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The generic competition paradox in a universal healthcare's prescription drug market

Author

Listed:
  • Kenichi Ohkita
  • Kazumitsu Minamikawa

Abstract

This paper provides a game theoretic model on the likelihood of the generic competition paradox in a universal healthcare's prescription drug market. Using a two-stage model in which patients are prescribed either the brand-name drug, a generic alternative, or no drug, it is found that under certain conditions the price of the brand-name drug increases after the entry of generic alternatives. The generic competition paradox is found to require full market coverage and to be more likely to occur with a larger difference in the perceived quality of the brand-name drug and its generic alternatives, higher marginal costs of production, or lower insurance coverage.

Suggested Citation

  • Kenichi Ohkita & Kazumitsu Minamikawa, 2015. "The generic competition paradox in a universal healthcare's prescription drug market," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 14(4), pages 438-445.
    • Handle: RePEc:ids:ijbglo:v:14:y:2015:i:4:p:438-445
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