Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry

Izabela Jelovac (1, 2) , Catalina Bordoy (3)

1 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne
2 CNRS - Centre National de la Recherche Scientifique
3 MERIT

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.

Mots clés: Parallel Imports; Welfare

Domaines: Economies et finances

Izabela Jelovac, Catalina Bordoy. Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry. International Journal of Health Care Finance and Economics, 2005, 5 (1), pp.5-21. ⟨10.1007/s10754-005-6599-x⟩. ⟨hal-03881154v2⟩