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.
|Journal||International Journal of Health Care Finance & Economics|
|Publication status||Published - 1 Jan 2005|
Jelovac, I., & Bordoy Marcó, C. P. (2005). Pricing and welfare implications of parallel imports in the pharmaceutical industry. International Journal of Health Care Finance & Economics, 5, 5-21. https://doi.org/10.1007/s10754-005-6599-x