Authorized Generic Drugs, Price Competition, And Consumers’ Welfare
Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA. Health Affairs
(Impact Factor: 4.97).
05/2007; 26(3):790-9. DOI: 10.1377/hlthaff.26.3.790
The growing frequency of authorized generics has important implications for the welfare of prescription drug consumers. Authorized generic entry could affect the timing of generic entry, brand-name and generic prices, and generic penetration. We reviewed 1999-2003 data and found that generic entry in the absence of short-run exclusivity restrictions benefits consumers through lower short-run prices. We suggest that these benefits likely also result from authorized generics. We posit that long-run prices and shares are likely essentially unaffected by authorized generics and that potential costs to consumers from any delayed generic entry are likely small.
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