The generic competition paradox in a universal healthcare's prescription drug market

Kenichi Ohkita and Kazumitsu Minamikawa

International Journal of Business and Globalisation, 2015, vol. 14, issue 4, 438-445

Abstract: This paper provides a game theoretic model on the likelihood of the generic competition paradox in a universal healthcare's prescription drug market. Using a two-stage model in which patients are prescribed either the brand-name drug, a generic alternative, or no drug, it is found that under certain conditions the price of the brand-name drug increases after the entry of generic alternatives. The generic competition paradox is found to require full market coverage and to be more likely to occur with a larger difference in the perceived quality of the brand-name drug and its generic alternatives, higher marginal costs of production, or lower insurance coverage.

Keywords: prescriptions; brand-name drugs; generic drugs; generic competition paradox; GCP; universal healthcare; prescription drug market; prescription drugs; game theory; drug prices; perceived quality; production costs; marginal costs; insurance cover. (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:14:y:2015:i:4:p:438-445

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