Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, October 17, 2019

The Competitive Impact of Branded Generic Medicine in a Developing Country

By: Roberto ÁlvarezAldo GonzálezSebastian Fernández
Abstract: This paper studies the effect of the entry of branded generic medications — representing 47 molecules — between January 2002 and July 2017 in the Chilean retail pharmaceutical market. Using a differences-in-differences approach, we measure the impact on prices and quantities on the market after the entry of branded generic pharmaceuticals, following the patent expiration of innovator drugs. The results show that in a period of 48 months from the first entry, the quantities sold in the retail market increased by 148.1%. This is explained by the lower prices of the branded generics, as the gross average price is 33% cheaper than the innovator alternatives. Finally, no statistically significant effect is observed on prices and quantities for innovators, suggesting that the segmented market theory might apply to the Chilean pharmaceutical market.

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