Evaluating the Impact of Data Exclusivity on the Price of Pharmaceutical Imports

Abstract

Data exclusivity is a form of intellectual property (IP) protection that restricts competition by preventing generic firms from relying on originator test results to win regulatory approval. It is a TRIPS-Plus intellectual property provision often required by Free Trade Agreements (FTAs). This study analyses the impact of data exclusivity on aggregated pharmaceutical import prices in a set of 16 countries that enacted data exclusivity as required by FTAs, and six comparator countries that had not introduced this type of IP protection. It uses a difference in differences methodology appropriate for datasets in which treatment occurs at different periods, and in which treatment affects are heterogeneous over time. Between 1996 and 2014, pharmaceutical import prices were 14–20% higher on average in countries that had enacted data exclusivity than those that had not. Since these laws only applied to products entering the market after their enactment, their impact took time to become apparent. It eventually became quite large. The first statistically significant difference in prices occurred seven years after countries introduced data exclusivity. Nine years after these changes, the price differences averaged 175–210%.

Keywords: Intellectual Property, Trade, Health, Law

JEL Classification: D04, F55, F61, I18, K33