Pricing and welfare implications of parallel imports in the pharmaceutical industry

I. Jelovac, C.P. Bordoy Marcó

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Abstract

In this paper we investigate the implications of permitting parallel imports of pharmaceuticals produced by a monopoly, from one country to another. We use a model where countries differ in the patients’ level of co-payment for buying pharmaceuticals, and patients differ in the utility obtained from the consumption of pharmaceuticals. We show that the effects of parallel imports on total welfare are as follows: on the one hand, when countries differ in their health system only, parallel imports decrease total welfare; on the other hand, when countries differ in the health needs of their patients only, parallel imports enhance total welfare.
Original languageEnglish
Pages (from-to)5-21
JournalInternational Journal of Health Care Finance & Economics
Volume5
DOIs
Publication statusPublished - 1 Jan 2005

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