The Impact of the Entry of Biosimilars: Evidence from Europe
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Biologics represent a substantial and growing share of the U.S. drug market. Traditional “small molecule” generics quickly erode the price and share of the branded product upon entry, however only a few biosimilars have been approved in the US since 2015, thereby largely preserving biologics from competition. We analyze European markets, which have had biosimilar competition since 2006. Using our own survey, we analyze how market features and public policies predict biosimilar entry, price, and penetration, finding significant heterogeneity across countries and products. Effective buyer institutions are associated with increased biosimilar penetration. Our estimates can inform ongoing policy discussions.
KeywordsHealth care Biosimilars Biologics Pharmaceutical competition Health care spending Innovation
We are grateful to Ernie Berndt, Bill Comanor, Innessa Colaiacovo, James Leung, Robert Meyer, Andrew Mulcahy, Stacy Springs, Robert Town, and seminar participants at Boston University, UCLA, the Kellogg Health Care Markets Conference, Harvard Business School, Harvard Medical School, Tulane University, the University of Virginia, IFS, KU Leuven, ASHEcon, the NBER Productivity Lunch, and the Bates White Life Sciences Symposium for helpful suggestions. Several experts in and well acquainted with the health ministries of European countries in our sample provided valuable information on domestic drug procurement policies. Suzette Kox, Julie Maréchal, Pieter Dylst, and Maarten Van Baelen from Medicines for Europe were particularly generous with their time. Prof. Fernando de Mora in the Department of Pharmacology, Therapeutics and Toxicology at the Universitat Autònoma de Barcelona—Spain provided detailed scientific and regulatory detail. Melissa Ouellet, Oliver Falvey, Lila Kelso, Brittany Ngo, and Kathrin Lampert provided excellent research and editorial assistance. Funding from the National Science Foundation award number 1064341 (The Industrial Organization of the Biologics Industry: theory, Empirics and Policy) and the National Institute on Aging, through grant number T32-AG000186 to the National Bureau of Economic Research, is Gratefully acknowledged. We are particularly appreciative of access to IMS data that was provided by Pfizer Inc. and IMS.
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