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Generic Competition in the US Pharmaceutical Industry

  • Atanu Saha
  • Henry Grabowski
  • Howard Birnbaum
  • Paul Greenberg
  • Oded Bizan
Registered author(s):

    We develop a simultaneous equations estimation framework to understand the interactions among generic entry, prices, and market shares. We base our estimates on a panel data sample of 40 brand-name drugs that first experienced generic competition during the period July 1992-January 1998. We find that generic share and price are simultaneously determined, while the number of generic entrants is a key determinant of generic market share and the generic-to-brand price ratio. In addition, we find generic competition to be particularly intense for blockbuster drugs, which experience significantly more generic entrants, price erosion, and generic penetration than other drugs.

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    File URL: http://www.tandfonline.com/10.1080/13571510500519905
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    Article provided by Taylor & Francis Journals in its journal International Journal of the Economics of Business.

    Volume (Year): 13 (2006)
    Issue (Month): 1 ()
    Pages: 15-38

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    Handle: RePEc:taf:ijecbs:v:13:y:2006:i:1:p:15-38
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    1. Meir Statman, 1981. "The effect of patent expiration on the market position of drugs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 2(2), pages 61-66, 06.
    2. Hudson, John, 2000. "Generic take-up in the pharmaceutical market following patent expiry: A multi-country study," International Review of Law and Economics, Elsevier, vol. 20(2), pages 205-221, June.
    3. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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