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Generic competition and market exclusivity periods in pharmaceuticals

Author

Listed:
  • 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.

Suggested Citation

  • Henry G. Grabowski & Margaret Kyle, 2007. "Generic competition and market exclusivity periods in pharmaceuticals," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 491-502.
  • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:4-5:p:491-502
    DOI: 10.1002/mde.1356
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    Cited by:

    1. Herr, A. & Suppliet, M., 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
    2. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2014. "Starving (or Fattening) the Golden Goose?: Generic Entry and the Incentives for Early-Stage Pharmaceutical Innovation," NBER Working Papers 20532, National Bureau of Economic Research, Inc.
    3. Iain M. Cockburn & Jean O. Lanjouw & Mark Schankerman, 2016. "Patents and the Global Diffusion of New Drugs," American Economic Review, American Economic Association, vol. 106(1), pages 136-164, January.
    4. 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 Chapters,in: Measuring and Modeling Health Care Costs, pages 243-271 National Bureau of Economic Research, Inc.
    5. Berndt, Ernst R. & 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.
    6. 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.
    7. Eric Helland & Seth A. Seabury, 2016. "Are Settlements in Patent Litigation Collusive? Evidence from Paragraph IV Challenges," NBER Working Papers 22194, National Bureau of Economic Research, Inc.
    8. Böhme, Enrico & Frank, Severin & Kerber, Wolfgang, 2016. "Optimal Incentives for Patent Challenges in the Pharmaceutical Industry," Annual Conference 2016 (Augsburg): Demographic Change 145637, Verein für Socialpolitik / German Economic Association.
    9. repec:eee:ijrema:v:28:y:2011:i:4:p:295-308 is not listed on IDEAS
    10. 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.
    11. 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.
    12. Mark Trusheim & Murray L. Aitken & Ernst R. Berndt, 2010. "Characterizing Markets for Biopharmaceutical Innovations: Do Biologics Differ from Small Molecules?," NBER Working Papers 16014, National Bureau of Economic Research, Inc.
    13. Papachristos, George & Adamides, Emmanuel, 2016. "A retroductive systems-based methodology for socio-technical transitions research," Technological Forecasting and Social Change, Elsevier, vol. 108(C), pages 1-14.
    14. Blume-Kohout, Margaret E. & Sood, Neeraj, 2013. "Market size and innovation: Effects of Medicare Part D on pharmaceutical research and development," Journal of Public Economics, Elsevier, vol. 97(C), pages 327-336.
    15. 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.
    16. Eric Budish & Benjamin N. Roin & Heidi Williams, 2015. "Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials," American Economic Review, American Economic Association, vol. 105(7), pages 2044-2085, July.
    17. Eric Budish & Benjamin Roin & Heidi Williams, 2013. "Do fixed patent terms distort innovation? Evidence from cancer clinical trials," Discussion Papers 13-001, Stanford Institute for Economic Policy Research.
    18. 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.
    19. Severin Frank & Wolfgang Kerber, 2016. "Patent Settlements in the Pharmaceutical Industry: What Can We Learn From Economic Analysis?," MAGKS Papers on Economics 201601, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    20. Jorge Mestre-Ferrandiz & Adrian Towse & Mikel Berdud, 2016. "Biosimilars: How Can Payers Get Long-Term Savings?," PharmacoEconomics, Springer, vol. 34(6), pages 609-616, June.
    21. 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.
    22. Phill O’Neill & Jorge Mestre-Ferrandiz & Ruth Puig-Peiro & Jon Sussex, 2013. "Projecting Expenditure on Medicines in the UK NHS," PharmacoEconomics, Springer, vol. 31(10), pages 933-957, October.
    23. Wrona, Thomas & Trąpczyński, Piotr, 2012. "Re-explaining international entry modes – Interaction and moderating effects on entry modes of pharmaceutical companies into transition economies," European Management Journal, Elsevier, vol. 30(4), pages 295-315.

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