Product patents and access to innovative medicines

Enacted in 1995, the Agreement on Trade-Related Aspects of Intellectual Property Rights of the World Trade Organisation makes it obligatory for member states to protect pharmaceutical product patents, which has great impacts on global access to medicines. This paper analyses the impact of patents on the availability and affordability of new and innovative medicines in a post-TRIPS era. Our data from IQVIA covers 578 molecules in 70 countries. Using launch data from 1980 to 2017, we find that introducing product patents is important for innovative medicines by speeding up their launch by 14 percent. Innovative medicines are launched sooner than non-innovative ones irrespective of patent regimes. However, we find little evidence that either patentability or innovativeness improves drug availability in low-income countries. With regard to differential pricing, a firm-level strategy to achieve affordable prices for patented medicines, we find that overall, from 2007 to 2017, originator medicine prices are adjusted to local income levels by only 11 percent and generic medicine prices by 26 percent. Prices of generic HIV/AIDS, malaria, and tuberculosis medicines are much better adjusted to local income-by 69 percent-suggesting that disease-specific global policy responses have led to more affordable prices benefiting people with these diseases in poor countries. Also, brand competition in the molecule market can effectively drive down prices of both originator and generic medicines, implying that multiple generic entry is crucial to achieving drug affordability.