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The European Journal of Health Economics

, Volume 17, Issue 8, pp 1027–1040 | Cite as

The diffusion of generics after patent expiry in Germany

  • Katharina Elisabeth FischerEmail author
  • Tom Stargardt
Original Paper

Abstract

To identify the influences on the diffusion of generics after patent expiry, we analyzed 65 generic entries using prescription data of a large German sickness fund between 2007 and 2012 in a sales model. According to theory, several elements are responsible for technology diffusion: (1) time reflecting the rate of adaption within the social system, (2) communication channels, and (3) the degree of incremental innovation, e.g., the modifications of existing active ingredient’s strength. We investigated diffusion in two ways: (1) generic market share (percentage of generic prescriptions of all prescriptions of a substance) and, (2) generic sales quantity (number of units sold) over time. We specified mixed regression models. Generic diffusion takes considerable time. An average generic market share of about 75 % was achieved not until 48 months. There was a positive effect of time since generic entry on generic market share (p < 0.001) and sales (p < 0.001). Variables describing the communication channels and the degree of innovation influenced generic market share (mostly p < 0.001), but not generic sales quantity. Market structure, e.g., the number of generic manufacturers (p < 0.001) and prices influenced both generic market share and sales. Imperfections in generic uptake through informational cascades seem to be largely present. Third-party payers could enhance means to promote generic diffusion to amplify savings through generic entry.

Keywords

Pharmaceutical industry Market regulation Off-patent markets Product life cycle Generic entry Generic market share 

JEL Classification

I11 

Notes

Funding

This study was supported by a research grant from the Federal Ministry of Education and Research in Germany (Grant number BMBF 01EH1101A).

Compliance with ethical standards

Conflict of interest

The author(s) declare that they have no competing interests.

Supplementary material

10198_2015_744_MOESM1_ESM.pdf (374 kb)
Supplementary material 1 (PDF 373 kb)
10198_2015_744_MOESM2_ESM.pdf (2.1 mb)
Supplementary material 2 (PDF 2177 kb)

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© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  1. 1.Hamburg Center for Health EconomicsUniversität HamburgHamburgGermany

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