How do Brands’ “Own Generics” Affect Pharmaceutical Prices?

How do Brands’ “Own Generics” Affect Pharmaceutical Prices? This paper examines the price effects of generic drugs that are produced by brand-name drug firms and that are labeled, priced, and marketed to compete against independent generics. The strategy of introducing such “pseudo-generics” – also known as “authorized generics” – has raised some antitrust concerns. One defense of this strategy has been that the additional competition created by pseudo-generics should lead to lower prices. This paper develops a simple model to show that pseudo-generics can be expected to have exactly the opposite effect. It then examines empirical evidence on this point from the Canadian pharmaceutical market, showing that there appears to be a positive relationship between drug prices and the share of generic sales made by the brand’s own pseudo-generic. Review of Industrial Organization Springer Journals

How do Brands’ “Own Generics” Affect Pharmaceutical Prices?

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Kluwer Academic Publishers
Copyright © 2005 by Springer
Economics; Industrial Organization; Microeconomics
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