During the 1980s the share of prescriptions sold by retail pharmacies that was accounted for by generic products roughly doubled. The price response to generic entry of brand-name products has been a source of controversy. In this paper we estimate models of price responses to generic entry in the market for brand-name and generic drugs. We study a sample of 32 drugs that lost patent protection during the early to mid-1980s. Our results provide strong evidence that brand-name prices increase after entry and are accompanied by large price decreases in the price of generic drugs.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5306.
Length: Date of creation: May 1997 Date of revision: Handle: RePEc:nbr:nberwo:5306
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