Market Concentration and Its Implications for Generic Drug Prices
Atanu Saha and
Yong Xu
International Journal of the Economics of Business, 2025, vol. 32, issue 2, 139-155
Abstract:
While many prior studies have focused on brand-generic drug price differences, we contribute to the literature by examining the competitive landscape and pricing within the generic pharmaceutical industry. We have analyzed the possible effects of rising levels of market concentration in this industry. Our results have shown that high levels of market concentration are associated with declining price discounts, which we define as the percent difference between WAC (list price) and NADAC (a proxy for price net of discounts). Using 500 top selling generic drugs’ prices at retail pharmacies, we demonstrate that while in the least concentrated markets the prices of the generic drugs have registered on average a year-over-year decline, in the most concentrated markets the opposite is true: the prices of generics have risen. These results exist even after controlling for drug-specific characteristics such as market size and therapeutic class. We estimate that the high degree of concentration in the generic industry is costing payers on average more than a billion dollars per month.
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1080/13571516.2025.2456136 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:32:y:2025:i:2:p:139-155
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIJB20
DOI: 10.1080/13571516.2025.2456136
Access Statistics for this article
International Journal of the Economics of Business is currently edited by Eleanor Morgan
More articles in International Journal of the Economics of Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().