`Me-Too' Innovation in Pharmaceutical Markets

Anupam Jena, John Calfee, Mansley Edward C () and Tomas Philipson
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Mansley Edward C: U.S. Outcomes Research, Merck & Co., Inc.

Forum for Health Economics & Policy, 2009, vol. 12, issue 1, 21

Abstract: Critics of me-too innovation often argue that follow-on drugs offer little incremental clinical value over existing pioneer products, while at the same time increasing health care costs. We examine whether consumers view follow-on and pioneer drugs as close substitutes or distinct clinical therapies. For five major classes of drugs, we find that large reductions in the price of pioneer molecules after patent expiration--which would typically lead to decreased consumption of strong substitutes--have no effect on the trend in demand for follow-on drugs. Our findings are likely unaffected by health insurance, competitive pricing of me-toos, marketing, and switching costs.

Keywords: innovation; pharmaceuticals; “me-too” drugs (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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DOI: 10.2202/1558-9544.1138

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