ENTRY THREATS AND PRICING IN THE GENERIC DRUG INDUSTRY

• 成果类型: Article
• 署名作者: Tenn, Steven; Wendling, Brett W.
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00382
• 发表日期: 2014-05
• 页码: 214-228
• 关键词: potential competition; patent expiration; pharmaceutical-industry; in-differences; MARKET; deterrence; INVESTMENT; oligopoly; airlines; DYNAMICS

摘要

We use the unique regulatory environment of the pharmaceutical industry to examine how potential competition affects generic drug pricing. Our identification strategy exploits a provision of the Hatch-Waxman Act that awards 180 days of marketing exclusivity to the first valid generic drug applicant against the holder of a branded drug patent. In smaller drug markets, we find that price falls in response to an increase in potential competition. We also find that few manufacturers enter these markets, indicating this price reduction is an effective deterrent. In contrast, we find that generic incumbents accommodate entry in larger drug markets.