Events at CERGE-EI

Prof. Margaret Kyle

Toulouse School of Economics, France

Author: Margaret Kyle

Abstract: Intellectual property rights (IPRs) attempt to balance long-run incentives for innovation and short-run access to innovation. The market power granted by IPRs allows innovators to charge higher prices, potentially reducing access to patented products. However, the existence of IPRs may make a market more attractive for innovators, leading to country-specific investments in marketing and distribution. Such investments may result in quicker launch of new products, increased marketing of older products, and greater availability of treatments. We examine the consequences of stronger pharmaceutical patent protection on the speed of drug launch, price, and quantity in 59 countries from 2000-2011. The World Trade Organization required its member countries to implement a minimum level of patent protection within a specified time period as part of the TRIPS Agreement. At the product level, selection into patent "treatment" is exogenously determined by these compliance deadlines. Our results suggest that patents are generally associated with faster launch, higher prices, and higher sales, but the importance of patents varies across country income groups: patents have little effect in relatively poor countries.

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