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How do Brands’ “Own Generics” Affect Pharmaceutical Prices?

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Abstract

This paper examines the price effects of generic drugs that are produced by brand-name drug firms and that are labeled, priced, and marketed to compete against independent generics. The strategy of introducing such “pseudo-generics” – also known as “authorized generics” – has raised some antitrust concerns. One defense of this strategy has been that the additional competition created by pseudo-generics should lead to lower prices. This paper develops a simple model to show that pseudo-generics can be expected to have exactly the opposite effect. It then examines empirical evidence on this point from the Canadian pharmaceutical market, showing that there appears to be a positive relationship between drug prices and the share of generic sales made by the brand’s own pseudo-generic.

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Authors and Affiliations

  1. Department of Economics and Institute of Health Economics, University of Calgary, 2500 University Dr NW, Calgary, AB, T2N 1N4, Canada

    Aidan Hollis

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  1. Aidan Hollis
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Correspondence to Aidan Hollis.

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Hollis, A. How do Brands’ “Own Generics” Affect Pharmaceutical Prices?. Rev Ind Organ 27, 329–350 (2005). https://doi.org/10.1007/s11151-005-5469-5

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  • DOI: https://doi.org/10.1007/s11151-005-5469-5

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