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'Branded Generics' as a strategy to limit cannibalization of pharmaceutical markets

Author

Listed:
  • David Reiffen

    (US Commodity Futures Trading Commission, USA)

  • Michael R. Ward

    (University of Texas, Arlington, USA)

Abstract

This paper demonstrates how, by introducing a generic version of its previously patented product, a branded firm can influence the equilibrium in the generic segment of the market for the product. This in turn can increase the firm's profits from selling the branded version. We then use structural estimates from previous literature to calculate the magnitude of the effects in the generic and branded segments. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • David Reiffen & Michael R. Ward, 2007. "'Branded Generics' as a strategy to limit cannibalization of pharmaceutical markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 251-265.
    • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:4-5:p:251-265
    DOI: 10.1002/mde.1339
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    References listed on IDEAS

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    1. Richard G. Frank & David S. Salkever, 1997. "Generic Entry and the Pricing of Pharmaceuticals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 75-90, March.
    2. Berndt, Ernst R, et al, 1995. "Information, Marketing, and Pricing in the U.S. Antiulcer Drug Market," American Economic Review, American Economic Association, vol. 85(2), pages 100-105, May.
    3. Ying Kong & James R. Seldon, 2004. "Pseudo-Generic Products and Barriers to Entry in Pharmaceutical Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(1), pages 71-86, August.
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    Citations

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    Cited by:

    1. Ernst R. Berndt & Joseph P. Newhouse, 2010. "Pricing and Reimbursement in U.S. Pharmaceutical Markets," NBER Working Papers 16297, National Bureau of Economic Research, Inc.
    2. Berndt Ernst R. & McGuire Thomas & Newhouse Joseph P., 2011. "A Primer on the Economics of Prescription Pharmaceutical Pricing in Health Insurance Markets," Forum for Health Economics & Policy, De Gruyter, vol. 14(1), pages 1-30, November.
    3. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    4. Luke M. Olson & Brett W. Wendling, 2018. "Estimating the Causal Effect of Entry on Generic Drug Prices Using Hatch–Waxman Exclusivity," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 139-172, August.
    5. 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.
    6. Yunyun Wan, 2018. "Brand Loyalty and Generic Entry: Why Do Brand-Name Drug Companies Launch Their Own Generics?," The Japanese Economic Review, Springer, vol. 69(3), pages 340-346, September.
    7. Farasat A. S. Bokhari & Franco Mariuzzo & Arnold Polanski, 2020. "Entry limiting agreements: First‐mover advantage, authorized generics, and pay‐for‐delay deals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 516-542, July.
    8. Farasat A. S. Bokhari & Gary M. Fournier, 2013. "Entry in the ADHD drugs market: Welfare impact of generics and me-too's," Journal of Industrial Economics, Wiley Blackwell, vol. 61(2), pages 339-392, June.
    9. Appelt, Silvia, 2010. "Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 357, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    10. Ricardo Gonçalves & Vasco Rodrigues & Hélder Vasconcelos, 2015. "Reference pricing in the presence of pseudo-generics," International Journal of Health Economics and Management, Springer, vol. 15(3), pages 281-305, September.
    11. Ivan Moreno-Torres, 2011. "Generic drugs in Spain: price competition vs. moral hazard," Working Papers XREAP2011-04, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
    12. Iván Moreno-Torres & Jaume Puig-Junoy & Joan-Ramon Borrell, 2009. "Generic Entry into the Regulated Spanish Pharmaceutical Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(4), pages 373-388, June.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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