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Therapeutic Equivalence and the Generic Competition Paradox

Munirul Nabin, Mohan Vijay (vijay.mohan@deakin.edu.au), Aaron Nicholas and Pasquale Sgro (sgro@deakin.edu.au)
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Mohan Vijay: Deakin University

The B.E. Journal of Economic Analysis & Policy, 2012, vol. 12, issue 1, 26

Abstract: Following the passage of the Waxman-Hatch Act (1984), FDA approval for a generic drug requires the establishment of bio-equivalence between the generic drug and an FDA approved branded drug. However, a large body of evidence in the medical community suggests that bio-equivalence does not guarantee therapeutic equivalence; in some instances the lack of therapeutic equivalence can lead to fatal consequences for patients switching to generic products. In this paper, we construct a simple model to analyze the implications of therapeutic non-equivalence between branded and generic drugs. We show, theoretically and empirically, that this distinction can provide a plausible explanation of the generic competition paradox.

Keywords: therapeutic equivalence; generic competition paradox (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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DOI: 10.1515/1935-1682.3234

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