E-DRUG: Paper on impact of data exclusivity on pharmaceutical import prices
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Hi all.
Boston University's Global Development Policy Center has published my working paper on data exclusivity and the price of imported medicines. Thanks to Rachel Thrasher, the BU team, and the workshop participants who gave me feedback on the earlier drafts.
A blog about it is here:
https://www.bu.edu/gdp/2021/04/21/a-strict-ip-rule-in-us-free-trade-agreements-is-associated-with-higher-drug-prices-in-importing-countries/
The full paper is here: https://www.bu.edu/gdp/files/2021/04/GEGI_WP_Palmedo_FIN.pdf
Title & abstract below...
Evaluating the Impact of Data Exclusivity on the Price per Kilogram of Pharmaceutical Imports
Michael Palmedo
GEGI Working Paper 048 * 04/2021
ABSTRACT
Background: Intellectual property provisions in free trade agreements (FTAs) enhance the monopoly power of branded pharmaceutical producers, yet studies that measure their impact on access to medicines or pharmaceutical prices often find small effects.
There are at least two possible reasons for this. First, the impacts of TRIPS-Plus provisions appear gradually. These provisions will only apply to new drugs coming onto the market, which means they only affect a handful of drugs each year. Furthermore, FTA provisions will not affect prices of newly approved drugs until the end of their patent terms. Most countries already have TRIPS-level patent and data protection in place when FTAs are implemented, so TRIPS-plus policies may only effect the length of exclusivity on the margin. The second reason is a focus on FTAs themselves, rather than countries' domestic implementation of FTA obligations. The FTA provisions generally do not change domestic policy until implemented at the domestic level. It is notable that studies of policies often required by FTAs have found substantial impacts on price and/or availability.
This study attempts to overcome the methodological problems noted above. It presents the impact of data exclusivity on the price of pharmaceutical imports. Data exclusivity is a form of intellectual property protection that prevents generic entry by preventing generic firms from relying on the originator's test results to win regulatory approval. It is a TRIPS-Plus provision often required in FTAs.
Methodology: A set of annual price and volume data from the UN Comtrade database covers 42 countries and 8 diagnostic classes between 1996 and 2010. IFPMA and WIPO sources determine the year when these countries implemented data exclusivity in their laws (and which countries did not have data exclusivity during this period). Simple observation shows that the price per kilogram of drug imports grow more quickly in countries that have enacted data exclusivity in their laws than in countries where data exclusivity is not in force. Panel regressions show that the impact on prices is statistically significant and robust to the inclusion of controls. A second set of tests using the IDEAS index, which measures varying levels data exclusivity in countries' laws, yields similar results.
Finding: Between 1996 and 2010, the annual increase in price per kilogram of drug imports for these 42 countries was between 2.4 and 4.5 percentage points higher in countries that had implemented data exclusivity than in countries that had not implemented it.
Discussion: It is difficult to assert a causal relationship between the implementation of data exclusivity and the subsequent pharmaceutical import price inflation. This is partially due to the nature of Comtrade's data and partially due to the imprecision of policy implementation.
Overall study topic: applied economics, health economics, trade policy
Michael Palmedo
Zoom: https://auwcl.zoom.us/my/michaelpalmedo
Assistant Director, Interdisciplinary Research
Program on Information Justice & Intellectual Property
American University Washington College of Law
Washington D.C., 20016
Michael Palmedo <mpalmedo@wcl.american.edu>