Uncertainty in the Generic Versus Brand Name Prescription Decision
This paper analyzes the impact of uncertainty concerning product quality of generic drugs on the substitution behavior of prescribing physicians. It is shown that uncertainty about the generic drug quality gives the physician a value of waiting for more information before switching to the generic version. In addition, it is shown that reducing the approval requirements for generic drugs, thereby increasing uncertainty about quality, may discourage physicians from prescribing such drugs. A small empirical study supports the theoretical findings and indicate that uncertainty about the quality of generic drugs do affect physician prescription behavior.
|Date of creation:||20 Jan 2003|
|Contact details of provider:|| Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden|
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- Whitney K. Newey & Kenneth D. West, 1986. "A Simple, Positive Semi-Definite, Heteroskedasticity and AutocorrelationConsistent Covariance Matrix," NBER Technical Working Papers 0055, National Bureau of Economic Research, Inc.
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- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Fiona Scott Morton, 1997. "The Objectives of the FDA's Office of Generic Drugs," NBER Working Papers 6143, National Bureau of Economic Research, Inc.
- Hartley, K & Lavers, R J & Maynard, A K, 1986. "Regulation and Development Times in the U.K. Pharmaceutical Industry," Scottish Journal of Political Economy, Scottish Economic Society, vol. 33(4), pages 355-369, November.
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