Biomedical Engineering Reference
In-Depth Information
Table 8.2 Overview of empirical research on generic entry
Article
Goal
Period
Sample
Findings
Hurwitz and
Caves
( 1988 )
Investigate the impact of the goodwill of a
branded drug on generic market share
and the impact of the generic price and
promotion on the branded drug's share
1978-1983
29 Oral drugs
Drugs that are on the market for a longer time before patent expiry have a
higher post-patent market share, due to a higher amount of goodwill
built. Higher pre-patent expiry promotional expenditures also increase
post-patent market share. Higher branded prices increase the share of
generics.
Caves et al.
( 1991 )
Identify the patterns displayed by branded
and generic drugs' prices, market
shares, and quantities sold, as well as
branded drugs' advertising
1976-1987
30 Drugs
Generic entry leads to a small decrease in the branded price. The price of
the generic drugs decreases with the number of generic competitors. The
total share of generic drugs increases with the number of generic drugs
available, but remains relatively small.
The advertising expenditures start decreasing 2 years before patent expiry,
decrease substantially upon generic entry, and in the number of generic
drugs.
Grabowski
and
Vernon
( 1992 )
Investigate the impact of generic entry on
generic and branded drug prices, as
well as the determinants of generic
entry
1983-1987
18 Drugs with yearly
sales above $50
million before
patent expiry
On average, branded drugs lose half of their market share in the 2 years
after patent expiry. Prices of branded drugs rise in response to generic
entry and generic prices decrease in the number of generic entrants.
There are no signifi cant barriers to generic entry and the expected
profi tability of generic entry is driving the number of generic entrants.
Frank and
Salkever
( 1997 )
Price response of generic and branded
drugs to generic entry
1980-1991
32 Drugs
Brand-name prices increase after generic entry and more generic drugs
leads to lower generic prices, but do not decrease branded prices. The
net effect is a decrease in the average price of a molecule.
Bae ( 1997 )
Determine factors that infl uence the speed
and likelihood of generic drug entries
1987-1994
81 Drugs
Higher sales for the branded drug lead to faster generic entry. Generic entry
is slower for branded drugs with few or many competing brands in the
same therapeutic market. Chronic drugs face increased generic
competition than drugs for acute illnesses.
 
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