms of competition policy, or attempts to limit the abuse of market power offered by patents and copyrights. Finally, we review the emerging literature on how policies governing PI may affect international trade agreements.

Parallel Trade In Pharmaceuticals

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Author : Frederick M. Abbott
language : en
Publisher:
Release Date : 2017

Parallel Trade In Pharmaceuticals written by Frederick M. Abbott and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.

Pharmaceutical products are developed, approved, manufactured, traded, and used under complex and demanding regulatory schemes. While the intensity of regulation varies substantially among countries, lightly regulated markets are the exception, particularly from an economic standpoint. In this regard, pharmaceuticals are not generally traded in what might be described as a "free market" in the sense of absence of regulation, and this includes import restrictions which are generally consistent with the overall regulatory schemes. A drug that is not approved for marketing in a particular country does not become so because it is imported. Parallel trade (i.e., imports and exports) in pharmaceuticals takes place in markets that are "distorted" by regulation. Probably the single most significant "distortion mechanism" is the patent. The patent allows its owner to price a pharmaceutical product in the absence of ordinary market competition in the sense that potential competitors may not freely copy the product. The ultimate price may depend on a variety of factors, including the uniqueness of therapeutic effect within a particular class. But, the price of patented pharmaceutical products generally does not represent the cost of reverse engineering plus production. Substantially but not exclusively because of the effects of patents, many countries place controls on the prices of pharmaceutical products. Originator patented pharmaceutical products and generic products are often subject to controls. In addition, as a result of public health concerns regarding lower income countries, a number of pharmaceutical companies are voluntarily licensing patented products for manufacture and sale in developing countries at significantly lower prices than are charged in high income markets. This is backdrop to addressing issues concerning parallel trade in pharmaceutical products. It is conducted in what typically are heavily regulated markets, and this may include price controls and voluntary discriminatory pricing. This adds a substantial layer of complexity to analysis of the "exhaustion question." Today there is no reason for sympathy toward originator complaints about government price controls distorting ordinary international trade mechanisms, if for no other reason than that pricing practices have shown no respect for consumers or public health budgets. If an originator company voluntarily licenses a patented product for distribution in low and middle income countries at prices substantially below the "market" price in the high income countries, it should be able to make contractual arrangements with the licensees that the resulting production and distribution will be limited to designated markets. Government programs that take advantage of such special discriminatory pricing may add the weight of government re-export restrictions on such specifically licensed products. If a government's pricing control practices become sufficiently distortive such that the conduct is manifestly unfair, a pharmaceutical company may be justified in restricting the quantity of drugs delivered into that market. But, that is not ordinarily the case. As a general rule, international exhaustion of patent, trademark, and copyright should be a mandatory rule for the international trading system. Political reality may, for the time being, dictate otherwise. This still leaves each government with a choice to adopt international exhaustion. This should help to facilitate price reductions in the global market for pharmaceuticals.

Reference Pricing And Parallel Imports

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Author : Laura Birg
language : en
Publisher:
Release Date : 2019

Reference Pricing And Parallel Imports written by Laura Birg and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.

I study the effect of reference pricing on competition by parallel imports, in particular the market share of parallel imports and the number of parallel traders. First, I analyze the effect of reference pricing on competition by parallel imports in a vertical differentiation model with a locally sourced version and a parallel import offered by n identical parallel traders. Second, I explore the effect of reference pricing on competition by parallel imports using a dataset with prescription drugs with competition from parallel imports. Both model and estimation results suggest that the introduction of reference pricing inrceases the market share of the parallel import and the number of parallel traders, while a decrease in the reference price decreases the market share of the parallel import and the number of parallel traders.

External Reference Pricing And Parallel Imports Of Pharmaceuticals

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Author : Foad Iravani
language : en
Publisher:
Release Date : 2020

External Reference Pricing And Parallel Imports Of Pharmaceuticals written by Foad Iravani and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.

Governments across the world constantly use a variety of measures to contain drug costs in order to increase patient access to critical medications. External Reference Pricing (ERP), or international price comparison, is a commonly employed policy to control prices of pharmaceuticals. ERP uses the price(s) of a medicinal product in one or several countries in order to derive a benchmark or reference price for the purposes of setting the price of the product in a given country. Despite potential drawbacks, empirical studies show ERP has been successful in reducing drug prices. Another strategy that can reduce drug prices is legalizing parallel imports of drugs from low-price countries. Motivated by the differences between government policies and the absence of national price management policies in the U.S., in this paper we compare the effects of implementing ERP or authorizing parallel imports on firm profit and different social welfare measures. We find that authorizing parallel imports can result in higher firm profit and/or social welfare than using ERP. We also examine, in a decentralized supply chain, two variations of ERP that are used in practice, the ex-factory-based ERP and the pharmacy purchase price (PPP)-based ERP. We show that despite the ex-factory-based ERP being more common, PPP-based ERP can increase both firm profits and social welfare. Therefore, governments should consider using PPP-based ERP policies. Our findings help generate insights for ongoing policy discussions around measures for controlling drug prices in the U.S.