the TRIPS Agreement and that are available in the Indian patent laws, but the implementation of these provisions has not yet taken place.<sup>16</sup> In addition, price controls administered by the Government of India are usually cited as another channel that could dampen the effect of product patents on prices. The Indian government currently controls the price of only 74 commonly used drugs, representing approximately 8 percent of the pharmaceutical market (Government of India 2010).<sup>17</sup>

# **III. Data and Findings**

To estimate the impact of product patent enforcement on our outcome variables of interest, we begin by merging together data from two sources. The first main source of data was obtained from IMS Health and contains proprietary data on total sales (excluding those to hospitals and long-term care facilities) in India for all CNS products in each quarter from 2003 to 2008. According to IMS, these data covered 85 percent of all pharmaceutical sales in the country during this time period. The data also contains the number of doses (standardized units) of the product that were sold in each quarter. This allows us to calculate the average price per dose in each quarter for each product.<sup>18</sup> Pharmaceutical products are available in multiple presentations, such as dosage forms (capsule, tablet, syrup, etc.), and strength (10 milligrams, 50 milligrams, etc.). In calculating prices, we aggregate sales and quantities for all versions of the same drug in each quarter.<sup>19</sup> The CNS market is the second largest therapeutic category in the world in terms of retail sales and is one of the fastest growing. Figure 2 shows the quarterly trend in mean price and total quantity of all drugs within the CNS therapeutic category in our sample. Within this market, the largest segment of sales are for anti-depressants, antipsychotics, anti-epileptics, sleep disorders, attention deficit disorders, and Alzheimer’s disease (see Table 1). Many of the new products developed by pharmaceutical companies these days are life quality enhancing drugs such as anti-depressants and are likely to be affected by product patents. Although, this segment accounted for about 7% of the total retail

> 16 Compulsory Licensing refers to ―use without authorization of the patent holder‖, and includes use by third parties and use by the government in situations of national or extreme emergency, and public noncommercial use. No compulsory licenses have yet been issued in India under the amended Patents Act (personal communication with Patent officer in the Delhi Patent office).

> 17The details of the procedures for price fixation can be found in the official government website: http://www.nppaindia.nic.in/index1.html, under the link ―Drug Price Control Order 1995‖.

> 18 Note that the prices we use in our estimation are not the posted prices at the drugstore but the revenues of each drug divided by units sold from invoice data.

19 These data are available from the retail pharmacy audits undertaken by IMS Health, the best known market research firm for pharmaceuticals. The audit provides detailed product-level estimates of quarterly sales, dozes, launch dates, brand name, active pharmaceutical ingredient, therapeutic categorization on all pharmaceutical products sold in India. The coverage of the audit is extensive, reaching a representative panel of thousands of retail chemists in across cities and towns in India. The data collected, which provide the only real source of disaggregate information on the Indian pharmaceutical market, are used by both the government of India in formulating pricing policy and other decisions, and the Indian pharmaceutical industry in determining pricing and marketing strategies (Goldberg 2008).

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