Pharmaceutical Lifecycle Extension Strategies - Innovation and Marketing in the Pharmaceutical Industry - page 233

Table 8.2 (con tinued)

Article Goal Period Sample Findings

Reiffen and
Ward
( 2005 )

Understand how competition evolves in
the generic drug industry

1985-1995 31 Drugs The rents in the generic industry increase during the fi rst 5-10 months after

patent expiration and then decrease as more fi rms enter. In markets with
higher expected rents, more fi rms enter and they enter faster. In large
markets, the margins on generics will eventually become close to zero.

Saha et al.
( 2006 )

Understand the interactions between
generic entry, prices, and market shares

1992-1998 40 Drugs The number of generic entrants is a key determinant of generic market share

and generic-to-brand price ratio. Blockbusters face more generic
entrants, lower generic prices, and higher generic penetration. The extent
of HMO coverage increases generic market share.
Generic entries lead to a small decrease in price of the branded drug (0.2 %
per additional entrant) and no evidence of entry-deterrent pricing is
found.

Gonzalez
et al.
( 2008 )

Study how doctors and doctor characteris-
tics impact competition among
molecules in a therapeutic class, when
one of the drugs loses its patent and
generics enter

1998-2000 Panel data on patent

expiry of fl uoxetine

Generic entry decreases the number of prescriptions for the molecule that
loses its patent, but increases prescriptions for non-bioequivalent
branded competitors. Detailing-sensitive doctors switch from the drug
that loses its patent to other branded alternatives, while price-sensitive
doctors switch from the drug losing patent to generic alternatives.

Regan ( 2008 ) Study the effect of generic entry on
post-patent price competition

1998-2002 18 Oral solid drugs for

chronic conditions

There is strong price competition between different generics, but not
between branded and generic brands. The price of branded drugs
increases in the number of generic entrants, while average generic price
decreases.

Ching ( 2010 ) Investigate the dynamics of demand for
prescription drugs after patent
expiration

1984-1987 14 Drugs Brand-name price elasticities of demand are often less than one and increase
over time. Patients are risk averse and have a negative prior about the
quality of generic drugs. Branded drugs should set their prices before
patent expiry lower than expected by a myopic fi rm (that does not take
learning about generics' quality into account) in order to decrease the
learning for the quality of generics.
Notes : Two important regulatory changes may have substantial impact on the results in different time periods: (1) the Hatch-Waxman Act in 1984, (2) the change in the regulations
on DTCA in 1997.