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Generic competition and market exclusivity periods in pharmaceuticals

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  • Henry G. Grabowski

    (Department of Economics, Duke University, Durham, NC 27708, USA)

  • Margaret Kyle

    (Departments of Strategy and Economics, London Business School, London NW1 4SA)

Abstract

In this paper we examine generic competition and market exclusivity periods for pharmaceuticals experiencing their initial generic entry between 1995 and 2005. We find that generic competition has increased over several dimensions. First, an increasing number of drugs are subject to generic entry, including drugs with relatively modest annual average sales. Second, drugs with larger sales attract more generic entrants and have shorter market exclusivity periods than smaller selling drugs. Third, blockbuster drugs with annual sales in excess of $1 billion have experienced significant decreases in their market exclusivity periods in recent years. We also find that Hatch-Waxman Act patent challenges have negatively affected market exclusivity periods over the 1995 to 2005 period. Copyright © 2007 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 28 (2007)
Issue (Month): 4-5 ()
Pages: 491-502

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Handle: RePEc:wly:mgtdec:v:28:y:2007:i:4-5:p:491-502

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
  2. David Reiffen & Michael R. Ward, 2005. "Generic Drug Industry Dynamics," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 37-49, February.
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Cited by:
  1. Filson, Darren & Oweis, Ahmed, 2010. "The impacts of the rise of Paragraph IV challenges on startup alliance formation and firm value in the pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 29(4), pages 575-584, July.
  2. Berndt, Ernst & Dubois, Pierre, 2012. "Impacts of Patent Expiry and Regulatory Policies on Daily Cost of Pharmaceutical Treatments: OECD Countries, 2004-2010," IDEI Working Papers 702, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Patricia M. Danzon & Michael F. Furukawa, 2011. "Cross-National Evidence on Generic Pharmaceuticals: Pharmacy vs. Physician-Driven Markets," NBER Working Papers 17226, National Bureau of Economic Research, Inc.
  4. Eric Budish & Benjamin N. Roin & Heidi Williams, 2013. "Do fixed patent terms distort innovation? Evidence from cancer clinical trials," NBER Working Papers 19430, National Bureau of Economic Research, Inc.
  5. Lee G. Branstetter & Chirantan Chatterjee & Matthew Higgins, 2011. "Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry," NBER Working Papers 17188, National Bureau of Economic Research, Inc.
  6. Magazzini Laura & Fabio Pammolli, 2013. "R&D, Within and Between Patent Competition in the Pharmaceutical Industry," Working Papers 3/2013, IMT Institute for Advanced Studies Lucca, revised Jul 2013.
  7. repec:ind:iispdp:11-02 is not listed on IDEAS
  8. Appelt, Silvia, 2010. "Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry," Discussion Papers in Economics 11476, University of Munich, Department of Economics.
  9. Hemphill, C. Scott & Sampat, Bhaven N., 2012. "Evergreening, patent challenges, and effective market life in pharmaceuticals," Journal of Health Economics, Elsevier, vol. 31(2), pages 327-339.
  10. Murray L. Aitken & Ernst R. Berndt & Barry Bosworth & Iain M. Cockburn & Richard Frank & Michael Kleinrock & Bradley T. Shapiro, 2013. "The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales Following Loss of Exclusivity," NBER Working Papers 19487, National Bureau of Economic Research, Inc.

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