Competition between brand-name and generics--analysis on pricing of brand-name pharmaceutical.

The objective of this paper is to provide two-stage game models explaining the 'Generic Competition Paradox' that demonstrates an increase of brand-name drug price in response to generic entry. Under the assumption that there are two groups of consumers who are segmented by their insurance status, high insurance coverage and low insurance coverage consumers, the models indicate that the decisive factor is the market share of the high insurance coverage consumer and the size of cross-substitute factor relative to certain characteristics of market demand. The paper analyses both the case of only true generic entry and the case of pseudo-generic and true generic entry. The models prove that a brand-name price will increase when both the market share of high insurance coverage consumer and the factor of cross-substitute are small. Also, the 'Generic Competition Paradox' more likely occurs in the market where less pseudo-generic products are produced.

Kong Y 《-》

The effect of generic competition on the price of brand-name drugs.

Lexchin J 《HEALTH POLICY》

Pricing of drugs with heterogeneous health insurance coverage.

In this paper, we examine the role of insurance coverage in explaining the generic competition paradox in a two-stage game involving a single producer of brand-name drugs and n quantity-competing producers of generic drugs. Independently of brand loyalty, which some studies rely upon to explain the paradox, we show that heterogeneity in insurance coverage may result in higher prices of brand-name drugs following generic entry. With market segmentation based on insurance coverage present in both the pre- and post-entry stages, the paradox can arise when the two types of drugs are highly substitutable and the market is quite profitable but does not have to arise when the two types of drugs are highly differentiated. However, with market segmentation occurring only after generic entry, the paradox can arise when the two types of drugs are weakly substitutable, provided, however, that the industry is not very profitable. In both cases, that is, when market segmentation is present in the pre-entry stage and when it is not, the paradox becomes more likely to arise as the market expands and/or insurance companies decrease deductibles applied on the purchase of generic drugs.

Ferrara I ，Missios P 《-》

Reference pricing of pharmaceuticals.

Brekke KR ，Königbauer I ，Straume OR 《JOURNAL OF HEALTH ECONOMICS》

Price regulation and generic competition in the pharmaceutical market.

Dalen DM ，Strøm S ，Haabeth T 《European Journal of Health Economics》