Costa-Font, Joan 
ORCID: 0000-0001-7174-7919
(2016)
Is medicines parallel trade ‘regulatory arbitrage’?
International journal of Health Economics and Management, 16 (4).
pp. 321-336.
ISSN 2199-9023
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Abstract
Parallel trade (PT) is a phenomenon that takes place at the distribution level, when a patented product is diverted from the official distribution chain to another one where it competes as a parallel distributor. Although some research regards PT in Europe as a ‘common’ form of arbitrage, there are reasons to believe that it is a type of ‘regulatory arbitrage’ that does not necessarily produce equivalent welfare effects. We draw upon a unique dataset that contains source country records of parallel imported medicine sales to the Netherlands for one therapeutic group (statins), that accounts for 5%of the market at the time of study and it faced no generic competition. We estimate precise differences in prices and statutory distribution margins for each source country/product and, examine whether they drive parallel import flows using a gravity specification and an instrumental variable strategy. Our findings reveal that parallel imports are driven by cross-country differences in statutory distribution margins in addition to price differences, consistently with the hypothesis of PT being a type of ‘regulatory arbitrage’.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.springer.com/public+health/journal/1075... |
| Additional Information: | © 2016 The Authors |
| Divisions: | LSE Health Policy |
| Subjects: | R Medicine > RA Public aspects of medicine |
| Date Deposited: | 07 Sep 2016 09:54 |
| Last Modified: | 07 Nov 2024 19:30 |
| URI: | http://eprints.lse.ac.uk/id/eprint/67603 |
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