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Review of Industrial Organization
Published in: Review of Industrial Organization 1/2019

20-02-2019

The Single Market in Pharmaceuticals

Author: Margaret K. Kyle

Published in: Review of Industrial Organization | Issue 1/2019

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Abstract

This paper examines the state of the single market in the European Union (EU) for pharmaceuticals. As with other products, the EU has adopted a number of institutions and policies to encourage integration and the free movement of goods. Over time, member states are more similar in the availability of pharmaceutical products, as well as in the patents that protect them. New pharmaceuticals are generally available sooner and in more EU members. However, there are large differences in the number and mix of products across member states. Because the pricing of pharmaceuticals remains a national competence, price variation also persists—though this may be desirable from a social welfare standpoint.
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Footnotes
1
The EEA includes all EU member states as well as Iceland, Liechtenstein and Norway. Switzerland, a party to the European Free Trade Association, is not an EEA member.
 
2
Biologics are products derived from biotechnology processes.
 
3
For a more detailed discussion of these policies, see OECD (2008), for example.
 
4
In a few countries, only the retail or hospital segment is included.
 
5
The decline observed in the most recent years is a result of truncated data: we have fewer years over which to observe launch decisions.
 
6
These data are derived from the Human MRIndex.
 
7
This is higher than the average number of countries in which the drugs were launched because a marketing authorization provides the right—but not the obligation—to sell a product.
 
8
The specification is extremely parsimonious. Many other factors, including pricing and reimbursement policies, affect the decision to market a product and the speed of launch; I discuss these later in this paper.
 
9
In recognition of the weaker protection for drugs that were marketed prior to a country’s accession to the EU, derogation periods for parallel trade in pharmaceuticals applied to Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia, Slovenia, and Spain.
 
10
I define “in force” in year y as a granted patent that is not yet lapsed, expired, or invalidated.
 
11
See Eurostat for more information and underlying data.
 
12
Occasionally, countries are listed as both origins and destinations, most often Ireland, Malta, and the UK.
 
13
Note: Calculations based on data from IMS MIDAS, 2002-2016, using data for Austria, Belgium, Bulgaria, the Czech Republic, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the UK. Calculations use the entire set of countries, including periods prior to their EU membership.
 
14
About 30% of the observations in my dataset are sold in a single country, for example, though close equivalents may be available elsewhere.
 
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Metadata
Title
The Single Market in Pharmaceuticals
Author
Margaret K. Kyle
Publication date
20-02-2019
Publisher
Springer US
Published in
Review of Industrial Organization / Issue 1/2019
Print ISSN: 0889-938X
Electronic ISSN: 1573-7160
DOI
https://doi.org/10.1007/s11151-019-09694-6

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