[Ip-health] New York Fed Staff Report: What Do Drug Monopolies Cost Consumers in Developing Countries:

Michael Palmedo mpalmedo at wcl.american.edu
Thu Oct 30 08:15:05 PDT 2014


My take on it is this:  If a country is relatively wealthy and has a
competitive market, then

- The fact it is relatively wealthy will affect prices in the positive
direction. You'll see prices be higher
- The fact that it has a competitive market will affect prices in the
negative direction.  You'll see prices be lower.
- A country with both these qualities will see prices tugged in both
directions, but the competition effect on price is stronger than the
wealth effect on price.  (Note the size of the coefficients in table
one).

You could also ask the author.  Her contact info is here:
https://ideas.repec.org/e/phe47.html 


-----Original Message-----
From: Ip-health [mailto:ip-health-bounces at lists.keionline.org] On Behalf
Of Dzintars Gotham
Sent: Thursday, October 30, 2014 9:39 AM
To: ip-health at lists.keionline.org
Subject: Re: [Ip-health] New York Fed Staff Report: What Do Drug
Monopolies Cost Consumers in Developing Countries:

 This bolded part of the sentence in the concusion, which you also chose
to quote, seems to contradict the information shown in the tables (Table
1) in the report, and other parts of the conclusion.

It finds that for ARV's with an average per-capsule price of $0.65,
*consumers
in*
* competitive countries paid $0.12 more per capsule due to their
greater*
* purchasing power *than did consumers in monopolistic countries and,
more generally, that every $100 increase in per-capita income
corresponded to a 1-cent (about a 1.5-percent) increase in the average
per-capsule price.

...in competitive settings consumers paid *more*?

I'd be very grateful if someone could explain this.

Thanks!

--
*Dzintars Gotham*

European Coordinator (UK) for Universities Allied for Essential
Medicines <http://www.uaem.org/> Europe Coordinator - Universities
Global Health Research Index (with Medsin UK
<http://medsin.org/>)

email: dzintarsgotham at gmail.com
mobile: +447908178639 (UK)
Skype: dzintarsgotham

LinkedIn <http://uk.linkedin.com/pub/dzintars-gotham/78/2b7/576/>
Twitter <https://twitter.com/dzintarsgotham>

On Wed, Oct 29, 2014 at 1:38 PM, Michael Palmedo
<mpalmedo at wcl.american.edu>
wrote:

>
> What Do Drug Monopolies Cost Consumers in Developing Countries?
>
> Rebecca Hellerstein
>
> Federal Reserve Bank of New York
> Staff Report no. 530, December 2011
>
> http://www.newyorkfed.org/research/staff_reports/sr530.pdf
>
> ... Conclusion:
>
> This paper compares markups on ARV's in countries with monopolistic 
> drug markets to those with more widespread availability of generics. 
> It finds that for ARV's with an average per-capsule price of $0.65, 
> consumers in competitive countries paid $0.12 more per capsule due to 
> their greater purchasing power than did consumers in monopolistic 
> countries and, more generally, that every $100 increase in per-capita 
> income corresponded to a 1-cent (about a 1.5-percent) increase in the 
> average per-capsule price. The paper also finds that consumers in 
> monopolistic countries paid on average $0.50 more per capsule owing to

> firms' exercise of their monopoly power than did consumers in 
> competitive countries. These results suggest a fairly modest 
> responsiveness of ARV prices to consumers' purchasing power and a 
> somewhat more robust responsiveness to firms' monopoly power. In the 
> end, richer nations may pay a little more for drugs, but a lot more if

> a monopolist is supplying them. Finally, the paper's empirical 
> approach and markup estimates may be useful for other researchers as 
> they evaluate the impact of granting monopoly rights on prices, and
consumers, in developing countries.
>
>
> --
> Mike Palmedo
> Program on Information Justice and Intellectual Property American 
> University Washington College of Law
> 4801 Massachusetts Ave., NW, Washington, D.C. 20016
> W: 202-274-4442 | M: 571-289-3683
> pijip.org | infojustice.org | us.creativecommons.org
>
>
>
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