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China and India as Suppliers of Affordable Medicines to Developing Countries

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  • Tamara Hafner
  • David Popp

Abstract

As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicaments from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely.

Suggested Citation

  • Tamara Hafner & David Popp, 2011. "China and India as Suppliers of Affordable Medicines to Developing Countries," NBER Working Papers 17249, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17249
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    References listed on IDEAS

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    1. Lichtenberg Frank R., 2010. "Pharmaceutical Price Discrimination and Social Welfare," Capitalism and Society, De Gruyter, vol. 5(1), pages 1-32, July.
    2. Sudip Chaudhuri & Maureen Mackintosh & Phares G M Mujinja, 2010. "Indian Generics Producers, Access to Essential Medicines and Local Production in Africa: An Argument with Reference to Tanzania," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 22(4), pages 451-468, September.
    3. Lanjouw, Jean O. & Cockburn, Iain M., 2001. "New Pills for Poor People? Empirical Evidence after GATT," World Development, Elsevier, vol. 29(2), pages 265-289, February.
    4. Colleen V Chien, 2007. "HIV/AIDS Drugs for Sub-Saharan Africa: How Do Brand and Generic Supply Compare?," PLOS ONE, Public Library of Science, vol. 2(3), pages 1-6, March.
    5. Danzon, Patricia M & Chao, Li-Wei, 2000. "Does Regulation Drive out Competition in Pharmaceutical Markets?," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 311-357, October.
    6. F. M. Scherer & Jayashree Watal, 2002. "Post-TRIPS Options for Access to Patented Medicines in Developing Nations," Journal of International Economic Law, Oxford University Press, vol. 5(4), pages 913-939, December.
    7. Schmalensee Richard L, 2010. "Comment on "Pharmaceutical Price Discrimination and Social Welfare" (by Frank R. Lichtenberg)," Capitalism and Society, De Gruyter, vol. 5(1), pages 1-6, July.
    8. Lexchin, Joel, 2004. "The effect of generic competition on the price of brand-name drugs," Health Policy, Elsevier, vol. 68(1), pages 47-54, April.
    9. Laurens M Niëns & Alexandra Cameron & Ellen Van de Poel & Margaret Ewen & Werner B F Brouwer & Richard Laing, 2010. "Quantifying the Impoverishing Effects of Purchasing Medicines: A Cross-Country Comparison of the Affordability of Medicines in the Developing World," PLOS Medicine, Public Library of Science, vol. 7(8), pages 1-8, August.
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    Cited by:

    1. Aggarwal, Mayank & Chakrabarti, Anindya S. & Chatterjee, Chirantan & Higgins, Matthew J., 2023. "Research and market structure: Evidence from an antibiotic-resistant pathogenic outbreak," Research Policy, Elsevier, vol. 52(1).
    2. Loitongbam, Bishwanjit Singh, 2016. "Impact of TRIPS and RTAs on the Indian Pharmaceutical Product Exports," MPRA Paper 75764, University Library of Munich, Germany, revised 27 May 2016.

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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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