Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India

In the context of the TRIPS agreement and the accompanying debate about the merits of the requirement to enforce product patents for pharmaceuticals, this paper provides a rigorously-derived estimate of the possible impact of pharmaceutical product patents on prices and welfare in a developing economy. Using detailed product-level data on monthly pharmaceutical prices and sales over a two year period from January 1999 to December 2000, the study estimates key price and expenditure elasticities and supply-side parameters for the fluoroquinolone (quinolone henceforth) segment of systemic anti-bacterials (i.e., antibiotics) in the Indian pharmaceuticals market. These estimates are then used to carry out counterfactual simulations of what prices, profits, and consumer welfare would have been, had the fluoroquinolone molecules under study been under patent in India as they were in the U.S. at the time. [BREAD Working Paper No. 125, July 2006]