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Pharmaceutical followers

Author

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  • Arcidiacono, Peter
  • Ellickson, Paul B.
  • Landry, Peter
  • Ridley, David B.

Abstract

We estimate a model of drug demand and supply that incorporates insurance, advertising, and competition between branded and generic drugs within and across therapeutic classes. We use data on antiulcer drugs from 1991 to 2010. Our simulations show that generics and “me-too” drugs each increased consumer welfare more than $100million in 2010, holding insurance premiums constant. However, insurance payments in 2010 fell by nearly $1billion due to generics and rose by over $7billion due to me-too antiulcer drugs.

Suggested Citation

  • Arcidiacono, Peter & Ellickson, Paul B. & Landry, Peter & Ridley, David B., 2013. "Pharmaceutical followers," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 538-553.
    • Handle: RePEc:eee:indorg:v:31:y:2013:i:5:p:538-553
    DOI: 10.1016/j.ijindorg.2013.10.005
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    Cited by:

    1. Branstetter, Lee & Chatterjee, Chirantan & Higgins, Matthew J., 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, Elsevier, vol. 51(10).
    2. Dag Morten Dalen & Marilena Locatelli & Steinar Strøm, 2018. "An Equilibrium Model Estimated on Pharmaceutical Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(3), pages 281-296, September.
    3. Farasat A. S. Bokhari & Franco Mariuzzo & Anna Rita Bennato, 2021. "Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions," Small Business Economics, Springer, vol. 57(1), pages 603-634, June.
    4. Tomaso Duso & Annika Herr & Moritz Suppliet, 2014. "The Welfare Impact Of Parallel Imports: A Structural Approach Applied To The German Market For Oral Anti‐Diabetics," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1036-1057, September.
    5. Lee, Chung-Ying, 2020. "Pricing strategy and moral hazard: Copay coupons in pharmaceuticals," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    6. Gregory J. King & Xiuli Chao & Izak Duenyas, 2019. "Who Benefits When Prescription Drug Manufacturers Offer Copay Coupons?," Management Science, INFORMS, vol. 65(8), pages 3758-3775, August.
    7. Margaret K. Kyle, 2018. "Are Important Innovations Rewarded? Evidence from Pharmaceutical Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 211-234, August.
    8. David B. Ridley, 2015. "Payments, Promotion, And The Purple Pill," Health Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 86-103, January.
    9. Callejas, Jerónimo & Mohapatra, Debi Prasad, 2021. "Welfare effects of public procurement of medicines: Evidence from Ecuador," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    10. Yin, Nina, 2023. "Pharmaceuticals, incremental innovation and market exclusivity," International Journal of Industrial Organization, Elsevier, vol. 87(C).
    11. Alderighi, Marco & Bianchi, Carluccio & Lorenzini, Eleonora, 2016. "The impact of local food specialities on the decision to (re)visit a tourist destination: Market-expanding or business-stealing?," Tourism Management, Elsevier, vol. 57(C), pages 323-333.
    12. Chatterjee, Chirantan & Kubo, Kensuke & Pingali, Viswanath, 2015. "The consumer welfare implications of governmental policies and firm strategy in markets for medicines," Journal of Health Economics, Elsevier, vol. 44(C), pages 255-273.
    13. David Dranove & Craig Garthwaite & Manuel I. Hermosilla, 2020. "Expected Profits and The Scientific Novelty of Innovation," NBER Working Papers 27093, National Bureau of Economic Research, Inc.
    14. Clark, Robert & Fabiilli, Christopher & Lasio, Laura, 2022. "Collusion in the US generic drug industry," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    15. Rabbani, Maysam, 2021. "Mergers with Future Rivals Can Boost Prices, Intensify Market Concentration, and Bar Entry," MPRA Paper 112864, University Library of Munich, Germany, revised 26 Apr 2022.
    16. Kyle, Margaret, 2017. "Are Important Innovations Rewarded? Evidence from Pharmaceutical Markets," CEPR Discussion Papers 12420, C.E.P.R. Discussion Papers.
    17. Sacks, Daniel W., 2018. "Why do HMOs spend less? Patient selection, physician price sensitivity, and prices," Journal of Public Economics, Elsevier, vol. 168(C), pages 146-161.

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    More about this item

    Keywords

    Pharmaceuticals; Me-too drugs; Generics; Pricing;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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