Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry

Izabela Jelovac and Catalina Bordoy

International Journal of Health Economics and Management, 2005, vol. 5, issue 1, 5-21

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. Copyright Springer Science+Business Media, Inc. 2005

Keywords: parallel imports; welfare (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (54)

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DOI: 10.1007/s10754-005-6599-x

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