The aim of this paper is to analyse empirically entry decisions by generic firms into
markets with tough regulation. Generic drugs might be a key driver of competition
and cost containment in pharmaceutical markets. The dynamics of reforms of
patents and pricing across drug markets in Spain are useful to identify the impact of
regulations on generic entry. Estimates from a count data model using a panel of 86
active ingredients during the 1999 2005 period show that the drivers of generic
entry in ...
The aim of this paper is to analyse empirically entry decisions by generic firms into
markets with tough regulation. Generic drugs might be a key driver of competition
and cost containment in pharmaceutical markets. The dynamics of reforms of
patents and pricing across drug markets in Spain are useful to identify the impact of
regulations on generic entry. Estimates from a count data model using a panel of 86
active ingredients during the 1999 2005 period show that the drivers of generic
entry in markets with price regulations are similar to less regulated markets: generic
firms entries are positively affected by the market size and time trend, and negatively
affected by the number of incumbent laboratories and the number of substitutes
active ingredients. We also find that contrary to what policy makers expected, the
system of reference pricing restrains considerably the generic entry. Short run brand
name drug price reductions are obtained by governments at the cost of long run
benefits from fostering generic entry and post-patent competition into the markets.
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